In brief: XBRL taxonomy and the implications for climate change reporting

eXtensible Business Reporting Language, or XBRL as it is more commonly known, is about to transform the way companies report their climate change information.

XBRL is already widely used for financial reporting in the United States, where it is mandated by the Securities and Exchange Commission (SEC) and in the UK where company accounts and tax returns must be submitted in XBRL electronic format. Now CDP and the Climate Disclosure Standards Board (CDSB) are working with a number of organizations to harness this technology and create an XBRL climate change reporting taxonomy. This will make climate disclosure easier and more streamlined for companies.

Together with CDP’s transformative system and CDSB’s climate change reporting framework we will provide a comprehensive toolkit for standardized, investor-quality climate change disclosure.

"The climate change reporting taxonomy will further enhance the great work being done by the Carbon Disclosure Project to encourage companies to be more transparent in their carbon reporting. The taxonomy will make this important information easier to analyze by investors, academics, and the companies themselves, enabling them to easily benchmark and improve their performance."

— Robert G. Eccles, Professor of Management Practice, Harvard Business School

 

 What advantages will the climate change reporting taxonomy provide?

 
  • Improve the way companies report their climate change data;
  • Reduce the administrative costs of carbon emissions disclosure;
  • Improve the comparability, usability and consequent value of emissions reporting;
  • Prepare businesses for future reporting requirements, such as integrated reporting;
  • Help CFOs, sustainability experts, stakeholders, investors and other users of mainstream financial reports to access climate change data faster and with more ease;
  • Enable organizations to fully capitalize on the commercial opportunities presented by sustainable management and strategy.
 

 What is XBRL and the climate change reporting taxonomy?

 

XBRL is an electronic language of the 'XML' family that enables computers to tag and recognize information in a comprehensive and standardized way across business systems. The climate change taxonomy will classify the data processed through XBRL. It is based on the CDP system and CDSB’s climate change reporting framework and will improve the communication and dissemination of information.

 

 Who will be able to use it?

 

Any organization that files, collates or collects financial data including companies, governments, regulators, economic agencies and stock exchanges can benefit from using XBRL. Many already do. The development of the new climate change reporting taxonomy will deliver real-time information to these organizations and package it into a standardized format.

Designed to help meet the increasing demand for carbon emissions data, the taxonomy will assist all those involved in the reporting and analysis of corporate climate change information: accountants, auditors, managers, financial analysts, investors, corporate responsibility departments and anybody from the sustainability sector.

 

 How will it impact the way companies disclose through CDP?

 

Once fully tested and developed, we intend to accept XBRL disclosures based on the climate change reporting taxonomy. Companies that adopt this once it has been developed will be able to continue to use systems they are familiar with for coming years. Users will recognize more efficiency in business practices:

  • Reduced mechanical data entry;
  • Eliminated entry errors;
  • Easy comparisons against external data; and
  • Greater transparency.

We are currently looking at the implications of the taxonomy for our systems and have no plans to discontinue CDP’s current online response system. We are still investigating the most appropriate mechanism for companies to file through CDP using XBRL.

CDP CDSB
Fujitsu XBRL
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