the climate change organisation - The Climate Group [PDF]

THE CLIMATE CHANGE ORGANISATION t/a

Annual Report and Accounts 2011/12 12 months to 30 June 2012

COMPANY NUMBER: 4964424 CHARITY NUMBER: 1102909

Board of Trustees’ Report Contents Chairman’s message ................................................................................................................ Chief Executive’s message ......................................................................................................

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Who we are ............................................................................................................................... Why we are here ........................................................................................................................

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How we work ............................................................................................................................. Our partners ...............................................................................................................................

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What we do ...............................................................................................................................

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Our organisational aims: The Clean Revolution Initiative .......................................................... Work plan for 2011/12 ................................................................................................................

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Key achievements 2011/12 ........................................................................................................ What we will do in 2012/13 ........................................................................................................

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Structure, governance and management.................................................................................... UK Board, management team and advisers ...............................................................................

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Financial results ..........................................................................................................................

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Financial strategy ....................................................................................................................... Trustees’ responsibilities in relation to the Financial Statements .............................................

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Independent auditor’s report to the Trustees ............................................................................ Consolidated Financial Statements ...........................................................................................

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Notes to the consolidated Financial Statements .......................................................................

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- Annual Report 2011/12

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Chairman’s message In last year’s Chairman’s message I noted that the outlook for dangerous climate was becoming ever more threatening but that the message was not getting through and spurring action to address the climate. Twelve months later – and despite some notable achievements within the business community, important new initiatives from some governments and not insignificant process within the UN climate negotiations – it remains the case that our collective climate actions still fall short of our climate needs. Much of the problem is due to perceptions, or rather misperceptions. Climate action is still seen by too many businesses and political leaders as being all about cost, rather than opportunity. The focus too often is on the perceived short term risks, such as to political poll ratings or quarterly reports, while the very real long term risks are ignored. It is for these reasons that the work of The Climate Group remains as important as ever. By providing a platform to bring leading businesses and governments together and communicating their lowcarbon successes, The Climate Group continues to play a key role in creating the economic and political tipping points we need for solving the climate crisis. As the world continues its slow recovery from recession and financial crisis, the messages that decision makers in business and government need to hear are simple. First, the opportunities from low-carbon growth are huge and need to be seized before it’s too late. Second, most of the clean technology we need already exists – we just need to scale it. And third, climate action is good for people – everywhere. We can distil this to three short phrases: carbon down, growth up and living better. These are the essential pillars of The Climate Group’s Clean Revolution initiative, which continued to grow in strength and influence over the past year. The events that took place in New York and Rio and the various publications, workshops and meetings that were produced or held across the year, helped to keep climate action on political and business agendas. None of this could have happened without dedication of our staff and of course the individuals and organisations that continued to generously support The Climate Group’s programmes during 2011/12. The year ahead looks set to be as busy and as fruitful as the one just past. I look forward to working with Mark and the Board to ensure it is a success for The Climate Group and the Clean Revolution. John R Coomber

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Chief Executive’s message The 2011/12 year was one of highs and lows for climate action around the world. In many key countries and regions the issue continued to be overshadowed by other political priorities. In the US, as the race for the 2012 Presidential election gathered pace, discussion on climate change was conspicuous by its absence. In Europe, the Eurozone crisis continued to dominate cabinet discussions. And in China, the smooth transition in the country’s top leadership team was the paramount political concern. In spite of the challenging politics, progress to address climate change around the world was made. At the UN Climate Conference in Durban, countries agreed to a set of decisions that have put the world on a path to a new global climate treaty by 2015; this treaty should cover all countries and enter into force in 2020. Cleantech investment also reached record levels in the 2011 calendar year, with over $280 billion invested worldwide, led by the US and China. On the other hand, 2011 witnessed record growth in greenhouse gas emissions, underlining the challenges that remain to effective climate action: it is clear that time is running out if we are to keep greenhouse gas emissions at levels consistent with a safe climate that allows continued prosperity. Responding and adapting to these opportunities and challenges has continued to drive The Climate Group’s work. As an organisation we focused on two broad areas of work in 2011/12. First and foremost we launched our Clean Revolution initiative as the overarching umbrella for all our programmes and projects over the next three years, focussing on inspiring and catalysing the leadership we so urgently need. Second, but no less importantly, we began a systematic overhaul of our management systems, including finance, HR and fundraising. Taken together, these have, I believe, made The Climate Group a fitter, leaner and more focused organisation. There is much to be proud of from the last year as a result of the hard work of our staff and our joint initiatives with our corporate, government and other partners. Highlights include our annual Climate Week New York events where we presented the Clean Revolution initiative for the first time and the official launch of the initiative to the wider business and governmental community at the Rio Earth Summit in June. These events were estimated to have reached some 550 million people globally. In addition, we produced influential reports on leadership by subnational governments, ICT-based sustainability solutions for city governments; electric vehicle procurement and scaling up efficient lighting; all were presented to key decision-makers in each sector. Our successful low carbon lighting work continued in India, with, Kolkata committing to scale up its pilot to over 100,000 luminaires and on-going work to create broader policy frameworks in West Bengal and Odisha. Both New York City and Sydney have also committed to scale up LED lighting as a result of our pilots. In China we started pioneering work on low carbon urban development and climate financing, both of which have attracted considerable attention from both the national and local governments and the private sector. None of this would of course be possible without the generosity of our funders. Central to our work over the coming year and beyond will be our growing network of Clean Revolution Ambassadors. I was delighted to welcome our first Ambassadors in 2011/12. Prince Albert of Monaco, former World Bank climate advisor Andrew Steer, entrepreneur Niklas Zennström and Indian industrialist Tulsi Tanti; are all outstanding examples of individuals who have been at the forefront of tackling climate change. Working with such leaders is what makes The Climate Group unique. By creating a tipping point amongst the world’s leading decision makers and opinions formers I know that The Clean Revolution can make the change we all need happen. Mark Kenber

