2. MINIMUM REPORTING REQUIREMENTS - OVERVIEW
Overview of Requirements
From Financial Year 2011-12, all relevant bodies are encouraged to produce a 'Scottish Public Sector Sustainability Report' including:
- A simple overview commentary covering a body's performance in the reported year along with an overview of forward plans; and
- A 'Sustainability Report' essentially comprising a table of financial and non-financial information covering the organisation's emissions 3, waste, water and any other finite-resource consumption for the financial year to which it relates. An illustrative format for the table, and guidance supporting its population, are included within this Guidance. Bodies are encouraged to consider where they are already gathering environmental management data for other purposes that could also be used to populate the Sustainability Report to avoid unnecessary duplication of effort. Reports should be based on gross emissions; data related to any self-generated energy or the deployment of renewable energy should be reported separately - Section 3 offers advice on the suggested format.
The key principles of such reporting are that it should provide both transparency, in terms of clarity and openness, and consistency for comparative purposes.
1. The following table provides an overview of the minimum requirements in each of the main reporting areas:
Greenhouse Gas Emissions
Scope 1 (Direct) GHG Emissions
All Scope 1 emissions (in tonnes of carbon dioxide equivalent) should be accounted for. These occur from sources owned or controlled by the organisation. Examples include emissions as a result of combustion in boilers owned or controlled by the organisation, and emissions from organisation-owned fleet vehicles (including vehicles on finance leases). An analysis of related gas consumption, in kWh, should also be included.
Gross expenditure on the purchase of energy, expenditure on the Carbon Reduction Commitment Energy Efficiency Scheme (referred to as the CRC), total expenditure on official business travel and expenditure on reported areas of energy use
Scope 2 (Energy Indirect) GHG Emissions
All Scope 2 emissions (in tonnes of carbon dioxide equivalent) should be accounted for. These result from energy consumed which is supplied by another party. For example, electricity supply in buildings or outstations. They also include purchased heat, steam and cooling. An analysis of related energy consumption, in kWh, should also be included.
Scope 3 Official Business Travel GHG Emissions.
Scope 3 emissions relating to official business travel directly paid for by an organisation ( i.e. not business travel re-charged by contractors) should be accounted for.
Waste minimisation and management
The minimum requirement is to report absolute values for (in tonnes) (administrative and operational, including construction) waste produced by the organisation against the following categories;
(a) total waste arising, (b) waste sent to landfill ( e.g. residual waste), (c) waste recycled / reused (recycled, composted, internal or external re-used), and (d) waste incinerated / energy from waste ( e.g. food waste)
Total expenditure on waste disposal. (incl. waste disposal contracts, specialist waste arising and the purchase of any licenses for waste) and expenditure against each of the additional three categories (b) to (d) opposite.
As a minimum, public sector bodies should report on water consumption in cubic metres. Public sector bodies should also consider which, if any, other finite resources use is material and report on consumption.
Total expenditure on purchase of related finite resources including purchase of licenses.
Action on Biodiversity
The commentary section should describe measures taken to meet the statutory duty on public bodies to further the conservation of biodiversity when performing their functions under the Nature Conservation (Scotland) Act 2004
The commentary should explain progress in achieving more sustainable procurement methods
2. Expenditure information should be collected through normal financial systems developing the chart of accounts coding to ensure clarity of cost capture in alignment with audited year-end financial accounts. This will also provide internal visibility for in-year monitoring purposes and will assist in development of any future performance management targets in expenditure areas.
Non-Financial Reporting Requirements
3. The minimum suggested non-financial reporting requirements are detailed in the table above. In the case of greenhouse gases, emissions are defined under three different scopes by the Greenhouse Gas ( GHG) Protocol ( www.ghgprotocol.org). These scopes are explained more fully later in this guidance.
4. In meeting these requirements, organisations should, wherever possible, make use of their normal accounting and environmental management systems to regularise the collection of such information throughout the year. This may require additions / changes to existing systems ( e.g. fields to capture quantitative information, additional subjective codes in financial systems etc.) or processes. These should be identified as early as possible so that the necessary changes can be made to capture the required information.
The Accounting Year
5. All information included in the Sustainability Report, is to conform to the normal public sector financial year of 1 April to 31 March (recognising that carbon budgets under the Climate Change Scotland Act which Scottish Ministers are committed to are based upon individual calendar years). Where possible, the timing of the production of Sustainability Reports should allow for publication alongside Annual Reports and Accounts.
Sustainability Report Format
6. An example of the suggested reporting format, incorporating commentary, is at Example 1 at the end of this section, using data in the Scottish Government's annual report on its own environmental performance in 2009/10. The format has been developed to show the connectivity of the different areas and reporting bodies are strongly encouraged to adopt this as a common format. However, it is not a prescribed pro-forma for reporting and organisations may wish to develop the format further to fit their business providing that the eventual format used covers the minimum information requirements set out in this guidance, namely:
- Greenhouse Gas Emissions;
- Waste minimisation and management;
- Other relevant Finite Resource Consumption.
