Carbon emission repor in two companies Essay Example

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Carbon Emission Report


Due to the damages caused by the greenhouse gas (GHG), it has become vital to monitor the amount of CHG being released into the atmosphere. Companies have started looking for means in which they can reduce their carbon foot print and monitor it (Boiral, 2006). This has led to carbon accounting services being sought by the firms as they comply with the set emission guidelines. Companies have been using environmental accounting as tools for environmental accounting. Environmental accounting has competitive advantages, internal benefits, and external benefits and makes it possible to address competitive risks (Sullivan, 2009). Firms utilises environmental accounting for voluntary disclosure. This is due to the investors, customers, employees, legal liabilities and regulatory interference (Bebbington and Larrinaga-Gonzalez, 2008). This report compares two firms on environmental accounting which are Nyrstar which is an integrated mining firm with its headquarters in Balen Belgium and Agnico Eagle a Canadian based mining company. This is through comparing how the companies measure, disclose and accounts for their carbon emissions and greenhouse related activities based on their reporting years. The report discusses the specific motivations of the two companies to successfully improve their reporting quality.

Environmental accounting

Environmental protection has become a global issue which makes it prudent for the management to focus their attention in GHG reduction, use biodegradable products, manage resources efficiently, and have more control on their pollution. Environmental accounting has been able to draw attention on the expenses and revenue. The firm is able to identify the cost of their environmental conservation and the benefits gained from such activities. The corporate is able to know whether they are discharging their environmental duties appropriately. Companies also face pressure from the stakeholders, shareholders and customers on environmental health. The information provided through environmental accounting helps in strict control of the environmental costs, environmental protection and attracting customers. Firms which are able to uphold environmental health are able to gain more customers. This is due to rising demand for environmental friendly products in the market (Romm, 2006). When a firm fails to comply with environmental accounting, they risk damaging their reputation and rank low in good publicity (Prado-Lorenzo et al., 2009).

International benchmarks

The environmental accounting used is expected to be consistent with both local and international levels. There are local benchmarks and international benchmarks used. The Canadian benchmarks include Canadian Environmental Protection Act (CEPA) and the Specific Gas Emitter Regulations based on the Alberta climate change and Emissions Management Act (ACCEM). In Belgium, the bench marks include, Belgian Federal Public Service of Health, Food Chain Safety and Environment, Inter-ministerial Conference for Environment and the Committee for Co-ordination of the International Environmental Policy (IEP) (Eyckmans, and Rousseau, 2009). These national benchmarks work to implement Kyoto protocol. Based on the United Nations Framework Convention on Climate Change (UNFCCC), there is need to ensure that greenhouse gas released in the environment does not interfere with the climate system. The Kyoto protocol has been used to set targets for six types of GHG with most focus being on carbon dioxide which is a major contributor to climate change (Springer, 2003). Each country has a set target based on the Kyoto protocol for the GHG reduction. Kyoto protocol is legally binding and goes beyond the voluntary emission controls. Each of the individual nations involved in the treaty has their target which is different. Through use of flexible provisions, countries are able to meet their targets through the lowest costs. There are three mechanisms which the protocol works in the countries. These are; removing carbon dioxide from the atmosphere, clean development mechanism and emission trading. Canada committed to reduction of their 1990s level of carbon by 6% in 2008-12 in the first phase. For most companies, reducing carbon emissions has been a major step in helping the countries reaches the targets. Canada and Belgium belongs to annex B countries based on the Kyoto protocol. This involves the industrialised nations as well as countries in central and Eastern Europe committed to emission reduction (Freestone and Streck, 2005).