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Who we are “This year the human population will exceed 7 billion. The only path to alleviate poverty, avert dangerous climate change and ensure sustainable development is to ensure that modern energy is made available to all, and that it is provided as cleanly as possible.” – Ban Ki-moon, Secretary General, United Nations

Climate change is undoubtedly the greatest risk to us all in the future, especially in developing countries where those least able to protect themselves will be worst affected through increased poverty, as well as a range of other detrimental social and economic impacts.To avoid this, by 2050, we need to reduce carbon emissions by around 80% of today's level. This target cannot be credibly met unless world emissions of greenhouse gases peak before 2020 and start rapidly to decline thereafter. “Climate change is for real. We have just a small window of opportunity and it is closing rather rapidly. There is not a moment to lose.” — Dr Rajendra Pachauri, Chairman of the IPCC

At The Climate Change Organisation (trading as The Climate Group), we know that time is running out. Our appreciation of this urgency makes our approach different to other environmental charities. Our approach is to engage leaders in government, business and public life who can reduce emissions by the largest amounts in the shortest timeframes. We inspire leaders by communicating a compelling narrative for change; we equip them by delivering evidence of success; and work in partnership with them in driving transformative change. We were founded in London in 2004 and currently employ 48 staff in Europe, North America, Australia, China and India; with the majority of our staff based in our London headquarters. Our regional offices have separate legal status. Governing boards are in place for all of our regional operations. Our International Leadership Council of high profile business and government leaders, chaired by the Rt. Hon. Tony Blair, helps us to gain access to high level networks, advises us on strategy and provides visible support to our major initiatives.

Public Benefit We take full account of the Charity Commission’s general guidance on public benefit to ensure that our work programmes contribute to our charitable objects and aims. Our objectives - set out in our governing document - are: To promote for the benefit of the public the protection of the world’s climate systems in such parts of the world and by such charitable means as the Trustees may from time to time think fit. To advance the education of the public and interested parties in the effective reduction of greenhouse gases and to promote and carry out for the public benefit research into the effects of climate change and to publish and widely disseminate the useful results of such research.

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Why we are here Other environmental NGOs, many of whom are our partners, make their own important contribution towards tackling global warming, for example working with the general public to raise awareness of energy efficiency and behavioural change in the home. Uniquely, The Climate Group has chosen to concentrate its work and resources on scaling up leadership, because we know that a small community of influential leaders in the world have the power to make transformational action to tackle carbon emissions a reality before the 2015 deadline. If we can create fundamental change this decade in how we run our businesses and governments, by inspiring these individuals to provide leadership, the 2050 target to reduce carbon emissions by 80% is still achievable. Currently, there are pockets of strong climate leadership – but not at the scale required. We need to speed up the pace at which world leaders are committing to a low carbon world. This is why we are here. It takes courage to lead any change, so our role is to support leaders on their path. We bring top leaders together and arm them with the evidence and tools they need to give them the confidence to make brave decisions. We create opportunities for leaders to work collaboratively on more risky transformational action at opportune times – programmes that can have transformational economic, social and environmental outcomes for our communities. These white lights have changed the way my little business used to be under the street lights every evening. Earlier anything and everything would look yellow in colour resulting into a decreased purchasing interest among buyers, but now that a buyer can clearly differentiate between a green and blue, my sales figures have gone higher.”

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- Gobind Saha, 61, owner of a roadside stall at Rabindra Sarani (India) is a 1 beneficiary of our global LightSavers project which piloted LED lighting in ten cities around the world. The project proved their viability as a cost effective, carbon reducing measure that can also bring significant economic and social benefits for some of the most vulnerable communities in the developing world.

Through our transformational projects, delivered together with a range of partners, we are also able to help provide a range of social and economic benefits to local communities, for example giving them access to cheaper energy or creating employment opportunities. Where we are successful with these programmes, we are able to communicate these successes and models of delivery to other leaders in our network around the globe, scaling up what initially would have been a small scale and modest project to an initiative that has a game-changing impact on our ability to mitigate climate change by 2050.

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Developed by and used under license from the Toronto Atmospheric Fund

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How we work All our work is guided by four core principles: Climate change is an economic issue not just an environmental concern. Government and business leaders are sensitive to moral imperatives, but they respond best to clear messages and proposals that combine economic, social and environmental benefits. Leaders also respond better to approaches that enrol and involve people. So we present solutions professionally and in business terms, making the economic case for their implementation. A small community has a big influence. A small number of organisations have a huge influence on the future economy and its carbon intensity. If the 200 sector-leading global companies, 50 leading governments (national, regional and city), and most influential individuals within these organisations – CEOs, political leaders, ministers, governors, mayors, senior executives and advisers pursue the economic, strategic, social and environmental benefits of a low carbon future, their actions and commitments can be decisive in making it happen. Partnerships are more effective than organisations acting alone. Our active network of governments, business and other partners enables new, innovative partnerships to generate original, bold and exciting actions for low carbon growth. We look to partner like-minded organisations to ensure that the total of our efforts is greater than the sum of their parts. Clear communication of practical success stories drives action. Information about the science and economics of climate change is extensive, occasionally overwhelming, and often inaccessible to decision and opinion makers. Much can be achieved by presenting case studies and evidence of success in new and compelling ways, and by communicating a positive vision of a low carbon future at the same time as demonstrating that this future is truly achievable.

