Reporting Energy Use & Emissions and Making Voluntary Environmental Carbon Claims

The UK government/Defra provides guidance to companies on reporting energy use and greenhouse gas emissions.

There is also advice from the Advertising Standards Authority (ASA) on the wording of claims that can be made on voluntary environmental claims and carbon neutral/carbon-offsetting claims.

This is particularly important for agri-businesses in light of the Agriculture Act and the listed public goods including sustainability, water and soil quality and reduction in waste objectives.

It is also important for all food business operators due to both the savings that may be made, the ongoing audit requirements for customers in achieving their own environmental goals and the potential for making environmental or carbon off-setting and carbon neutral claims on products.

An overview on the requirements for both reporting and then the making of any voluntary environmental carbon claims is outlined below.

Reporting Energy Use & Emissions

Since 1 October 2013 the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 has required all UK quoted companies to report on their greenhouse gas emissions as part of their annual Directors’ Report.  From 1 April 2019, quoted companies must report on their global energy use and large businesses must disclose their UK annual energy use and greenhouse gas emissions. This is required by the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018. Further information may be found  at Measuring and reporting environmental impacts: guidance for businesses - GOV.UK (www.gov.uk)

Advice for those companies and limited liability partnerships required to report, as well as those for which it remains voluntary, is included in the UK government’s environmental reporting guidance.

A guide for small businesses on how to measure and report greenhouse gas emissions is also available. SMALL BUSINESS USER GUIDE: Guidance on how to measure and report your greenhouse gas emissions (publishing.service.gov.uk)

As well as greenhouse gas emissions, the government’s environmental reporting guidance helps companies identify and address their other significant environmental impacts. These include things like water use, air pollution, waste and biodiversity. The guidance explains how companies can set targets or “key performance indicators” (KPIs) to measure and improve their environmental performance.

Converting Data

To calculate the greenhouse gas emissions associated with each activity, businesses will need to convert the data they have collected using emission factors.

Data x Emission Factor = Greenhouse gas emissions

This can be done in two ways:

  • Using DECC/Defra’s greenhouse gas conversion factors:  Annually updated emission factors are available for free on the Defra website.  To use these you will need the data that has been collected (e.g. annual gas use from gas bill).  These annual figures can then be put into the appropriate spreadsheets of the conversion factors guidelines. The spreadsheet will automatically calculate the greenhouse gas emissions associated with this gas use. The DECC/Defra spreadsheets convert inputted data into kilogrammes of carbon dioxide equivalents.
  • Using an online calculator:  Online calculators will calculate greenhouse gas emissions from the information that has been input into the online tool. These tools are useful when you are new to reporting and the data you wish to convert into greenhouse gas emissions is simple. The Carbon Trust has a carbon calculator tool2 on its website which uses the DECC/Defra conversion factors.

There are many sources of Government-funded support which can provide further help on how to measure and reduce greenhouse gas emissions:

• Business Link (http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1079068363)

• Carbon Trust (http://www.carbontrust.co.uk/default.ct)

• Envirowise (http://www.envirowise.gov.uk/)

• WRAP (http://www.wrap.org.uk/)

• EST Green Fleet programme (http://www.energysavingtrust.org.uk/business/Business/Transport-in-business)

• The Quality Assurance Scheme for Carbon Offsetting (http://www.direct.gov.uk/offsetting)

Environmental Claims: Carbon offsetting and carbon neutral

The use of low carbon or carbon neutral claims are becoming increasingly sought after by consciensious consumers. 

It may therefore be helpful to examine the requirements for these sorts of claims.

The ASA sets out advice as follows Environmental claims: Carbon offsetting and carbon neutral - ASA | CAP 

'Carbon offsetting' is the process of reducing the net carbon emissions of an individual or organisation, either by their actions or through arrangements with a carbon-offset provider.

'Carbon-offset providers' are companies that either prevent the emission of gases that would otherwise find their way into the atmosphere or companies that absorb carbon dioxide (or other greenhouse gases) that have already been emitted into the atmosphere. They then “sell” that reduction in carbon dioxide (CO2) or other greenhouse gases to companies that produce greenhouse gases.

'Carbon neutrality' - Although no universally accepted definition of the concept exists, all definitions follow the same general lines: carbon neutrality involves achieving zero net emissions associated with an organisational unit, product, service or process. The zero net emissions target is generally achieved through a combination of internal emission reduction and external carbon offsetting.

The established process to achieve best-practice carbon neutrality is:

·         Calculating Emissions – This stage requires a clear decision of what emissions will be calculated, and the setting of a clear boundary for which emissions will be covered.

  • Reducing Emissions – Each business should assess on an individual basis its potential for reducing emissions, for example energy efficiency measures.
  • Offsetting Residual Emissions – Carbon credits should then be purchased to offset residual emissions, after the initial emissions have been calculated, and internal emission reduction has been taken into account.

The calculation methodologies used are therefore critical to ensuring any claim is appropriately substantiated.

The ASA recommends marketers make it clear in their advertisements the elements they have included in their calculations. For example, if the ad had included an unqualified claim such as “Carbon Neutral” and had not made clear that the claim referred only to journeys, the ASA might have decided that the quantity of emissions that had to be offset was larger than for the claim “carbon neutral journeys”.

