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ACCA Strategic Professional · Advanced Performance Management · Sustainability

Orchid Retail's board links 20% of executive bonuses to a carbon-intensity target and wishes to report this in its integrated report with credible data. The company currently collects emissions data manually in spreadsheets once a year. Which action would most improve the reliability and usefulness of the reported data for both the bonus scheme and external reporting?

Automated data capture with strong internal controls and independent assurance is best. When pay depends on a non-financial metric, the data must be accurate, timely and verifiable, otherwise managers may manipulate it and external users will not trust the reported figure.

  1. AImplement automated, system-based data capture with internal controls and obtain independent assurance over the reported metricCorrect
  2. BReplace the carbon target with a narrative statement of intent
  3. CEstimate emissions from prior-year figures adjusted for revenue growth
  4. DReport emissions only in the remuneration report and not in other sections

Explanation

Reward linked to a non-financial metric creates incentive to manipulate it, so data must be accurate, timely and verifiable. Automated capture with controls and independent assurance supports reliability. Estimating from revenue growth does not measure actual performance and weakens the link to behaviour; narrative removes accountability.

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