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Our partners We are a partnership driven and centred organisation. To deliver action on climate change at the scale required, we work with our government and business members – it is their leadership and actions that drives progress. We work with partners to deliver specific projects, events and reports. We also work with non-government organisations (NGOs), where our combined efforts and expertise can drive change forward more quickly. NGOs: The World Bank, Carbon Disclosure Project, United Nations Global Compact, Climate Knowledge Innovation Centre are official partners in our Clean Revolution initiative. We also work with a range of other non-profits and academic organisations in delivery of our programmes worldwide. Philanthropic: Nationale Postcode Loterij, Zennström Philanthropies, Esmée Fairbairn Foundation, The Prince Albert II Monaco Foundation and Tellus Mater Foundation. Government: State of Baden-Württemberg, Government of the Basque Country, State of Bavaria, Region of Brittany, State of California, Government of Catalonia, Region of Île-de-France, Greater London Authority, Region of Jämtland, Province of KwaZulu-Natal, Region of La Reunion, Province of Manitoba, City of New York, State of New York, Government of North Rhine-Westphalia, Province of Ontario, Province of Québec, Government of Quintana Roo, Region of Rhône-Alpes, State of São Paulo, Government of Scotland, State of South Australia, State of Upper Austria, Region of Wallonia, Welsh Assembly Government. Corporate: Arup, Better Place, Bloomberg, British Telecommunications, Broad Group, CB Richard Ellis Group, CECEP, China Mobile, Cisco, CLP Holdings Limited, Coca-Cola, Dell, Deutsche Bank, Duke Energy, En+ Group, GE Capital Finance Australasia Pty Ltd, Goldman Sachs, Greenstone Carbon Management, Hanergy, HP, HSBC, IWC Schaffhausen, Johnson Controls, JP Morgan Chase, Landsea, News Corporation, Nike, Origin Energy, PassivSystems, Philips, Procter & Gamble, Suzlon, Swiss Re, Taobao, VantagePoint Venture Partners, Veolia Environment, Visy. International Leadership Council: We are also honoured to count on the guidance and support of the international leaders that make up The Climate Group’s International Leadership Council (ILC). Chaired by the Rt Hon. Tony Blair the ILC brings together leaders in business and government from around the world, to accelerate global action on climate change and drive low carbon economic transformation. The group meets annually at the World Economic Forum in Davos, Switzerland (for a full list of Council members see page 23). Advisory Board: We work with a small group of experts to help us shape and guide our Clean Revolution Initiative. (see page 24 for a full list).

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What we do We deliver our organisational objectives by highlighting the opportunities presented by leadership in the low carbon economy through: Building coalitions that bring leaders together, bridging sectors and regional boundaries; Developing and delivering, replicable transformational projects that deliver significant carbon savings whilst benefiting local communities. Running media and communications campaigns that heighten awareness, reward action and drive commitment; Organising events, forums and bilateral meetings to share knowledge, remove barriers and facilitate new partnerships; and Producing publications and briefings that demonstrate the benefits and opportunities of increased action; We draw on the progress that our members are making in deploying new technologies, policies, financing mechanisms and business strategies for a low carbon future, and we use our in-house communications expertise to show how these advances can become the new normal. In short, we pinpoint the most influential people in government, business and society. We offer them a credible, positive, politically neutral and inclusive vision of the low carbon future, arm them with hard evidence and success stories and spur them into action so we can reach that tipping point where transformation to a low carbon economy becomes inevitable.

We are fortunate to be beneficiaries of the Nationale Postcode Loterij. Their funding allows us the financial confidence to plan strategically and to respond quickly to breaking news and changes in policy.

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Our organisational aims: The Clean Revolution Initiative Who we are, why we’re here, how we work and what we do, are all encapsulated in the current focus of our work – our three year ‘Clean Revolution’ initiative. The initiative has three aims: a)

To inspire world leaders, by presenting them – through influential ambassadors – with a compelling evidence base for the opportunities of a low carbon future;

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To generate understanding of the key elements of successful low carbon transformation by bringing decision-makers together to share best practice and support each other’s low carbon projects;

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To deliver a set of catalytic low-carbon projects that have the potential to create tipping-points for scaling-up clean technology, financing and partnerships.

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Work plan for 2011/12 During 2011/12 we set out to: 

Present the Clean Revolution initiative during Climate Week NYC 2011 (September 2011).

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Complete the operational plan and communication strategy for a full launch of the Clean Revolution initiative at the June 2012 Rio+20 conference in Brazil.

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Recruit leading international organisations, NGOs and corporations to support the Clean Revolution initiative over three years. Key partnerships where targeted should be in place by the Rio+ 20 conference.

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Recruit 20 Clean Revolution Ambassadors – leading figures from the public and private sectors to act as advocates for the Clean Revolution.

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Develop variations of the Clean Revolution vision to reflect the main opportunities for low carbon growth that exist in different regions of the world.

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Work with our initiative partners to produce a series of powerful case studies which together demonstrate that the actions needed to make a Clean Revolution happen are already being taken by governments and corporations, help identify the key drivers and actions underpinning successful low carbon leadership and can be emulated and scaled up by others.

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Promote the Clean Revolution message, and profile leadership actions to members of our business and government leaders’ network through events, reports, and the Clean Revolution web site. Messaging and case studies will be tailored to the particular opportunities that exist in different regions and will be designed to inspire others to act.

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Monitor, evaluate and report on the initiative’s effectiveness, and refine the initiative plan where necessary.

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Integrate current work streams and staff structure with The Clean Revolution initiative. Work streams that do not have a clear fit with the initiative’s specific objectives and approach will be brought to a managed conclusion or spun off to an alternative institutional home.

