00:16 --> 00:47
Speaker 1 – Catherine Beare, Regional Director - Business Assurance (UK & Iberia)
Hello and welcome to this podcast exploring how companies can start their journey in Reasonable Assurance (RA) for climate related disclosures, including GHG emissions.
I'm Catherine Beare, the Regional Director for Business Assurance in the UK and Iberia, your host today, and I'm delighted to be joined by my colleague Rizwan Nasmuddin. Rizwan, did I get that pronunciation correct?
00:47 --> 00:50
Speaker 2 – Ridzwanurahim Bin Nazimuddin, Senior Sustainability Consultant, Intertek Assuris
Yeah, you got that right.
00:50 --> 02:04
Speaker 1 – Catherine Beare, Regional Director - Business Assurance (UK & Iberia)
Excellent. Now Rizwan is a consultant with our Assurance business, and he has nearly five years’ experience specifically in climate change and sustainability related matters and is going to show today how companies can best adopt reasonable Assurance as a beneficial business practice.
So, Rizwan, companies globally are facing calls to publish accurate climate related data and be very transparent regarding their impacts on climate change. Now, with Assurance gaining so much attention, we understand why. In today's podcast, we'll take a high-level look at what the practical steps business can consider moving forward in this regard. So let me kick off, Rizwan, with my first question for you.
Before diving further, can you help us understand what's driving companies to adopt reasonable assurance for climate related disclosures? please.
02:04 --> 04:51
Speaker 2 – Ridzwanurahim Bin Nazimuddin, Senior Sustainability Consultant, Intertek Assuris
Yeah, sure.
Well, in terms of climate change, I think companies aren't really islands, you know, they're impacted by stakeholders like investors and regulators. So, these stakeholders are asking companies to manage their climate related risks and opportunities with more certainty.
So, in other words, means they have to assure what they are telling people in terms of their public disclosures.
On that note, these disclosure requirements are actually becoming increasingly standardized. For example, we have the ISSB, the International Sustainability Standards Board's IFRSS 2 guidance, which is relating primarily to climate related misclosures being adopted by regulatory bodies everywhere worldwide.
But of course it's not just about regulation. I think reasonable assurance or RA to be short, can actually help companies be a bit more strategic when it comes to decarbonization because as companies progress and set reduction targets, they will need to be actually cost effective as well. I think RA can help validate the effectiveness of certain pilot initiatives that these companies take and build a stronger case before significant investment is made.
I've spoken a bit about these benefits in terms of compliance and strategy, but they are of course underpinned by this principle of solid foundations for climate reporting, which is what I think RA is about. Now, when we speak of solid foundations, really we mean data quality. So, things like material misstatements, they could impact companies as targets, strategies, as well as, their performance tracking essentially.
Now if you start early in RA, you can help reduce this risk going forward because not only does RA dive early and deep into their data, but also as well as their data management systems.
Now in terms of reporting, whatever companies report, it should be complete, and it should be relevant. I think if you were to take an example, companies need to account for all the emission sources, especially those within the operational boundaries, meaning their Scope 1, Scope 2 and Scope 3. Now here RA can definitely help because assurers go deep, deep into these activities and make sure that everything's done by the book.
04:51 --> 05:12
Speaker 1 – Catherine Beare, Regional Director - Business Assurance (UK & Iberia)
Yes, it's very clear in terms of many mandates coming down, but there's actually a lot that goes into that. So, thank you for clarifying.
Now, how can companies best prepare to adopt climate related reasonable Assurance for the long term?
05:12 --> 09:01
Speaker 2 – Ridzwanurahim Bin Nazimuddin, Senior Sustainability Consultant, Intertek Assuris
Well, I must say RA is hardly the impossible thing people often think that it is. So I think one way to develop traction is to think of RA as having a focus on one thing, which is about establishing your management system, especially with proper built-in process controls. So here what I mean is that it's essential that that whatever system you establish or that you put in place, it is designed as well to manage climate related disclosure data. So, what I mean by this is a strong system often has champions, people who always see accurate data input.
But equally important is also about having a standardized way of communicating to keep everyone who's involved in sync. This comprises things like definitions, definitions of data, the types of data that you're using, the reporting schedules of that data, how you're documenting it, as well as verification.
I am blabbering a lot here, so I'm going to break this down into further basic practices.
The first is basically data gathering. What I mean by this is that in the very first step when you're doing your climate related data collection, you want to make sure that you have the actual data itself as well as the supporting evidence. What I mean by that, for example, is you have your electricity consumed, your kilowatt hours, then you should also have your electricity bills in one place.
