Demystifying Sustainability Reporting Sustainable Business Network, 15 September 2023

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Demystifying Sustainability Reporting Agenda•••••

SBN –Carbon Footprint Ltd

Legal & Market Update –Zoe Booth, Carbon Footprint Ltd
Demystifying Sustainability Reporting – Zoe Rudge, Carbon Footprint Ltd
Case Study – ‘On Implementing TCFD in our Business’ – Harsha Thomas, De
La RuePanel discussion
Close© Carbon Footprint Ltd 2023

Feedback Time!

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Legislation & Market Trends
Zoe BoothCarbon Footprint Ltd01256 592599
Zoe.booth@carbonfootprint.com

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SBN –Carbon Footprint Ltd© Carbon Footprint Ltd 2023

G20 Summit…
• No consensus on the phase-out of fossil fuels despite UN report• G20 nations contribute ~80% of global emissions• More support needed for developing nations• African Union – 55 countries

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Science-Based Targets – Beyond Value Chain
Mitigation (BVCM)• Public consultation ran June 19th to July 30th 2023
• 62-page consultation• Aim: develop corporate guidance on BVCM to accelerate and scale private sector
mitigation finance (carbon offsetting)• Outcome to come from SBTi late autumn 2023

“Urgent Beyond Value Chain Mitigation is Essential,” SBTIThe independent one to watch : ISO 14068 – Carbon Neutrality– We welcome a global definition!
– Can be certified by any ISO auditor – not just an ‘own brand’

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ICVCM & VCMI – Confused? What’s thedifference?
• Joined forces ahead of the Summit for New Global Financial Pact in Paris (June 2023)• Aim:– Define best practice and credibility for use and sourcing high-integrity credits• Reinforces need for investment in the voluntary carbon offsetting to supplement on theroad to Net-Zero (SBTi, CDP)
• Own brand certification?
• Focus on:– Prioritising value chain decarbonisation– Complementary high-integrity credits– Promoting commitment to “quantified, independently verified science-based emission reduction targets”• But will ISO 14068 – Carbon Neutrality cover all of this and provide an independent or‘self-certification’ route?

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Energy Savings Opportunity Scheme (ESOS) Phase
3 Updates
Qualification date - 31st December 2022
Compliance deadline – 5th December 2023 NOW 5th June 2024
• No changes to qualification criteria or date
– 250+ employees– £44+ million annual t/o AND £38+ million balance sheet• Unable to submit Phase 3 until changes finalised in legislation• No recent updates – last update June from EA/DESNZ~ 8.5 months until the new deadline

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Fines continue to be issued for water companies• Thames Water fined £3.34 million for sewage dumping– Discharged undiluted sewage to Gatwick Stream (Sussex) & River Mole (Surrey)– 1,400+ fish killed– Four charges in EA prosecution• Note: 36% of water firm audits since 2010 are missing from EA• Two men got custodial sentences over illegal waste site
– Failed to have a fire-prevention plan
– Repeatedly failed to correct following EA instruction– Permit revoked March 2017 – but site found still in use by EA– 2 men sentenced to 8 months custody

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References / Useful Links• https://www.g20.org/en/g20-india-2023/new-delhi-summit/• https://www.theguardian.com/business/2023/sep/07/electric-van-production-begins-ellesmereport-stellantis-vauxhall-factory• https://www.independent.co.uk/news/uk/rishi-sunak-prime-minister-norwich-londongovernment-b2401327.html• https://www.h2fly.de/2023/09/07/h2fly-and-partners-complete-worlds-first-piloted-flight-ofliquid-hydrogen-powered-electric-aircraft/• https://www.asa.org.uk/news/updated-environment-guidance-carbon-neutral-and-net-zeroclaims-in-advertising.html• https://www.gov.uk/government/publications/comply-with-the-energy-savings-opportunityscheme-esos• https://www.bbc.co.uk/news/uk-england-sussex-66097906• https://www.bbc.co.uk/news/business-66749344• https://cedrec.com/r/news/0723-four-men-sentenced-over-illegal-waste-site• https://www.theguardian.com/environment/2023/sep/13/environment-agency-failing-tomonitor-water-firms-in-england-data-suggests• https://icvcm.org/icvcm-and-vcmi-join-forces-to-operationalize-a-high-integrity-market-toaccelerate-global-climate-action/

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Legislation & Market Trends
Zoe Booth
Carbon Footprint Ltd01256 592599
Zoe.booth@carbonfootprint.com

SBN –Carbon Footprint Ltd© Carbon Footprint Ltd 2023

Demystifying Sustainability Reporting
Sustainable Business Network
15 September 2023

Zoe Rudge
Senior Environmental Consultant
Carbon Footprint Ltd
zoe.rudge@carbonfootprint.com
01256 592599
SBN –Carbon Footprint Ltd© Carbon Footprint Ltd 2023

Corporate Sustainability reporting
Disclosure of sustainability–related non-financial performance.
‘Non-financial’ means disclosing information relating to sustainability, also
known as ESG reporting.
Reporting may be:❑ Required• Jurisdictional• Sector specific❑ Solicited• Tendering (supply chain requirements)❑ Voluntary
Enhanced sustainability reporting now a priority globally, particularly forclimate change impacts.