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Ensure The Climate Group’s long-term financial stability. In order to do so, we will: o Continue to develop our operational and financial systems to control and manage down cost further and ensure that we deliver maximum value to our funders. o Build our fundraising capacity and capability to increase income streams. o Create a strategic financial model to ensure that the Clean Revolution is fully resourced, and opportunities can be exploited. As part of this, we will increase liquidity to manage down financial risk.

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Key achievements 2011/12 As our 2011/12 objectives indicate, the focus of our work over the past year has been to embed and develop our three year Clean Revolution initiative across all aspects of the organisation; from communications and content, through to events and partner relationships. We have also begun implementing the necessary operational structures and measures to support the initiative. The Clean Revolution is a partnership of international statesmen and governments, business leaders, philanthropists, thinkers and opinion formers, calling for a swift, massive scale-up of clean energy and infrastructure, and of smart technologies and design as the only feasible path to a smarter, better, more prosperous future. The Clean Revolution has three linked aims:   

Inspire world leaders, by presenting them – through influential ambassadors – with a compelling evidence base for the opportunities of the Clean Revolution; Generate understanding of the key elements of successful low carbon transformation and bring decision-makers together to share best practice and support each other’s low carbon projects; Deliver a set of catalytic low-carbon projects that have the potential to create tipping-points for scaling-up clean technology, financing and partnerships.

Embedding and developing the Clean Revolution initiative 1. Launch of initiative We successfully presented the Clean Revolution Initiative to partners and the public at the Opening Ceremony of the annual Climate Week NYC in September 2011. Former UK Prime Minister. Rt. Hon. Tony Blair, New York City Mayor Michael Bloomberg, Andrew Steer, the World Bank, Achim Steiner, UNEP and a range of other leading political and business leaders from our global network took part at the launch. The initiative was highly visible and gained considerable exposure – through our media effort we reached an extended audience of approximately 200 million people. We officially launched Clean Revolution during the Rio +20 Earth Summit in June 2012 as part of the UN’s Rio+20 Conference on Sustainable Development. The event introduced the Clean Revolution to a large and influential audience of business, government, finance and thought-leaders from across the world. Speakers at the Summit included Tony Blair, Québec’s Premier Charest, HRH Prince Albert II and the World Bank’s Andrew Steer. The launch was accompanied by a new website, four reports and an open-letter to the G20 and Rio+20 from an impressive list of business and government leaders. In June 2012, we also organised and delivered the World Summit of States and Regions and hosted this with the State of Rio de Janeiro in collaboration with nrg4sd. At the event over 50 governors, premiers and ministers adopted an ambitious statement on tackling climate change with joint commitments which will serve as guidance for their work in the coming months and years. This has led to the establishment of working groups chaired by individual government members. The Climate Group will continue to provide the secretariat and expertise to support these working groups to help them speed up the adoption of low carbon commitments focussing on policy, technologies and financing mechanisms globally.

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2. Complete initiative plan, budget and external materials Our Executive Management Team developed a strategic plan for the organisation in 2011, focusing on effective and focused delivery of the Clean Revolution initiative and laying out headline objectives and milestones for the campaign, as well as documenting and prioritizing all projects that we are currently delivering or developing. External materials, such as all branding materials associated with the Clean Revolution initiative were developed in 2010-11 and completed in 2011. 3. Building our coalition As planned, we were successful in establishing new partnerships with a number of influential organisations to our initiative in time for the Rio+20 Summit in June 2012. The World Bank, the Carbon Disclosure Project, and the UN Global Compact committed to working with us, providing inkind support to help deliver our Clean Revolution objectives. A number of leading businesses also joined the initiative. Philips became the first Clean Revolution lead partner and Suzlon, a major Asian wind turbine manufacturer, became a strategic partner. We have also received support from the Prince Albert II of Monaco Foundation, the Nationale Postcode Loterij, the Tellus Mater Foundation and Zennström Philanthropies. Within our States & Regions Alliance, we also welcomed the French overseas region of La Reunion, the German state of Baden-Wuerttemberg and the Austrian region of Upper Austria as new members. On the corporate side, Hanergy, a leading Chinese energy company was an important signing as a new Climate Group global member. We have also been active in seeking to recruit Clean Revolution Ambassadors. Later in the year we recruited five top-tier international personalities as our first Clean Revolution Ambassadors: Prince Albert of Monaco, Indian industrialist Tulsi Tanti, former Special Envoy for Climate Change at the World Bank Andrew Steer, former South Australia Premier Mike Rann and entrepreneur Niklas Zennström. We believe that, along with the current members of our International Leadership Council, we are in strong position to form a critical mass of ambassadors over the coming 12 months. 4. Building the case for change Our most successful technology programme to date concluded this year. It saw 10 cities pilot LED solutions and has provided compelling evidence that LED products that are already widely available have reached maturity commercially. The major outcome of our work in this area has been that four of the ten cities are moving to scale up, and in particular in India, Kolkata applied and secured funding from the Asia Development Bank to replace 15,000 of its streetlights with LED products. Other technology successes have continued with our SMART ICT and cities work. Since 2008 and the publication of SMART 2020, The Climate Group has been recognised as having produced some of the world’s leading work relating to the role that information technology can have in supporting climate change mitigation at a policy and practical implementation level. During the year, invaluable partnerships have been developed with the Planetary Skin Institute, Living Labs, Metropolis (to help us build connections to cities), Accenture (to bring expertise for analysis) and Arup (for analytical support). Following this work, we will work with over fifty cities next year to help them speed up the deployment of ICT technologies which have the potential to deliver a reduction of 15% in global Greenhouse Gas [GHG] emissions by 2020.

