Globally, various environmental disclosure mechanisms have evolved in recent years. One of these disclosure mechanisms is the Carbon Disclosure Project (CDP). The CDP is a global not-for-profit initiative that requests companies to disclose on matters like greenhouse gas pollution and water impacts. It is one of the premium disclosure mechanisms as it provides an overview of 81% of the world’s largest public companies and how these companies are seeking ways to reduce their environmental impact.
Winner of the 2014 South African Energy Efficiency Association Patron Award and Nedbank Carbon Specialist, Dr Marco Lotz, says that disclosure initiatives, including the CDP, have helped move energy efficiency and sustainably reporting into mainstream business thinking.
“Electricity constraints and rising electricity tariffs have motivated companies to reduce their energy consumption.
“Also, investors and shareholders are placing increasing demand on companies to disclose more information around their impact on the environment,” Marco explains.
The United Nations (UN) forecasts that by 2030 nearly 50% of the world population will live in areas facing water scarcity. Less than 1% of the world’s water is easily accessible fresh water and South Africa is a water scarce country ranking in the top 30 driest in the world. Moreover, even with water being available South Africa is facing water distribution efficiency and infrastructure limitations.
Analysts therefore see water disclosure projects as a vital tool for investors and businesses to be able to evaluate companies’ ability to operate successfully in a water-constrained world.
“The proposed carbon tax, increased water scarcity, and possible climate change impacts are all factors that companies need to be cognisant of when quantifying their operational impact, investigating capital expansion projects and the overarching strategic market positioning.” says Marco.
It is imperative for any disclosure mechanism to evolve as the sustainability space is ever-evolving. This will ensure that the correct measures are disclosed and compared between different disclosing periods.
Currently, there is limited legislative obligation for organisations to disclose environmental impacts beyond legal compliance. This could change in the near future if the proposed domestic carbon tax requires increased disclosure. It is then in the best interest of organisations to start to do internal environmental impact monitoring before it becomes a requirement.
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