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Corporate Sustainability reporting
What do we mean by impact?
Single VS Double materiality‘Materiality’ is an accounting concept which generally
relates to the importance/significance of thedisclosure.
For single-materiality this often means disclosing
information considered important to investors.
Double materiality considers transparency of mostsignificant sources of environmental impact,
considered important to wider stakeholders.
Important because different frameworks/standards have different requirements for disclosure…
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Acronyms galore!

ISSB, CSRD, TCFD, SECR, ESOS, CDP, SBTi ...
… the list goes on.
What do these mean?
Do they apply to my business?
What are the reporting requirements, and by when?
What if I need to comply with more than one?
What can my business do to prepare?
Enhanced sustainability disclosures are welcome but
additional resource and data is required.
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Global standards and frameworks“The greatest danger to our planet is the belief that someone else will save it”
Robert Swan, British Explorer

Several frameworks aim to standardise sustainability reporting globally e.g.
International Sustainability Standards Board (ISSB)
Taskforce on Climate-related Finance Disclosures (TCFD)
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International Sustainability Standards Board(ISSB)
Aim: comprehensive global baseline for sustainability
disclosure, driven by needs of investors.
Governed by the International Financial Reporting Standards(IFRS) Foundation who are developing their Sustainability
Reporting Standards.
• IFRS 1 General Requirements for Disclosure of Sustainability-related
Financial Information• IFRS S2 Climate-related Disclosures• Climate risks & opportunity disclosures• GHG emissions and targets.

Consideration for other frameworks during development• interoperability with GRI, TCFD, CSRD etc.

Mandating ISSB aligned disclosure will be up to individual jurisdictions.

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Taskforce on Climate-related Finance
Disclosures (TCFD)
TCFD was created by the Financial Stability Board (FSB) in 2015.
Reporting focuses on climate-related risks andopportunities, for the needs of investors.
The aim of the TCFD is to drive more sustainable investment
globally.
Recommendations for disclosure fall under four key elements:• Governance• Strategy• Risk Management• Metrics and Targets
Alignment to existing and new frameworks i.e., ISSB and endorsedby voluntary frameworks such as the Carbon Disclosure Project(CDP).
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UK-specific standards and frameworks
UK currently has several mandatory sustainability reporting
initiatives in place including:• Energy Savings Opportunity Scheme (ESOS)– Currently in Phase 3.
• Streamlined Energy and Carbon Reporting (SECR)• UK Government Procurement Policy Notice 06/21 (PPN-0621)
Endorsement of global frameworks include:• TCFD mandated by FCA (for finance institutions) and UK Government(for large non-finance sector organisations) since April 2022.
Coming soon…
• ISSB – UK Sustainability Disclosure Standards (SDS) being developedthat will rely on the ISSB IFRS SDS – guidance expected summer 2024.

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European standards and frameworks
Corporate Sustainability Reporting Directive(CSRD)• Replaces the Non-Financial Reporting Directive (NFRD)• Sustainable Finance Disclosure Regulation (SFCR) aligned.

Applies to EU-registered companies, companies listed on an EU-regulated
market, and eventually companies with significant activity within the EU.
Must disclose in accordance with European Sustainability ReportingStandards (ESRS) developed by the European Financial Reporting Advisory
Group (EFRAG). Some companies required to comply as early as 2025, for
FY on or after 1st January 2024.
What does this involve?
••••

Double materiality with coverage of a wide range of ESG topics.
Climate related scenario analysis required to assess company resilience.
External assurance on sustainability information is mandatory
Disclosures must be in company’s management report and be digitally tagged.

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US standards and frameworks (proposed)
US Securities Exchange Commission (SEC) proposed an Enhancement andStandardization of Climate-Related Disclosures.
Applies to large accelerated and accelerated filers first with coverage
expected to expand.
Proposed disclosures will:• Have a climate focus, closely aligned to TCFD.
• Be aimed at the needs of investors.
• Disclose climate risk and opportunities and GHG emissions (incl. phase inof scope 3 where relevant), intensity metrics and targets.
External assurance on Scope 1 and 2 emissions required for larger
businesses.
Where must disclosures be made?
••Sustainability disclosures must be included in registration statements and annual
reporting i.e., Form 10-K, and must be digitally tagged.
Certain climate-related financial metrics required within a company’s consolidated
financial statements.