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Our UK electric vehicles programme also successfully concluded this year. With support from the Esmée Fairbairn Foundation and The Prince Albert II of Monaco Foundation, and working in partnership with the Energy Savings Trust, CENEX, fleet owners and Transport for London; we have been able to advise fleet owners on how to deploy green fleets without affecting the day to day running of their operations. Aware of the need to back up practical demonstration with political will, we also convened the EV20 Policy Initiative and Electrification Coalition in partnership with the Province of Quebec. These continue to operate, and bring together States, Regions, Cities and Corporates to share successes and communicate the lessons learnt from policies and practical action relating to Electric Vehicle deployment. The main outcomes of our work is that in the UK it has influenced London’s strategy and has encouraged the UK to update its EV incentives to cover commercial fleets; and that practically Transport for London, in partnership with the Office for Low Emission Vehicles and the Energy Saving Trust has committed to fund further work with individual fleets in London to speed up their deployment. Throughout 2011/12 we successfully developed and launched a range of Clean Revolution reports, briefings and online content. In June, at the Rio+20 Conference we set out our central vision for the initiative in our flagship report ‘Leadership for a Clean Revolution’, which proposes five critical traits of low-carbon leaders. At the same time we launched reports on the energy savings and other benefits of LED lighting, the pioneer work of our sub-national government network, and on China’s sustainable development initiatives as well as the country’s importance in delivering a global clean revolution. A wide variety of other briefings and reports were also produced throughout the year, which highlighted key opportunities for low carbon growth in different regions of the world. Our Beijing office published briefings on energy efficiency financing; low-carbon vehicles, and the prospects for smart th grid development in China. Case studies looking at the implementation of the 12 Five Year Plan in China’s cities and innovative energy efficiency ideas for buildings were also produced. In Australia, we released a set of briefings that analysed the federal government’s new Clean Energy Package and what this important policy plan means for the country’s low-carbon future. Detailed reports were also published on electric vehicles (EVs) and the use of information and communication technology (ICT) in cities. Our ‘Plugged-In Fleets’ report – developed in collaboration with Energy Saving Trust and Cenex, with support from Esmée Fairbairn Foundation, Transport for London, and TNT’s Planet Me division – demonstrated that EVs are already a commercially viable option for increasing numbers of business fleet owners. In our ‘Information Marketplaces’ report – written in conjunction with Arup, Accenture, Horizon and the University of Nottingham, with support from HSBC and Cisco – we showed the enormous economic opportunities that city governments could tap with the right use of smart ICT. Both those reports attracted significant interest and media coverage. The new Clean Revolution website – http://cleanrevolution.org – went live at Rio. With fifty inspiring case studies and more being added every week, the site is already proving to be a “go to” resource for evidence of low carbon success, and is helping our Clean Revolution Ambassadors make the case to their peers to replicate their carbon-cutting projects around the world. 5. Events and communications A wide variety of events and communication outputs were successfully delivered in 2011/12, which promoted the Clean Revolution message and profiled the leadership actions of our business and government leaders. In addition to our high level summit at Climate Week NYC, our second flagship event for the year was the ‘Clean Revolution Leaders’ Summit’. This was held in Rio de Janeiro, Brazil, in June 2012 as part

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of the United Nation’s Rio+20 Conference on Sustainable Development. Working in partnership with the UN Global Compact’s ‘Corporate Sustainability Forum’ and the Rio de Janeiro State Government, the summit presented the Clean Revolution initiative to a new and much larger business and government audience. It also provided the opportunity to introduce new partners, launch a series of four reports on leadership, LED lighting, China and State and Regional government actions (see above), convene our annual meeting of States and Regions, and launch the ‘ICTs for Sustainable Energy Partnership’ (ISEP) in support of the UN’s Sustainable Energy For All (SE4ALL) initiative. Collectively, our events in Rio resulted in more than 500 media articles which reached an audience of 350 million people in over 40 countries. Through our social media effort we generated more than 1.5 million Twitter impressions. Throughout the year we also convened a range of issue-specific roundtables and briefings. This included a roundtable dialogue on mobilising $1 trillion in climate finance with Andrew Steer, the World Bank’s Special Envoy on Climate Change, Theodore Roosevelt IV from Barclays Capital and other senior members of New York’s financial sector. We also helped convene meetings for our state and regional government partners on scaling up clean technologies, electric vehicles and the role of small and medium enterprises (SMEs). In November 2011, we once again organised the Hong Kong Business Summit on Climate Leadership, bringing together 160 top business and government leaders from around the world.

Implementing operational structures and measures 1. Operational and financial systems In November 2011 a full review of all our systems and procedures was initiated, identifying a range of specific initiatives to improve processes covering the four areas outlined below: 

Strategic Management Systems. Improving information management, decision making and accountability to deliver the Clean Revolution initiative, long term sustainability and exploit opportunities.

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Operations Systems and Procedures. Improving information management, decision making, planning and accountability.

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Financial Management Systems. Improving information flow, decision making, cost control and accountability.

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Developing People. Helping people to succeed by supporting and developing them in order to deliver against our plans.

Allied to the above, a review of policies was carried out with in areas such as internal financial control, data protection, and anti-bribery and corruption. Following this the UK Employee Handbook was reviewed and updated. An action plan with measurable deliverables was created and approved by the Executive Management Team in December 2012. The action plan was completed to deadline at the end of June 2012 with the new systems ready to be taken into use by the Executive Management Team from the beginning of the new financial year on 1 July 2012.

