Corporate Carbon Reporting - Case Study Example

CORPORATE CARBON REPORTING Introduction Among other factors that have been pointed out, to bethe main contributors to change in global climate especially as shown by global warming and the associated effects is the effect of greenhouse gasses ("Global Warming and Climate Change; Reports on Global Warming and Climate Change from University of Wisconsin Provide New Insights", 2014, pp. 562). The effects of climate change are together with increased temperatures and this was associated with rising waters in ocean and melting glaciers. Human activities and the corporate activities have been shown to be the main causes to the rise in greenhouse gases hence analysts showing that human activities would equally provide the most reliable solution to curbing the raise in greenhouse gasses within the atmosphere. Among other policies that have been devised and embraced by corporate is the carbon reporting which is increasingly gaining importance among trading economies (OConnor, 2009, p. 12-13; "Carbon reporting reviewed", 2010, pp. 43). Legislations are equally being devised and embraced to ensure cooperation by the corporate as well as individuals (Miller, 2013, pp. 8-12). Reporting of the greenhouse gases emitted by corporate within a given span of time would be better understood as carbon reporting (Pulakkat, 2012, para 1-4). This on the other hand brings about the understanding of carbon accounting, which implies the procedures that people or corporate adopt in quantifying the amounts of greenhouse gases that they emit into the atmosphere often over a period (Haigh, M. & Shapiro, M.A. 2012, pp. 105-110). Among other usefulness of carbon accounting is the provision of information in facts that would aid in decision making processes concerning management of effects of greenhouse gases in the atmosphere and their effects towards the climatic change. Besides, through the carbon legislations and carbon accounting, companies reduce emission of the greenhouse gases hence reducing their grievous effects into the atmosphere. Discussion Corporate accounting as a procedure can and has been in use within organizations to assess and quantify the amounts of greenhouse gas emissions, which are produced directly and or indirectly by the processes of the organization. Currently being termed as carbon footprint, the accounting of carbon presents useful information, which according to the proponents of the ideology can serve to provide information for management of climate change and the associated effects in rising global temperatures as well as change in patterns of weather. In fact, in many international trading policies, carbon reporting has been made mandatory as effects of climate change associated with increase in carbon emissions has implications on social, political as well as economic fronts in economies (Davidson, & Haan, 2012, p. 217-222). Nevertheless, accounting procedures and mechanisms aimed at providing reliable information on the amounts of GHG emitted by corporations face particular challenges among which are standard accounting procedures, which are universally acceptable (Cotter, Najah and Wang, 2011, p. 294-296). There are therefore uncertainties that are associated with the measurements presented and this has further implications on the mechanisms adopted towards controlling the corporate emissions of the green house gasses in the future as based with the reports provided. Conventional auditing as well as accounting problems emanate while countries adopt different national inventory profiles on green house gas and emissions (Milne and Grubnic, 2011, p. 969). Research studies have shown that there are misconceptions and misunderstandings in the universality of the concept of carbon accounting. According to Ascui and Lovell (2011, p. 978), the misunderstandings in carbon accounting would be understood from the contradictions as well as tensions as they relate to physical, market enabling, political, social/environmental as well as financial modes in carbon accounting. According to the findings by the research study, the tensions and uncertainties shown through the accounting procedures may hamper the reliability and effectiveness of the climate science and as a result hamper policies and efforts to mitigate the effects of climate change. This therefore shows that if the confusion in carbon accounting would be resolved, great steps towards resolving the challenges of climate change would have been made. By having the different frames involved in carbon accounting operating in isolation contradicts the understanding of the whole carbon accounting concept. In definition of the concept of carbon accounting, a concise definition has not yet been made hence the abstractness in understanding the concept. However, a general understanding shows carbon to be used representatively over a large range of green house gases. Nevertheless, when the concept is used together with the term accounting and the different frames such as the physical, market enabling, political, social/environmental as well as financial modes, the meanings equally multiply hence limiting the adoption of a general consensus of the term. Various frames have been identified as applicable in the accounting processes for the carbon emissions. The main players associated with the frames are such as the scientists, accountants, politicians, economists as well as activists. It is worth noting that the physical, market enabling as well as the political frameworks in carbon accounting are relatively related but the rest two are distant from each other in concept and objectives. The physical accounting of carbon borrows from the idea of natural science physical measurement through estimation and calculation. The greenhouse gas fluxes are estimated within an environment and this represents the oldest method of accounting for greenhouse gases in the atmosphere (Nelson, Wood, Hunt and Thurbon, 2011, p. 147-150). This frame therefore presents the most widely used approach in carbon accounting procedures globally by climate scientists. Political accounting on the other hand is seen to emanate from political pressures, which have been characteristic in global efforts towards managing climate change. Through such a framework, economies and sovereign nations have been committed to be undertaking the accounts for carbon emissions at national levels especially to member countries as affiliated to the climate movements in the globe. For instance, UNFCCC has mandatory obligations to member signatories to conduct national accounting for the GHG emissions and this is through the political frame. Market enabling accounting for the greenhouse gas emissions relies on the accounting principles as explain the levels of emissions of each type of global warming gas, as would have an effect on the trade practices ("Global Warming and Climate Change; Researchers from Stanford University Discuss Findings in Global Warming and Climate Change", 2012, pp. 152). It is however, an obligation of every economy to present emission accounts while no