The ASA expects companies that claim carbon neutrality to offset their carbon emissions in a ‘robust and verifiable’ manner. Generally that can be achieved by buying offsets from companies that run emissions-reduction or emission-capture projects that comply with a generally recognised standard.

The ASA understands that the key factors that need to be taken into account when considering whether an offsetting standard is ‘robust’ are: additionality, validation, verification, project type, timing of credits, leakage and prevention of double counting.

It would use the same criteria to consider the robustness of other offsetting standards. For example the ASA considered a complaint that an advertiser could not substantiate their claim that you could "offset 100% of your car's carbon emissions with ibuyeco car insurance". Despite the fact that the ASA noted the calculation methodologies used by ibuyeco were sound and in general followed best practice they were found not to have a concrete policy regarding the creditability of their offset scheme and therefore the claim was found to be problematic on the basis of a lack of third party verification, additionality and the avoidance of double counting (BISL Ltd ibuyeco, 22 July 2009).

The ASA considered that projects that conformed to the standards of the three schemes listed below had been evaluated and validated to a high enough level to be compatible with a robust and verifiable offsetting system. Marketers who had accurately estimated the amount of carbon that had to be offset and who bought offsets that were certified by any of the three schemes could substantiate that their activities were carbon neutral.

Name of Scheme: Name of carbon credit per tonne of CO2 equivalent offset:

·         Clean Development Mechanism (CDM) Certified Emissions Reduction (CER)

·         Voluntary Carbon Standard (VCS) Voluntary Carbon Unit (VCU)

·         Voluntary Gold Standard (GS VER) Gold Standard Verified Emission Reduction (GS VER)

Food Marketing - Carbon Claim - Case Study

The case of Quorn Marlow Foods Ltd - ASA | CAP  30 September 2020 also stressed the need for clarity and substantiation of every part of any environmental claim that is made.

In Marlow Foods Ltd (t/a Quorn)  complainants challenged whether claims made that the product could help reduce their carbon footprint and had a beneficial effect on climate change were misleading and could be substantiated.

Quorn had advertised its’ Thai Wondergrains product that was certified by the Carbon Trust as “Cradle to Grave” for its full lifecycle. They said the footprint protocol not only certified Quorn product results, but also their continued commitment to reduce the product’s carbon emissions. They pointed to the on-screen text, which stated that the product had been awarded the Carbon Reduction Footprint certification, with a reference to a page on their website where viewers could go for further information. They said that, because Quorn Thai Wonder Grains was a new product, they did not have a recertification figure for it yet, but by signing up to the carbon footprint protocol they had a continued commitment to reduce the carbon emission on the product. Therefore, they would, over time, be helping viewers reduce their carbon footprint. They said it was worth noting that Quorn Pieces, a key ingredient of Quorn Thai Wonder Grains, had a carbon footprint ‘at factory gate’ which was lower than chicken.

Clearcast said that, prior to approving the ad, they were provided with information from the Carbon Trust which confirmed that the product’s carbon footprint results had been certified “Cradle to Grave” for the full lifecycle of the product. Based on that information, they considered that the claims in the ad were justified.

Despite all of this the ASA upheld the complaints against Marlow Foods.

The BCAP Code stated that the basis of environmental claims must be clear. Unqualified claims could mislead if they omitted significant information. Comparative claims could be justified if the basis of the comparison was clear.

The ASA considered that viewers would understand from the ad that purchasing a Thai Wondergrains pot would contribute to reducing their carbon footprint and therefore have a positive impact on climate change. The ad did not clarify the claim “helps us reduce our carbon footprint”, and the ASA considered that the basis of the reduction was likely to be material information which consumers would need in order to make an informed decision.

The advert included on-screen text, which stated that Wonder Grains had been awarded the Carbon Reduction Footprint certification, and that it related to the full life cycle of the product. However, it did not clarify what the claimed reduction of the carbon footprint was being measured against, and viewers would therefore not know what the basis of the reduction was.

The ASA understood that the certification related to the fact that Quorn had measured the carbon footprint of the product and committed to continue to reduce its footprint, meaning that over time, if individuals continued to consume the product, and all other things remained equal, they would reduce their footprint. However, the ASA considered that was not clear from the ad, and viewers would interpret the claim as a comparison against one or more other, similar, products, such that by choosing to buy a Quorn Thai Wondergrains pot over a different product, consumers could reduce their carbon footprint immediately.

In addition, the ASA noted that, because the Thai Wondergrains pot was a new product, it was not possible to demonstrate a reduction in its footprint, and the certification for that product related only to Quorn’s commitment to reduce the footprint over time. The ASA did not consider that was clear from the ad.

The ASA further understood that the award of the certificate, and the reduction of the product’s own carbon footprint over time, was also the basis for the climate change claims, and it was considered that was also not clear.

Summary

The importance of these reporting tools and clarity and substantiation for every part of any claim made is underlined. The calculation methodologies used are critical to ensuring any figure/claim is appropriately substantiated.  

For more information please contact Jessica Burt jessica.burt@mills-reeve.com and Keith Davidson email keith.davidson@mills-reeve.com 

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