- Biodiversity conservation measures (commentary overview).
- Sustainable Procurement (commentary overview).
7. It is recognised that there are many other aspects to sustainability that have not been given coverage in the minimum reporting requirements set out in this section. Scottish Government policy is to focus initially on reporting environmental performance to support sustainability, with a move to other areas such as social factors, and the potential inclusion of wider policy impacts in the longer term. However, where information is available, organisations may wish to add additional sections to the report to include other aspects of sustainability performance appropriate to their circumstances, and are encouraged to do so.
8. It is considered good practice to enable the comparison of historical data. It is therefore suggested that data for at least the previous 3 prior years should be included where possible as it becomes available following the introduction of these requirements.
9. The report should include a brief commentary which explains performance in terms of any relevant key performance indicators ( KPIs), direct impacts and indirect impacts. This should discuss trends and the organisation's strategic role in improving performance.
10. Notes should be included at the bottom of the Sustainability Report to briefly disclose any changes in policies and boundaries (with a pointer to the organisation's website page containing more detail where relevant) and any other information including publications, which will provide clarity to the reader of the report.
Sustainability Report Length
11. It is imperative that Scottish Public Sector Sustainability reports do not become overly burdensome either to the reporting body or the reader. Organisations should therefore ensure that the report is concise and clear in its delivery and uses data otherwise available where appropriate. Where possible, narrative should refer the reader to relevant areas of the Annual Report or the organisation's website if relevant performance is already covered there, and to any other relevant publications.
Performance Improvement and Target Setting
12. The purpose of the suggested reporting format is to encourage Scottish public sector organisations to improve their performance on sustainability issues and to report on their performance in an easily understandable way. While the Scottish Government has set a range of environmental and sustainability performance targets for its own performance and a number of public sector organisations already have their own sustainability targets against which they report, this guidance does not cover advice on the setting of targets (often referred to as key performance indicators - KPIs - or measures).
13. The Scottish Government is currently considering target-setting policy, starting with a review of our own targets. Pending the development of target setting policy, bodies are advised to consult Defra guidelines developed to help the private and public sector identify and set suitable targets and KPIs. Further details can be found at: http://www.defra.gov.uk/environment/economy/business-efficiency/reporting/
Reporting Performance against Targets
14. For all bodies, where relevant targets have been set, performance against them should, where possible, be included in the Sustainability Report, having regard to the principle of keeping reports concise. If performance against targets has already been published elsewhere an overview of performance with a link to the detailed information is acceptable. The commentary should be clear as to whether performance is improving or worsening, and not assume that the reader will understand the reporting metrics used.
15. Where available, organisations should provide prior-year data ( e.g. three years, as reported information becomes available) to provide a historical perspective of performance against targets. Where a base year is used as a basis of target setting and performance monitoring, the base-year data should be updated and reported in line with changes in accounting policies and boundaries. When material changes occur, the prior-year figure reported for comparative purposes should also be updated with an explanation being provided in the notes (see below). Where possible, the organisation should also compare performance against other benchmarks, such as similar organisations' performance.
Normalising Reported Performance
16. To enable comparisons to be made in performance between years and between organisations, all reports should include details of performance normalised by the organisation's total financial outturn (administration and programme costs) as the minimum ( e.g. carbon emissions per £ expenditure). This will enable a basic review of performance compared to organisation scale.
17. Organisations should also normalise performance results using other methods, which they consider appropriate to aid comparability between years and which are consistent with the presentation of organisations' accounts and any other relevant guidance. This may include, for example, normalisation by Full Time Equivalent ( FTE) staff numbers. It is important that this area is developed by organisations so that a consistent year-to-year method is adhered to in future within a common reporting framework.
The Public Sector Sustainability Reporting Accounting Boundary
18. The national UK approach for reporting entities in central government is that they should include items in sustainability reports for those entities over which they have budgetary control. i.e. to directly match the departmental financial accounting boundary. The principle extends to public bodies where they have one or more subsidiary organisations under their direct control. The financial reporting guidelines which establish the reporting boundaries of Scope 1 and 2 emissions are those that determine whether related assets and liabilities are included in the Statement of Financial Position, (the balance sheet). This includes items attributable to overseas operations.
19. Setting the Public Sector Sustainability Reporting Accounting Boundary in accordance with the financial reporting guidelines will, in most cases, result in reporting for all areas for which the organisation has direct control. However, bodies are encouraged to consider handling where they are engaged in certain other specialised arrangements e.g:
- Outsourcing contracts - e.g. in terms of carbon emissions that could be considered to be Scope 3 (and therefore not part of minimum reporting requirements) but where the scale and nature of the arrangement may make it more appropriate for early inclusion in reports; and
- PPP arrangements, including PFI and NDP contracts
20. For the specialised arrangements outlined above, the financial reporting treatment provides the basis on which these arrangements will be considered on a case-by-case basis. Where there are significant outsourcing contracts that are 'off balance sheet' the reporting of the resultant emissions is encouraged as soon as possible as part of the best practice Scope 3 emissions reporting encouraged under this Guidance, but they should not be treated as Scope 1 or 2 emissions if the financial reporting treatment suggests otherwise.