Accounting treatments

Based on accounting, the specific nature of emission rights makes them hard to be covered by the literal accounting definitions (Schaltegger and Burritt, 2000). In Canada, the emission rights are defined as assets. This is due to fact that they are resources which are controlled based on past events and has future economic benefits which will flow into the entity. Despite this, they are not under any asset category. They are outside the financial instruments, intangible assets and are not inventory of the physical commodities. Based on the polluter pays principle, the GHG emitting firms incur new production costs for goods and services (Larrinaga-Gonzalez and Bebbington, 2001). Despite this, the company does not pat directly to the state hence they are not like taxes. This has made the emissions accounting to be managed as a new type of commodity used in the production process. This has made the emission rights to be booked on the inventory accounts. A liability is entered in case the company emits GHG which it has not previously paid for. Based on the IFRS, the emission rights are measured at a fair value and less the cost to sell (Fornaro, Winkelman, and Glodstein, 2009).

The global accounting diversity leads to diverse accounting practices for GHG emissions. Belgium is based in the EU and uses the IFRS system of accounting. Emission rights were issued in 2003 by the IFRIC. The emission rights which were later released in 2004 contained the following (Csutora and Kerekes, 2011).

  • Emission rights should be treated as intangible asset

  • Purchased allowances are recorded at cost

  • Netting of assets and liabilities based on the emissions is not allowed.

Despite this, there is still poor comparability on the global firms which has led to questionable relevance on the emission information (Brown and Ulgiati, 2004). The attempts by the FASB and IASB to come up with a definitive accounting guidance have not been very successful due to diverse accounting practices. Working together, FASB and IASB has been examining the accounting issues and coming up with mechanisms to limit emissions (Fornaro, Winkelman, and Glodstein, 2009).

Case study of Nyrstar and Agnico Eagle

Agnico Eagle is a Canadian based mining company with a leading role in the production of gold. The company has mines in Canada, Finland, Mexico as well as exploration activities in United States. The company was started in 1957 with its name standing for silver, nickel and cobalt. The company changed its name to Agnico eagle mines in 2013. The company has been committed to environmental protection. The company has been very active in saving energy.

Nyrstar is an integrated mining firm with its headquarters in Balen Belgium. The company mining specialises on zinc and has its smelting operations located in Europe, China, Americas and Australia. The company has been highly committed to the environmental sustainability as shown by its policy. The company environmental management system is certified as ISO14001 (Nyrstar 2015).


Mining and smelting sites requires a lot of energy in their operations. The companies have invested in the renewable energy and low carbon energy sources. The risks associated with the carbon emissions are very vital to their business (Bebbington and Larrinaga-Gonzalez, 2008).

Agnico emission intensity in 2013 was 0.0285 tonnes which was a 3% reduction from the 2012 levels. The 2012 levels were 0.0293 tonnes. The company has been making their carbon disclosures to the carbon disclosure project. The first disclosure was in 2007 and the firm is committed to annual disclosures. In 2011, the emission levels were 0.024, and in following years, it was 0.029 in 2012, and 0.029 in 2013 based on 0.026 targets of 2014. The firm has been setting its targets based on the best two of the last three years performance (Agnico Eagle 2013).

Agnico: according to Yr. 2014 report, Agnico calculates both direct and indirect greenhouse gas on a monthly basis. The 2014 emissions intensity was 0.020 tonnes of CO2 per equivalent tonne. This was better than the set target of 0.026. In 2014, the company total GHG increased to 381,215 tonnes of CO2 from all sources. This was an 8% increase from 2013 levels. The company attributed this to opening of Goldex mine and La India Mine. Increase in tonnage led to equivalent GHG intensity decrease by 28% (Agnico Eagle 2014).

Nyrstar: Nyrstar has been able to disclose all environmental incidents that have occurred each year. The company GHG emissions in 2014 fell by 6% to 2.38 million tons of CO2. The company was also able to reduce their GHG emission intensity from the smelters through an improvement of 7% based on 2013 levels. The company does not use internal price of carbon. The company also ensures that their goods and services enable emissions to be avoided by the third party (Nyrstar 2014).


In order to make the firm budget, it is important to consider all costs incurred and capital inflows. This leads to the need for climate measurement. The GHG emissions are supposed to measured based on the intensity considering both direct and indirect emissions. The scope of measurement used is based on the purpose (Fornaro, Winkelman, and Glodstein, 2009).