Next comes the reviewing mechanisms. You've already collected the data, it should be reviewed to ensure that the data collected is correct, it is what is needed, and it is done by someone who is not the person who is collecting it.
The third one is about having an established methodology. So, it's about determining how do you compute your output data from the input data that you have. For example, how do you compute your emissions data from the activity data that you have, either using direct measurement or emissions factors and some related information like that.
But of course, last but not least, you should be documenting everything that you do in one place so that it can be referred to over time, especially by third parties. What I'm trying to say is that a well-defined system with such controls and processes will lend itself easier towards disclosure requirements and enable easy digesting by any stakeholder in the future.
08:01 --> 08:24
Speaker 1 – Catherine Beare, Regional Director - Business Assurance (UK & Iberia)
Clear, Clear.
Thanks for putting those steps in place, which I think the readers and listeners will understand better.
Now I guess a final question for me, what about unlocking opportunities in climate related reasonable assurance? How does that look for companies?
08:24 --> 12:28
Speaker 2 – Ridzwanurahim Bin Nazimuddin, Senior Sustainability Consultant, Intertek Assuris
OK. So let's break that up. First, we'll talk about companies embarking in climate related RA and then we'll talk about companies that are already doing RA.
Companies that are embarking in climate related reasonable assurance, typically they've already done limited assurance or a couple of internal audit cycles. But if they're just starting out in RA, they will definitely be able to unlock two opportunities which are about enhancing and expanding their systems and controls. Number two, they may be able to find ways to reduce their emissions overall.
So when we talk about enhancing the systems and controls because RA involves detailed testing and evidence collection as compared to, for example, limited assurance, it can actually help uncover certain control weaknesses/inconsistencies or data gaps that companies may not be aware of. For example, you even be able to reveal discrepancies in the emissions factors you use, or the inconsistent documentation across the various sites, in which you collected your data. So, resolving these kinds of issues can help you boost your own reporting as well as your reputation as a consequence of that law.
The second benefit is about reducing emissions. Because RA examines A broader range of emissions compared to limited assurance, you can discover hitherto maybe unrealized opportunities for reduction. One example is fugitive emissions; fugitive emissions are often considered a minor source, but interestingly air conditioning refrigerants actually have a high global warming potential. If you're able to reduce emissions from these kinds of sources, you may realize significant environmental benefits that you did not realize were there before. So, in relation to RA, this is usually done or discovered through procedures like site visits, which may be able to reveal such potential sources of emissions.
Now for companies that are already doing a reasonable assurance, they tend to much more mature. They may be having more robust data preparation mechanisms in place. Therefore, when you do RA or when they do RA, they will be able to number one optimize the operations and number two be able to create stronger team cohesion and stakeholder trust.
When we talk about optimizing the operations, it's because RA helps lay the groundwork for standardized practices, companies can achieve more accurate data, they can streamline their processes and make fewer mistakes. This helps them save time. They minimize redundancies and then potentially even lower costs. What begins is actually for a lot of companies is more of a compliance activity. It becomes maybe even a catalyst for efficiency and innovation.
Now the second thing is all about creating stronger team equation and stakeholder trust that I mentioned earlier. When reporting systems improve in these companies, internal teams actually become more aligned, they communicate more effectively and then they work better in achieving the common goal, namely reduced GHG impact or climate related impacts. This kind of internal synergy, we often see them reflected externally as part of a broader set of company values. Companies that are more eco-centric, so to speak, it helps them build better relationships with stakeholders who value these kinds of initiatives and therefore it helps establish trust as well.
12:28 --> 13:56
Speaker 1 – Catherine Beare, Regional Director - Business Assurance (UK & Iberia)
Brilliant. And all very, very clear.
Look, thank you, Rizwan. That was an extremely informative set of answers that you give us today and shared on the topic of reasonable assurance. So look, thank you for joining us today.
And thank you the listeners for listening in.
Intertek has a wealth of experience in helping organisations assure climate related disclosures including Scope 1, 2 and 3 GHG emissions. We do offer third party assurance services aligned with relevant assurance standards across a diverse set of industries at the organizational and product levels, as well as across supply chains, ultimately helping ensure transparency and credibility in your climate related disclosures.
For more information, please do go and visit our website at: www.intertek.com/assuris/sustainability
That concludes today's podcast. Thank you so much for listening in and watch out for more episodes from our Intertek teams to help you with your sustainability journey.
Thank you.
