CDSB hosted two webinars designed to demonstrate the practical experience of using CDSB’s Framework. The presentations outlined the necessary steps to prepare the non-financial data to match the financial themes in a company’s annual report.
Presenting the information in this way is an effective means to communicate material information to investors, stakeholders as well as internally within the organization. The first webinar focused on compliance with the new UK regulations, the second webinar looked at following the steps of CDSB’s Framework in more detail.
Complying with UK regulations – using CDSB’s Reporting Framework
Chaired by Lois Guthrie, CDSB’s Executive Director the first session set the UK GHG reporting regulations in context and introduced CDSB’s Reporting Framework. Andrea Smith, seconded to DEFRA from CDP’s technical team explained the new regulations, noting that conforming to CDSB’s Reporting Framework is a means of compliance. Jonathan Shaw from Grant Thornton discussed how non-financial information can be integrated with financial in the interests of transparency and consistency. Patrick Crawford from CDSB introduced the Reporting Framework and the structured steps of:
- Determination - deciding what to report
- Preparation - gathering clear, consistent and complete information
- Presentation – ensuring the disclosure is clear and relevant to readers of the annual report
- Review - checking for accuracy and relevance.
With the primary audience for annual reports being investors, David Harris, ESG Director of FTSE discussed the relevance of this information for investment decisions. The key theme that is emerging is the importance of reporting from the principle of communication rather than solely compliance.
Compliance and practicalities of using CDSB's Framework
The second webinar looked at compliance and the practicalities of using CDSB’s Framework. Chaired by Lois Guthrie the webinar followed the steps of CDSB’s Framework. Patrick Crawford briefly introduced the Framework before:
Joseph Donohoe from National Grid presented a corporate perspective. For National Grid it’s ‘all about materiality’. Determining what to report, prepare and present is now set up as an ongoing process with the management systems connecting to the board. Climate change is presented in a number of areas within the annual report depending on the relevance – from recognition of the operating environment in which National Grid operates to the achievements against their emission reduction targets.
Mike Reid from Grant Thornton represented the advisory perspective both in collecting the data and presenting the information in a way that adds value to the reader. Materiality is a key theme. Presenting the business case for taking action by linking the risks and opportunities of climate change with the impacts on a company’s prospects show that reporting is necessary for the business. The high level process for preparing non-financial information is consistent with the audit and verification processes.
Ben Richards from the communications agency Radley Yeldar explained how to make your reporting as relevant as possible, how to tell your story clearly in a credible and user friendly way and how to show the way this information drives performance and creates value for the company. Examples of best practice in reporting showed how companies actually present their data in a clear transparent and usable way – linking narrative and numbers. A consistent corporate narrative requires collaboration across the company but brings valuable benefits.
Freddie Woolf from Hermes Equity Ownership Services articulated the investor’s perspective. Carbon emissions are clearly important to a company’s performance. The regulations are designed to drive forward thinking behaviors, to present the company’s material issues and risks, including environmental, in the context of strategy, performance and value. Integrating this information with a company’s financial reporting is an important step in understanding the internal thinking of how these issues are being managed within the company. The narrative is essential, set alongside the data. ‘Telling the story’ about the material impact of these issues helps investors understand and support your company’s long term strategy and sustainability credentials.
It is clear from the webinar that regulation can be a catalyst for change and that using CDSB’s Framework to integrate non-financial and financial information helps a company communicate their management of these issues for the benefit of investors, the company and other stakeholders.
Watch webinar: Compliance and practicalities of using CDSB's Framework