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In tandem with this work: 

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In April 2012, work began on integrating the management accounts with the budget for reporting purposes, the accounts were extended to include full reporting for Belgium and India, and accounting coding, project and departmental codes, and layouts were revised. This work will be completed by October 2012. Internal contracts were reviewed and new ones created, tendering procedures written and new contract management records and controls created. An annual governance assurance framework was created for our global boards to provide oversight on key governance, compliance, finance and HR processes. A pilot was run in the UK in May 2012 and will be rolled out to all countries in early 2012/13.

2. Fundraising capacity and capability Our five year, US$17m partnership with HSBC concluded on schedule during this financial year. In recognition of the need to develop a long term, sustainable and diversified funding model, a UK Head of Fundraising appointment was created and filled in December 2011 to develop and implement the charity’s strategy to grow income from philanthropic supporters. In June 2012, a Fundraising Manager was subsequently appointed to support this post holder and increase our fundraising capacity further, and in particular to provide global support. Work is on-going in creating a coherent global fundraising strategy and further expansion of the UK team is highly likely. Since December 2011, new philanthropic support of over £3.9m has been agreed towards our core and project costs over the next five years.

3. Strategic financial modelling We implemented an improved strategic financial modelling process in December 2012, which enables us better to project our financial position over a three year period. We will continue to develop this model in due course, in line with our annual business plan and new accounting systems. We did not manage to increase liquidity and, consequently, this will be built into our forward financial plans.

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Our philanthropic supporters Our vision of a low carbon, prosperous world for all, will only be possible through a collaborative approach – one in which NGOs, foundations, corporations, governments and individuals work together to achieve action and change. Grant-making foundations and private donors who are willing to show their own leadership are crucial partners, ensuring our work:  

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remains independent; is entrepreneurial and innovative, delivering programmes that can have a transformational impact if successful, but undoubtedly because of the scale and level of ambition come with a degree of risk; can be flexible, adapting to and responding to opportunities as and when they arise; and can take a longer term strategic approach.

Philanthropic supporters give more than just financial support. We value their leadership and view of the world. We believe they have an important contribution to make at a strategic level. As such, we will continue to invite philanthropic supporters to join our International Leadership Council or to become Clean Revolution Ambassadors where their leadership can help drive forward our vision. Our achievements during 2011-12 have only been possible with the support of the following philanthropic supporters: the Dutch Postcode Lottery, Zennström Philanthropies, Esmée Fairbairn Foundation, The Prince Albert II of Monaco Foundation and Tellus Mater Foundation.

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What we will do in 2012/13 Our top line objectives for the current financial year are to: Maintain Thought Leadership  



Further develop our work on the role of disruptive leadership and innovation in delivering a clean industrial revolution, working with our partners to develop the content and analysis. Further expand and develop the content of our TheCleanRevolution.org with the aim of making it a recognised ‘go-to’ source on the transition to a low carbon economy with a target of [15,000+] monthly visitors by June 2013. Develop a portfolio of Clean Revolution briefings for our Ambassador network which layout both a ‘meta narrative’ of the Clean Revolution and provide in-depth analysis on specific current issues.

Strengthen the Clean Revolution Network        



Recruit an additional 10-20 Clean Revolution Ambassadors. Develop an engagement and communications programme for our Ambassadors, with at least 2-3 substantive actions (eg op-eds, speaking slots etc) agreed with each Ambassador for the year. Recruit an additional 2-4 lead corporate partners and 5-10 new strategic partners. Scope the feasibility and role of a BRICs clean revolution leaderships group. Hold our annual Davos meeting with our International Leadership Council to discuss Clean Revolution strategy and engagement. Hold our 2nd annual Clean Revolution Leaders’ summit to bring our corporate, government and international organisation partners together. th Hold our 4th annual Climate Week NYC meeting in September 2012. Preparations for the 5 Climate Week NYC anniversary must be underway. Continue to support our States & Regions members in developing the work of their working groups on electric vehicles, small and medium enterprises, energy efficiency financing and marine renewable energy. We will also look to develop links, where appropriate, with our other Clean Revolution partners. Develop a comprehensive global communications and events plan to support all initiative objectives.

Catalyse New Transformative Actions      

Work with partners to develop a project for a new transformational, low carbon innovation prize, with a view to launching in 2015. Work with our States & Regions members on new LED lighting commitments with the aim to have 10 adopt concrete targets on standards, procurement and sales. Work with ten Chinese cities to implement green growth plans in line with national commitments on carbon intensity Work with our ICT and city partners to begin piloting a selection of low-carbon ICT solutions in 10 global cities (population > 1 million). Establish a coalition of companies and regional governments committed to accelerating renewable energy, with targets committed to for 2014-2015. Launch an international climate finance alliance of financial institutions focused on enhancing climate finance into and out of China and make policy recommendations to the Chinese National Development and Reform Commission.

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18

Build our capacity to deliver   

Secure new funding of £4 million raised for FY2012-13 and £2.5 million for FY2013-2014 Fully implement a new staff appraisal and development. Complete annual business, budget and risk plans.

