The Business Case for Climate Registries

The Business Case for Climate Registries

Let me guess: You’ve been greening your business for a while, you’ve made progress, and you’ve even started to assess your performance. Still, you have no clear yardstick for your achievements -- and you have no template for communicating about your environmental progress credibly to your clients, your employees, potential investors or the public.

If so, it may be time to join a greenhouse gas (GHG) registry. GHG registries are an emerging tool for tracking, benchmarking and communicating about your business’ progress on climate change. While registries are quite new in the United States, they have existed in Europe for a while, and they are now gaining momentum in the U.S.

Climate Registries: What and Why

A climate registry is a database where companies and other entities can record the releases of greenhouse gases that result from their activities. (A record of an entity’s GHG releases is called a GHG inventory. Climate registries are attempts to bring together, under a single roof, a large number of GHG inventories. The ultimate goal of most registries is to reduce climate impacts by providing benchmarks for performance. Joining a registry helps companies evaluate how they’re doing and how they can improve in meeting climate change goals.

What exactly does it mean to share best practices through a registry? An inventory of GHGs is like any other quantitative performance assessment: it doesn’t mean much without context and comparisons. GHG registries, by bringing together many inventories, provide a platform for learning and sharing best practices. With a basis for comparison, a company can benchmark its performance against other entities with similar operations, and better identify opportunities for improvement.

So what’s the business benefit? First, a GHG inventory is a way to meet reporting guidelines. Conducting a GHG inventory serves a few useful purposes. There is a growing expectation that GHG inventories will be part of high-quality corporate reporting, both to explain the firm’s impacts and to disclose its liabilities and exposure. Top-notch corporate environmental reports increasingly include climate impacts. The Global Reporting Initiative, for example, requires a GHG inventory as part of its reporting protocol. And the Carbon Disclosure Project, a foundation-funded effort launched by a group of major institutional investors, has identified significant long-term “climate risk” associated with companies’ GHG impacts.

A GHG inventory is also important material for external communication and employee engagement. For example, when Stonyfield Farms announced back in 1996 that it would offset all of its carbon dioxide emissions, it identified itself as a leader in sustainable business. Stonyfield recently took the next step, becoming the first company to record its GHG inventory with a voluntary GHG registry in New Hampshire. This is one reason that the state’s Department of Environmental Services awarded the company its 2003 Energy Leadership Award.

Certification Before Registration

Some registries, such as the California Registry, require businesses seeking to register their GHG inventories to have them certified (a process that is akin to certification of financial statements). This generally means that you have to hire an accredited certifier to verify your inventory results. It appears likely that registries other than California’s will require certification in the future.

Certification may appear to be an additional burden, but it has distinct benefits. It provides external validation for your inventory, and helps to assure quality data. It also fits with the spirit of providing independently verified information to the outside world -- remember that we live in the post-Enron Age. And this sort of high-quality, externally verified information on climate impacts will increasingly matter to investors and financial markets who have grown skeptical of first-party claims about corporate performance, environmental or financial.

Joining a registry puts a company in a good place for meeting future expectations of environmental performance, including possible regulatory requirements. As climate change policy frameworks emerge regionally, nationally and internationally, firms will have climate liabilities that need to be documented and addressed. The first markets for “carbon credit trading” are emerging now in Europe, and such markets -- both in Europe and in the U.S. -- will likely form around the existing registries. Registering your GHG inventory positions you well for future changes as carbon trading develops and regulatory regimes change to include climate impacts.

The Bottom Line

Aiming for sustainability is often difficult, with nebulous goals and uncertain benefits. So it’s refreshing to see what the emerging climate registries offer: existing off-the-shelf tools, the promise of benchmarking performance and sharing best practices, and -- for the time being -- a chance to lead the pack. By participating in a registry, your business can capture attention, while participating in a vital collective effort toward a more sustainable world.

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Joshua Skov is co-founder and director of research and development for Good Company, a Eugene, Ore.-based consulting company focusing on sustainability issues.