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Voluntary frameworks and standards• PAS 2060 Carbon Neutrality• PAS 2080 Carbon management forthe built environment• ISO 14001• ISO 14064• Coming soon…ISO 14068
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Summary: what we have covered
A range of current and new sustainability reporting frameworks
Which businesses these apply to and by when
What the reporting requirements areCompliance with multiple frameworks

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What can my business do to prepare?
• Evaluate mandatory reporting requirements based on
jurisdiction, your sector and supplier requirements.
– When and when you are required to comply will depend on your business (size,location, sector).

• Consider voluntary disclosures that may benefit your business(and tie in with mandatory reporting).
• Carry out a gap analysis well ahead of inaugural reporting
deadlines to ensure preparedness.
Never too soon to prepare – data availability is achallenge, monitoring this now will save headaches
in the future.

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Questions?
Zoe Rudge
Senior Environmental Consultant
Carbon Footprint Ltd
zoe.rudge@carbonfootprint.com
01256 592599

SBN –Carbon Footprint Ltd© Carbon Footprint Ltd 2023

A Case Study on
Implementing the TCFD

Sustainable Business Network© De La Rue International Limited 2023 ℓ Confidential
CONFIDENTIAL

Who we are
De La Rue provides governments andcommercial organisations with products andservices that underpin the integrity of tradeand personal identity and the movement ofgoods.
De La Rue Currency provides market-leading
end-to-end currency solutions to over half
the central banks and issuing authorities
around the world.
Our Authentication solutions are reliable,
adaptable, and rapid to implement to protect
revenue and reputations.
De La Rue is a FTSE listed company and ouremployees are spread across 22 countries.

© De La Rue International Limited 2023 ℓ Confidential
CONFIDENTIAL

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Our Sustainability Journey
UK sites certified toISO 14001 (2003)

United Nations
Global Compact
Signatory (2015)

First TCFD reportpublished (2022)

Current

2000

Net Zero target andtransition planningFirst CDP
Disclosure (2010)
Scope 1 and 2emissions reporting(2002)

Committed tosetting an SBTitarget (2021)© De La Rue International Limited 2023 ℓ Confidential
CONFIDENTIAL

29

Meeting the TCFD Recommendations
To meet the requirements of listing Rule 9.8.6R, De
La Rue had to meet to the recommendations ofthe Taskforce for Climate Related Financial
Disclosures (TCFD) on a comply or explain basis
from 2022 onwards.
Our first step was to undertake a gap assessment
to evaluate how ready we were for TCFDreporting.

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CONFIDENTIAL

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TCFD ReadinessGovernanceStrongly aligned with minimal adoption required
Review of how well climate-related issues are integrated into the governance structure

Strategy

Weakly aligned with major adoption needed

Climate scenario analysis

Risk

Strongly aligned with minor adjustments

Management

Aligning with our CDP responses

Metrics andTargets

Partially aligned with greater emphasis needed on short, medium, and long term targets
Near-term science-based target submission© De La Rue International Limited 2023 ℓ ConfidentialCONFIDENTIAL

31Our key Strengths for TCFD Readiness010202STRONG
GOVERNANCESTRUCTURE

WELLINTEGRATEDENTERPRISE RISKMANAGEMENT

0303
CDP DISCLOSURE
EXPERIENCE© De La Rue International Limited 2023 ℓ Confidential
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Climate Scenario Analysis

ADOPTIONREQUIRED TO
MEET TCFDREQUIREMENTS.

DESIGNING MOSTAPPROPRIATESCENARIOANALYSIS TOOKTIME ANDCONSIDERATION.

CLIMATESCENARIOWORKSHOP WITHSENIORSTAKEHOLDERS.

INTEGRATING
CLIMATE RISKMANAGEMENTPROCESSES INTO
CURRENTFRAMEWORK.

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Learning Lessons− TCFD promotes internal
thinking to improve externalreporting.
− Realistic scoping for
scenario analysis.
− Bring in experts across thebusiness.
− There is already more
information than you think.

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New Reporting Frameworks
De La Rue will have comply with the Corporate
Sustainability Reporting Standard (CSRD) andInternational Sustainability Standards Board’s(ISSB) S1 and S2.
Meeting the TCFD recommendations have
improved our readiness to report against thesenew standards.
Readiness is not limited to the ESG team.

© De La Rue International Limited 2023 ℓ Confidential
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