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19

Structure, governance and management The Climate Group is an international not-for-profit organisation with representation in London, New York, Beijing, Hong Kong, New Delhi, Melbourne and Brussels. This report is produced by our international headquarters, which is a UK charitable company limited by guarantee and registered under the legal name of The Climate Change Organisation. Our statutory objects and powers are established in a Memorandum of Association, and the company is governed under its Articles of Association. Our Trustees are elected to serve for three years and can be re-elected for a second term. After six years, Trustees must take a minimum 12 months’ break before being eligible for re-appointment. Trustees meet quarterly, with additional meetings if required, and delegate the day-to-day operations of the organisation to the Executive Management Team headed by the Chief Executive. All Trustees give of their time freely and no remuneration or expenses were paid in the year. The Trustees look for a range of skills for representation on the board when recruiting and appointing new Trustees, including familiarity with the ways that leading businesses and governments should respond to climate change. Our current Board includes members with finance, communications, business and legal expertise. The induction of new Trustees is tailored to the skills, knowledge and expertise of each individual. Our Chairman and Chief Executive brief new Trustees on recent progress, future plans, legal structure and finances, as well as Trustees’ obligations in their role. We also encourage prospective Trustees to observe one or two Trustee Board meetings to familiarise themselves with our work before formal election. The Board is supported by two committees. The Finance and Audit Committee strengthens oversight of our finances, budgeting and fundraising performance, meeting with and obtaining reports from the organisation’s auditors. The Remunerations and Appointments Committee recommends remuneration strategies and policies and advises on matters pertaining to the appointment of Trustees. The committees meet quarterly in addition to the regular Trustee meetings. The Trustees are responsible for ensuring that major risks facing The Climate Group are appropriately managed. The major risks identified are regularly reviewed and their potential impact assessed. Strategies and controls to manage each risk appropriately are in place, with some subject to continuous improvement. In those areas of our work where a degree of risk is inevitable, appropriate steps have been taken to mitigate that risk where possible. Updates to the register and key risks are reported to the Finance and Audit Committee. The Climate Group is represented by legal entities in the US, Australia, China, Hong Kong, Belgium and India which enable us to hire staff and raise and direct funds towards our work internationally (see Note 15 of the accounts for further details). They work closely with the UK charity, with local board positions for members of our Executive Management Team strengthening international relationships. Our Chief Executive sits on the corporation board of the US, and together with our International Programmes and Strategy Director, sits on the Australian, Chinese, Hong Kong, and Belgian corporation boards, Our head office’s relationship with the regional offices is underpinned by legal contracts. These contracts cover co-ordination of work programmes and licensing of the name and trademarks to the regional representatives. Our UK trading subsidiary (The Climate Change Organisation Services Limited), carries out any trading or service activities of the charity.

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Carbon Management Policy According to organisational policy The Climate Group’s operations and activities are (certified) carbon neutral. As well as endeavouring to keep our CO2 emissions as low as possible by eliminating unnecessary travel, we offset unavoidable emissions using carbon credits certified under the Verified Carbon Standard or the Gold Standard. The Climate Group’s CO2 equivalent emissions during the accounting period were 328 tonnes (2010/11: 331 tonnes). The Climate Group’s Carbon Footprint report has been produced using Greenstone Carbon Management’s Acco2untenterprise solution.

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21

UK Board, management team and advisers Registered name Trading name Charity number Company number

The Climate Change Organisation The °Climate Group 1102909 4964424

Incorporation 14 November 2003 and registered as a UK charity on 26 March 2004

Principal office & Registered office Second Floor, Riverside Building County Hall Belvedere Road London SE1 7PB John R Coomber (Chairman) Matthew Anderson – resigned 13 October 2011 Zoë Ashcroft Josh Berger – resigned 9 May 2012 Matt Brittin Vivienne Cox Steve Howard – resigned 27 August 2012 Andrew Smith Dominic Waughray Niklas Zennström – appointed 16 December 2011

Company Secretary Ian McLintock – appointed 23 November 2011

Chief Executive Officer Mark Kenber

Executive Management Team Ben Ferrari, Director of Corporate Partnerships Eduardo Gonçalves, International Communications Director Mark Kenber, Chief Executive Officer Ian McLintock, International Operations Director Jim Walker, International Programmes and Strategy Director Caroline Bayliss, Director Australia Amy Davidsen, Executive Director US Changhua Wu, Greater China Director

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Accountants JS2 Limited One Crown Square Woking Surrey GU21 6HR

Solicitors Winston & Strawn London CityPoint One Ropemaker Street London EC2Y 9HU

Bankers HSBC Bank plc 34 High Street Walton-on-Thames Surrey KT12 1DD

Auditors Crowe Clark Whitehill LLP St. Brides House 10 Salisbury Square, London EC4Y 8EH

Trustees/Directors of our International Boards Professor Bill Moomaw, US Steve Westly, US Paul Dolan, US Plato K. Yip, Hong Kong Suresh Prabhu, India Uday Khemka, India Dr Kirit Parikh, India John Thwaites, Australia Keith Scott, Australia International Leadership Council Rt Hon Tony Blair, Former Prime Minister of Great Britain and Northern Ireland (ILC Chairman) HSH Prince Albert II, Sovereign Prince of Monaco Dr. Sultan Al Jaber, Abu Dhabi Future Energy Company and Masdar Initiative Mr. Clesio Antonio Balbo, Usina Santo Antonio S/A Mr. Thor Björgólfsson, Novator Sir Richard Branson, Virgin Group Lord Browne of Madingley, Riverstone Mr. John Coomber, Pension Corporation Dr. Steve Howard, IKEA Mr Dennis Mehiel, Fourmco Ms Karen Mehiel Mr. Sunil Bharti Mittal, Bharti Group Mr. James Murdoch, News Corporation Mr. Idan Ofer, Better Place and Israel Corp. Mr Mikael Ohlsson, IKEA Mr. Boudewijn Poelmann, National Postcode Lottery Mr. Anthony Pratt, Pratt Industries and Visy Mr. Jim Rogers, Duke Energy Mr. Alan Salzman, Vantage Point Venture Partners Mr. Vinod Sekhar, Petra Group and Sekhar Foundation Dr. Zhengrong Shi, Suntech Mr. Tulsi Tanti, Suzlon Energy Ltd. Mr. Wang Jianzhou, China Mobile Mr Steve Westly, The Westly Group Mr. Zhang Yue, Broad Mr. Niklas Zennström, Atomico Investments and Zennström Philanthropies

