From Past to Present: A Brief History of Climate Reporting and Disclosure
Climate reporting has evolved significantly over the past few decades, transforming from a niche concern to a mainstream imperative. This journey, marked by key milestones and global commitments, reflects the growing recognition of the urgent need to address climate change. World Kinect Senior Sustainability Consultant, David Carroll explores climate reporting from its inception to the present, focusing on how the evolution has shaped the landscape of climate disclosure.
Laying the Foundations of Climate Regulation (1997-2014)
The story of climate reporting begins in the late 20th century, a period characterized by the emergence of scientific data highlighting the adverse effects of rising greenhouse gas emissions. In 1997, the Global Reporting Initiative (GRI) was founded, marking a significant step towards voluntary climate disclosure. The GRI provided a framework for organizations to disclose their environmental impacts, linking these disclosures to their overall business activities.
This period also saw the signing of the Kyoto Protocol at COP3 in 1997, committing industrialized countries to reduce greenhouse gas emissions. The protocol underscored the global consensus on the reality of global warming and its contribution to climate change. In 1998, the Greenhouse Gas Protocol was launched, setting the standard for carbon accounting and enabling organizations to accurately measure and disclose their emissions.
The early 2000s witnessed the launch of the Carbon Disclosure Project (CDP), which provided a platform for stakeholders to request sustainability-related information from organizations. The European Union Emissions Trading System (EU ETS), launched in 2005, was another milestone, introducing a carbon pricing scheme that incentivized industrial decarbonization.
During this period, several countries introduced mandatory emissions reporting schemes, such as Canada's Greenhouse Gas Reporting Program (2004), Australia's National Greenhouse and Energy Reporting Scheme (2007), and the UK's Carbon Reduction Commitment Energy Efficiency Scheme (2010). These initiatives laid the groundwork for today's climate disclosure practices, establishing foundational frameworks and a global consensus on the need to combat climate change.
Accelerating Standards and Commitments (2014-2021)
The years from 2014 to 2021 marked a period of significant advancements in climate reporting standards and frameworks. In 2014, the European Union implemented the Non-Financial Reporting Directive (NFRD), mandating large organizations to publish information about their environmental and social impacts. This directive aimed to increase transparency and allowed organizations to disclose information using various frameworks, including GRI and CDP.
A watershed moment came in 2015 with the signing of the Paris Agreement at COP21. This historic agreement committed countries to limit global warming to well below 2°C, with efforts to keep it below 1.5°C. The agreement paved the way for national legislative developments on decarbonization and introduced the concept of Nationally Determined Contributions (NDCs).
Complementing the Paris Agreement, the Science-Based Targets Initiative (SBTi) was launched to guide organizations in setting emission reduction targets in line with global temperature goals. The Task Force on Climate-Related Financial Disclosures (TCFD), launched in 2015 by the G20 and the Financial Stability Board, aimed to standardize climate disclosure and provide insights into climate risks associated with organizational operations.
In the UK, the Carbon Reduction Commitment Energy Efficiency Scheme was replaced by the Streamlined Energy & Carbon Reporting Scheme in 2019, simplifying compliance procedures for organizations. These developments collectively accelerated the introduction of global standards and frameworks, driving action on a national level aligned with global temperature targets.
Mainstreaming Climate Disclosure (2021-Present)
Since 2021, climate disclosure has become mainstream, with more widespread adoption of reporting practices and the introduction of new regulations extending beyond national borders. The European Union's Corporate Sustainability Reporting Directive (CSRD), announced as part of the EU Green Deal, aims to modernize and strengthen climate risk disclosure requirements. The directive's transboundary nature mandates non-EU entities to comply with significant EU financial activities, reflecting the EU's objective to level the playing field globally.
In 2023, the EU introduced the Carbon Border Adjustment Mechanism (CBAM), levying a price on the carbon embedded in specific goods entering the Union. This mechanism aims to prevent carbon leakage and further level the playing field by tying the scheme to the existing EU ETS. In the United States, California passed the Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act in 2023, requiring specific organizations to disclose their emissions and climate-related risks.
These developments signify a shift towards greater transparency and accountability in addressing climate change. As climate disclosures become more standardized and globalized, organizations worldwide are better equipped to measure, manage, and disclose their environmental impacts.
Looking Ahead
The evolution of climate reporting reflects a growing global commitment to transparency and accountability in addressing climate change. As we look to the future, continued collaboration and innovation will be crucial in navigating the dynamic landscape of climate reporting. Organizations must stay informed and adapt to the latest regulations and best practices to drive sustainability efforts effectively.
World Kinect has been at the forefront of helping organizations worldwide navigate this fast-moving landscape. With our expertise, you can ensure compliance with the latest regulations, adopt best practices, and drive innovation in your sustainability efforts.