The arrival of the much-anticipated 2017 Defra UK conversion factors for greenhouse gas (GHG) reporting confirms a step change in the carbon intensity of the UK electricity grid and will pose a significant challenge for businesses when they disclose their emissions performance later in the year.

The headline drop of 14% on the electricity consumption conversion factor compared to 2016 will benefit businesses reporting performance on location-based emissions considerably. It will, however, also pose a challenge to articulate, with businesses across the board expected to report greatly reduced electricity emissions (the most major emissions source for many). Not getting internal and external commentary around annual performance right risks:

  • Internal momentum on energy efficiency being lost against a background of seemingly stellar performance, or alternatively;
  • External articulation of performance to stakeholders becoming shrouded by the reducing conversion factor; diluting the recognition of the tangible emissions reduction actions taking place.

Given the rapidly decarbonising grid (the UK electricity conversion factor has fallen 23% since 2015), 2017 could be a trigger year for more businesses moving to market-based reporting and target setting. This would ensure that carbon reduction successes are more directly correlated to proactive business decisions, rather than the influence of macro energy market investments and government policy.

So what else is new for 2017?  In the latest edition, keen reporters will also find that:

  • Plug-in hybrid and battery electric vehicles now have distance based factors available across scope 1, 2 and 3 (transmission and distribution)
  • Hotel stays have been added on a per room per night basis for 24 global markets
  • Domestic and short haul flight conversion factors have decreased by an average of 4% whilst long haul flights from the UK have increased in intensity by an average of 3%
  • Overseas electricity continues to be absent from the factor set, with users signed posted to the IEA to source factors. Scope 3 electricity transmission and distribution factors are still available.

All in all, there is considerable work ahead for reporters this year as they find the right narrative to explain their 2017 emissions performance, adapt to the alignment of CDP questionnaires with the TFCD (Task Force on Climate Related Financial Disclosure) recommendations and increase the breadth of their ESG (Environmental, Social and Governance) disclosures in response to the EU Non-Financial Reporting Directive.

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