21. Where an organisation operates overseas it may, if it wishes, segment the report to distinguish Scottish-based impacts from overseas impacts if it believes that this treatment will provide greater clarity. Similarly, emissions related to overseas travel can be distinguished from UK-based travel if so wished. However, the total impact should still be reported.
Availability of Underlying Data: Material Omissions and use of Estimates
22. Where information is not available to populate the minimum reporting requirements estimates should be given using a clear, documented methodology. A note should be made at the bottom of the Sustainability Report to explain where estimates have been included, and what plans are in place to improve data collection.
23. Where a robust estimate is not possible, and a material omission of information or data results, an explanatory note should be made at the bottom of the Sustainability Report, and it should explain what plans are in place to improve data collection.
24. The methodology for estimates will be left to the discretion of the reporting entity to ensure that it is able to use that which is most appropriate. Guidance and advice on estimating carbon emissions has been published by Defra and can be found at http://www.defra.gov.uk/environment/economy/business-efficiency/reporting/
Changes to Reporting, Accounting Policies and Organisational Boundaries
25. Changes to accounting policies or boundaries which have a material impact on the way emissions, waste and/or finite resources are reported, or on their method of calculation, should be brought to the attention of the reader by way of a footnote with a link to a more detailed explanation on the organisation's website. Organisations should also state their policy for re-base lining any reported information.
26. When amended, prior-year figures should, where possible, be re-stated using the new policy or boundary for comparative purposes.
Amending Prior-Period Figures
27. Occasionally, factors may come to light, such as errors of omission or calculation, which will result in a material change to published prior-year figures. In such circumstances, the prior-period figures should be restated and the nature of the change brought to the attention of the reader by way of a note at the bottom of the Sustainability Report, with a link to a more detailed explanation on the organisation's website.
Application of the Materiality Concept
28. Organisations should account for all of the minimum requirements with as much accuracy as possible. The materiality concept should only be applied to decisions on reporting or amendments to reporting in relation to providing a 'fairly stated' view of the information for the reader. Where there is some concern that data is incomplete a note should be made at the bottom of the Sustainability Report, with a link to a more detailed explanation on the organisation's website.
29. Where a reporting entity shares a service or a facility with another organisation, consideration should be given as to whether, and how, shared sustainability data should be split in relation to the different accounting boundaries. Where this relates to two or more public sector organisations the method should be agreed with all relevant parties ( e.g. third-party service / facility providers) to ensure consistency, and the agreed method should be properly documented for audit purposes.
30. Rather than disaggregating data relating to individual organisations' impacts, organisations sharing a service or facility may choose to report total figures related to the shared service. In these circumstances organisations will be expected to include a statement of their joint responsibilities in relation to emissions or other impacts related to the shared service and facility, and steps which they are taking to minimise or reduce related emissions, impacts and / or costs. However, where impact between the different organisations is considered by them to be material, steps should be taken to ensure that actual consumption can be measured for each organisation and costs properly attributed.
Information provided by Third Parties
31. Third parties often provide required information for sustainability reporting including:
- Travel providers for carbon data related to travel sourced through them;
- Waste Contractors providing details of waste; and
- Water and energy suppliers will provide much of the information used for the reporting of finite resources.
32. Public Sector organisations making use of such information should ensure that it has been calculated in accordance with the requirements of this guidance. They should also ensure that it is of sufficient quality to meet any audit requirements.
33. It is recognised that, for large contracting organisations, the capture of sustainability information from contractors may present difficulties. Where gaps in information exist as a result, these should be recognised in the commentary along with proposals for bridging the gap in future.
Audit and Scrutiny
34. It is important that organisations introduce internal arrangements to assure themselves about the data quality of figures and information reported in sustainability reports. Internal arrangements should include:
- Appropriate policies and procedures for recording and reporting data, which are consistent with the guidance on minimum requirements, and are applied in practice;
- Appropriate systems and processes to secure the quality of the data, minimising manual intervention and the number of data sources;
- Arrangements to ensure that relevant staff have the skills to produce reliable sustainability information; and
- A robust system of internal control and validation.
Examples of Sustainability Reports already implemented
35. Members of the HMT Sustainability Working Group have been trialling sustainability reporting in their own organisations in line with the same principles as those being introduced for Scottish public bodies. Examples can be found by looking at the annual report and accounts of the following organisations using the links below. Examples of reporting styles can also be found in Annex F