Agnico has categorised their emissions releasing activities into the three scopes. This involves direct emissions, energy indirect and other indirect. The reporting is done giving the total emissions. In year 2014 Agnico emissions intensity was 0.020 tonnes of CO2 per equivalent tonne (Agnico Eagle 2015). The company total GHG increased to 381,215 tonnes of CO2 from all sources. The opening of Goldex mine and La India Mine led to the increase (Agnico Eagle 2014).

Nyrstar reporting is based on scope 1, 2 and 3. Total GHG emissions from 3 scopes in 2014 fell by 6% to 2.38 million tons of CO2 (Nyrstar 2014). Nyrstar was also able to reduce their GHG emission intensity from the smelters through an improvement of 7% based on 2013 levels (Nyrstar 2014).


For Agnico, the company was able to decrease their carbon emissions from the previous levels. The Company has been using a target set based on the best last three years of performance. The 2013 emissions were 1% less 2014 emissions despite being short on the target. The 2014 performance was better than 2013 (Agnico Eagle 2014). It was a great improvement from the 2013 performance of 0.029 (Nyrstar, 2014). Nyrstar was able to reduce their emissions in 2014 by 6%. The efficiency from the smelters was improved by 7% on Yr. 2013-14. Despite this, Nyrstar does not disclose much information as Agnico Eagle (Nyrstar 2015).


Agnico has been setting targets for the GHG emissions. The targets are both long term and short term based on the performance if the previous years. The company calculates their greenhouse gases on a monthly basis and reporting is done annually to the CDP. In each of the reporting year, Agnico has an active GHG intensity target. The target uses a base year and target year. In 2014, the target intensity was 0.026 against the 2013 intensity which was at 0.029. This represented a 10% reduction (Agnico Eagle 2013). The company targets are set based on the performance of the previous three years. According to Agnico, the 2014 emission intensity was 0.020 tonnes of Cos per tonne. This was much better and an improvement from 2013 performance of 0.029 (Agnico Eagle 2014). In the case of Nyrstar, the company has been very committed in carbon reduction. The company does not have an emission reduction target during their reporting years unlike Agnico. The company claims that their energy mix is highly influenced by the structural arrangements which they have little control hence it is made to have a group emission targets. The company uses an overall GHG reduction objective (Nyrstar 2015).


Agnico has been utilising several initiaves aimed at saving CO2 hence reducing the GHG emissions. The company has been using recycled heat from power generation at the Meadow bank site. This is through an implementation of an energy dashboard. The project is estimated to save an annual 5000 metric tonnes of CO2. This is a voluntary project that is on-going (Agnico-Eagle, 2015). Nyrstar has been using the financial optimisation calculations. This is an investment in emission reduction activities which are assessed through the same process as the capital investments (Nyrstar, 2015).

Comparing the two firms, Agnico has been has been able to set targets and achieve them. In the case of Nyrstar, the company has not utilised any target. The company utilises an overall objective in reducing emissions.


Both firms should increase their commitment to environmental sustainability. The company should commit themselves to using the same accounting standards to ensure that there is ease of comparability and consistency. This is due to fact that this will have a positive impact for both firms and stakeholders. The new standards being set by FASB and IASB should be followed by the firm. Nyrstar should start setting targets for them to be comparable with Agnico and enhance their GHG reduction goals.


To sum up, GHG emissions have gained a lot of attention in firms. This has made it vital for them to come up with an emission scheme with an aim of setting up reduction targets. The main challenge faced by the firms is accounting and measurements. The accountings for emissions are treated differently based on the accounting standard in use. The accounting standards differ in both local and international level. The firms use the accounting standards based on their jurisdiction. The analysis shows that Agnico has a great GHG emission reduction scheme compared to Nyrstar. Agnico has succeeded in setting the targets to reduce emissions while Nyrstar have not.


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