associated responsibilities spelt out. Rights and obligations to sovereign countries on individual or associated effects of the emissions of the gases into the atmosphere were created in the Kyoto protocol explains the financial carbon accounting frameworks. However, it is noted that quantifying the emissions in monetary forms is somewhat abstract hence the challenge in fully institutionalizing the frame in GHG accounting ("Ernst & Young Llp”, 2010, p. 6). The social environmental frames in carbon accounting also affect the general perception regarding environmental accounts. Social responsibility in accounting processes however emanates voluntary disclosure to qualitative as well as quantitative information but to relevant audiences. Corporate reporting though seen as a continuation to the traditional accounting procedures incorporates policies in social and environmental impacts resultant from such emissions (Ratnatunga, Jones, & Balachandran, 2011, pp. 127-147). Effectiveness in reporting accurately on the amounts of emissions into the atmosphere from the activities of trading corporations has accompanying benefits among which are affecting investors while making decisions on investments within a country and or region. The foregoing discussion presents the point of consensus especially on the ‘unpacked’ definition to carbon accounting especially as shown through the various forms of accounting as discussed. Reporting on climate by private investors and individual corporations are increasingly facing the challenge of associated risk(s) and actual management of the risk(s). Corporations have an unsupported feeling that they are faced by a material risk through climate change where they are expected to provide the most sober mechanisms of attending to effects of the same. However, we understand the facts surrounding effects of GHGs on climate change and the risk posed to the society in general (Shi, Wang, & Yang, 2010, pp. 99-102). Early literature associated climate change with the eminent ‘dark side’ to the current world with environmental disaster(s) presenting just an example to such outcomes that would be expected. The ‘risk society’ is therefore molded from the fear and dread that the society has over the impending effects of climate change as resultant to human acts (Palmer, 2009, p. 684-686). The nature of adverse effects from the process of industrialization is pointed out to support the argument of the social shift from industrialization into the era of risk. In fact, the ‘risk society theorem’ theorizes the current society as influenced and filled with such risks as the global warming and climate change. Evolution in perceptions of risk have shaped the modern day analysis of climate change and associated risks to the phenomena of calculating the risks. In public reporting, corporations are viewed as main contributors to the surging amounts of GHGs and are therefore being charged to account for the amounts of GHGs that they produce and therefore show how they are attending to the same to mitigate the effects on climate (Solomon et al, 2011, p. 1119-1123). Climate change has been observed over ages with increased and more elaborate changes being blamed on the human activities especially within the modern day environment. Science has on the other hand showed that concentration of greenhouse gases into the atmosphere is mainly to blame on change of climate as is being experienced today (Shepardson, Niyogi, Choi, & Charusombat, 2011, pp. 481-507; Spinesi, 2012, pp. 545-559). The production and release of such gases into the atmosphere is what brings about the strategic role played by humans in propagating climate change especially through global warming ("Ecolab Acknowledged by Carbon Disclosure Project for Climate Change Initiatives", 2011, para 1-4). In fact, human beings come into play through implications of social, economic as well as political as related acts contributes to enhanced living environment. Despite the fact that carbon accounting procedures face a number of challenges, science through modeling have shown how critical the accounting and reporting procedures are not only good for the welfare of the individual company but also for the good habitation of all mankind. In fact, the federal government has been portrayed as being in the forefront towards formulating tax policies and laws aimed at compulsory carbon reporting. This report finds that corporate reporting has the capacity of propelling to greater height efforts to control climate change in the globe. This is because for instance, imposition of ‘emission tax’ by the federal government works to control the amount of waste gas emissions into the atmosphere as this would work to address the challenge of climate change. Besides, corporate carbon reporting has the capacity of influencing the governments and such other policy makers while designing policies aimed at controlling effects of own activities in adding into the GHGs ("Carbon Disclosure Project and Accenture Offer Report on Climate Change Management for European Cities", 2012,para 1-4). This therefore shows that the process of carbon accounting would aid in comparing the GHGs emissions per a given period while designing effective tools to be used in controlling the effects of greenhouse gases (Thomas, 2009, pp. 1). Summary In conclusion, this report establishes that carbon accounting and reporting are increasingly gaining popularity within climate science field. It is however noted that carbon accounting takes various forms, which include physical, market enabling, political, social/environmental, as well as financial modes in carbon accounting. Besides, effects of political and social economic factors influence the general process of carbon accounting and this would influence on the volumes gotten and quoted. Nevertheless, the accounting facts are very instrumental in lowering the effects of global warming as well as through policy formulations especially those addressing climate changes (Marten Law Reporting from Copenhagen on Climate Change Summit, 2009, para-5). The lack of universal carbon accounting procedure presents the main challenge in arriving at statistically significant values. We note that underrepresentation and understatement are detrimental factors that would hamper policy formulation and imposition. ‘We also hope to have shown that carbon accounting is relevant: it is precisely the easily overlooked systems of classification, measurement, commensuration and communication that underpin society’s key responses to the “super wicked problem” (Lazarus, 2009, p. 1153-1155) of climate change’ (Ascui and Lovell, 2011, p. 992). Bibliography Ascui F. & Lovell H., 2011. “As frames collide: making sense of carbon accounting” Accounting, Auditing & Accountability Journal, vol. 24, no. 8, pp. 978-999 "Carbon reporting reviewed", 2010, Financial Director, , pp. 43. Viewed 18 March, 2014 "Carbon Disclosure Project and Accenture Offer Report on Climate Change Management for European Cities", 2012, Health & Beauty Close – Up. 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