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Is your organisation equipped to comply with sustainability mandates?
January 19, 2024

Is your organisation equipped to comply with sustainability mandates?

CSRD, SDR, SEC-driven GHE regulations… How does your organisation keep up with the multiple environmental policies and reporting requirements that businesses are obliged to meet?

Corporate sustainability reporting is fast becoming key to running a business: not long after the EU’s release of its Corporate Sustainability Reporting Directive (CSRD), the UK followed suit with the Sustainable Disclosure Requirement and even the U.S. Securities and Exchange Commission is working on its own regulatory framework.

We expect some standardisation across different policies, so here are some of the key CSRD aspects that UK and US regulations are likely to include:

  • More companies will be impacted: with the minimum criteria being 250+ employees and €25M, CSRD increases the number of companies that will have to make climate-related disclosures from 11,700 to over 50,000.
  • Includes Scope 3: Companies will need to measure the emissions of their supply chains on a yearly basis.
  • Third party audit: There will be a mandatory audit of a company’s submission, i.e. disclosure statements will need to be backed up with data.

The Serious Consequences of Non-Compliance

Many companies are realising that they must act now to be compliant in the near future.

Failure to report and comply with the CSRD can result in:

  • Fines of up to 10 million Euro or 5% of a company’s annual revenue.  
  • Penalties amounting to twice the amount of profits gained or losses avoided because of the breach.
  • Severe loss of company value, with an average of 2% to 5% stock underperformance for publicly traded companies.
  • Prison sentences that can range from six months to six years.

Apart from the financial repercussions, failure to adhere to the CSRD may result in reputational damage, diminished trust from stakeholders, and potential legal action from non-governmental entities.

Does your organisation understand the reporting requirements, available tools and formats? How is your business going to comply and avoid the potential losses of not doing so?

Read on – we, at HNR have the answer to all these questions.

The Measuring Conundrum

As measuring carbon emissions becomes a growing concern for businesses, a range of measuring methods have come to the fore.

Choosing the right emission factor is a crucial element in carbon accounting. There are three types of emission factors: activity-based, production-based, and spend-based approaches, each requiring a high level of expertise to understand the most fitting approach for each business.

To date, top-down estimates have been used for reporting purposes. However, with stronger data points it is possible to get higher levels of accuracy by taking a bottom-up approach to emissions data measurement. We expect this will be required for reporting purposes in the future.

Additionally, a bottom-up approach, as implemented by HNR, also enables organisations to:  

  1. more clearly understand their data points,
  2. accurately trend their impact and, more importantly,
  3. obtain up to date, actionable data.
[Green Web Foundation]

Picking A System of Record

So how to choose your source of truth for reporting? What is the balance between gaining some immediate estimations or gathering more accurate data through a longer period?

Top-down models available in the market require minimal data points and deliver reasonable estimates of impact, which is often not sufficient.

Cloud providers such as Amazon Web Services and Microsoft provide greater detail but introduce some conflicts of interest such as:

  • their customers desire for them to be open and honest with data,
  • ensuring that they provide the correct optics for their own purposes, and,
  • sharing enough but not too much detail that this becomes overly incumbent to the provider.

Another option is for companies to build their own data aggregation and enrichment platform, which comes with its own range of challenges, such as finding and retaining specialised staff and keeping up to date with changing legislation.

There is also a point about independence here, as you shouldn't be marking your own homework. Building and measuring yourself is not open nor transparent. Working with an external organisation with an open accounting methodology provides that level of independence and transparency.

Choose the Right Partner

Selecting a platform that provides a bottom-up approach to analysis enables more accurate and transparent data points, with the ability to encompass all technical operations and independently measure and track impact against an organisation's emissions.

With a marked lack of off-the-shelf tools in the market that can measure emissions across a company’s entire technology operationsHNR provides a unique platform that not only enables holistic reporting, but also helps reduce carbon footprint, power consumption and associated costs.

For data-heavy businesses, HNR to ZERO provides a complete picture of emissions arising from data usage across multiple suppliers such as AWS and Google Cloud Platform. Usage data is ingested into HNR to ZERO and surfaced via an analytics UI and reporting suite that shows emissions usage over time by supplier/partner and the ability to set and track reduction targets.

This data can be exported to use with the major reporting frameworks such as CDP, GRI or SASB, and to deliver to 3rd-party auditors.

HNR to ZERO in Action

Here is a practical application of how the award-winning HNR to ZERO platform delivers bottom-up integration for carbon and electricity consumption reporting:

  • HNR to ZERO can integrate directly with your organisation’s cloud provider account details via API to take hourly readings of cost and usage data.
  • This enables HNR to ZERO to enrich data points based on cloud provider region, instance size and type to include accurate CO2e and energy data points.
  • Data is separated by cloud service and process type, allowing your team to see which services are being used and how.
  • HNR to ZERO transforms and stores data so that it can be separated and visualised based on a range of facets such as meter (e.g. a server or specific service), activity (e.g. file transcode) or emission type (e.g. Scope 3), and understand how costs relate to these (e.g. money, carbon, power)

These are just some examples of use cases that could be implemented in your facility - we do offer a wide range of data analyses, reporting configuration and advisories that automatically identify optimisation opportunities.

Act now to be ready for the multiple demands that sustainability mandates are going to impose on companies soon and avoid hefty fines and potential losses. To find out what your organisation needs to do to be compliant, contact HNR to book your demo.

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