- Annual Report 2011/12

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Clean Revolution Initiative Advisory Board John Elkington, Volans Jennifer Morgan, World Resources Institute Professor ZHOU Dadi, Josh Suskewicz, Innosight Jarl Krausing, World Bank Paul Simpson, Carbon Disclosure Project

- Annual Report 2011/12

24

Financial results The Statement of Financial Activities (page 32) and the following show our full financial results for the year. Financial information on this report relates to both the UK charity (indicated by “Charity” in the accounts) and the consolidated reports of the UK, the US, Australia, China, Hong Kong and India (indicated by “Group”). Figures in this section reflect the consolidated Group figures. Income Our total income for the 2011/12 financial year was £4,063,641 (2011: £6,306,871), which consists of voluntary income of £3,995,228 (2011: £6,018,292), income from activities for generating funds of £66,638 (2011: £286,499) and investment income of £1,775 (2011: £2,080). Development We continued to develop our programmes with a diverse group of funders, but giving from individuals, foundations, government grants and corporate philanthropy remains challenging. This reflects the continuing economic down turn and a move away from giving to organisations working on the climate change agenda. We directed 10% (2011: 7%) of our budget towards generating funds, with most allocated to staff costs. Our new strategy makes a compelling fundraising case and we have also continued to invest in our fundraising capability and, consequently, are confident that we shall substantively increase our fundraising income over the coming year and beyond. Expenditure During the accounting period we spent a total of £5,440,288 (2011: £7,845,382), including £1,282,737 on research activities (2011: £2,033,147) which represents a significant investment in transformational technologies which will form case studies for the Clean Revolution, £ 1,915,255 (2011: £2,574,373) on raising awareness of climate change and its solutions, and £ 1,595,679 on education of business and government partners on leadership opportunities associated with ‘low carbon’ policy and strategy (2011: £2,554,977). The cost of generating funds was £ 516,505 (2011: £514,714) and governance costs were £130,112 (2011: £168,171). Financial position at year end We made a deficit of £1,376,647 (2011: £1,538,511). This partly reflects lower income than expected and planned utilisation of prior year reserves. We closed the reporting period with a positive position of £362,350 (2011: £1,727,373) comprising a restricted funds position of £307,375 (2011: £1,170,261) and an unrestricted funds position of £54,975 (2011: £557,112). The result included a gain on revaluation of foreign currency subsidiaries of £11,624 (2011: £26,678).

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Financial strategy Reserves Policy The Trustees are of the opinion that the level of total reserves should normally equate to 25% of projected consolidated global resources due to be expended in the following 12 months, and that unrestricted reserves should never be less than zero. The Trustees recognise that it may be appropriate to allow the level of reserves to drop below, this benchmark at times as a result of short-term cash inflows, the nature of funding restrictions or in order to ensure our programmes’ continuity. Applying this ratio to the forecasts for the year ending 30 June 2012, the required level of reserves would be approximately £1.2 million, versus actual reported reserves of £1.7 million. Financial Risk Our reserves have fallen, but the UK forward income pipeline is both much more diversified and includes significantly more funding bids than last year. The group’s cost structure and internal value chain were assessed to identify how cost might best be managed down with minimal impact on capability. For example, our global IT migration to the cloud in January 2013 has reduced our IT cost base by circa £40k pa and simultaneously improved our IT capability. During 2012/13, we have achieved significant cost reductions globally with resource savings being taken either to reduce cost overall or diverted to build capability, in areas such as our agile cities work. Our work reported last year, to develop further our financial and business planning, management and reporting systems and procedures was completed on time, but these have not yet been taken fully into use and we must now do so. However, allied to the above, we have identified work that will improve our efficiency and effectiveness further, and work is on-going to develop further our new business model. We have also implemented flexibility analysis of income projections, which are updated and reported to the Finance and Audit committee monthly. This system has been further enhanced by implementing a financial dashboard to track key metrics using a traffic light system. For 2013/14, UK income projections, which account for half of the global budget, have been reduced by 10% below the most likely forecast as a measure of prudence. As at 1 March 2013, The Climate Group needed to generate £1.2m of funding (as a minimum) in order to remain cash positive to year end 2012/13 (30 June 2013) and the forecast worst case income projection was for funding of £1.15m, of which £0.9m was contracted. This does not include access to interest free loans of £200k, an estimated £100k for disposal of a valuable top level domain name or the core contribution from a recently awarded £2.3m two year restricted contract for our work in India to be paid beginning April 2013. Taking these additional factors into account, cash flow would still be forecast to remain positive to 30 June 2013 even under the worst case income projection. In 2013/14, we have budgeted UK expenditure of £3m of which £0.28m is contingency expenditure to fund innovative global projects, but which will only be committed subject to achieving budget targets, and there is also £0.25m of risk funding. Forecast income is £3.6m, which has been reduced to £3.3m in the budget as a risk mitigation measure. This income forecast includes £1.7m of contracted income, including prudent estimates of membership income for the period. The Very Bad income scenario forecast is currently £2.4m. The minimum income required to remain cash positive is £2.3m but taking the above factors into account the cash position remains overall positive.

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Financial Strategy In response to the end of the very large HSBC funding in 2011, we expanded our income generation strategy. This has focussed on building additional major corporate partnership agreements supplemented by a broad based fundraising income stream from trusts, individuals and sponsorship. nd

Our first lead partnership agreement was signed in January 2012, the 2 in December 2012 and we are in advanced discussions with other potential partners. The forward funding pipeline has continued to both build and diversify, and we now have substantial future secured income. We were recently notified of a very generous further funding commitment of circa £2m, over 2 years, from the Dutch Postcode Lottery. The Trustees are confident the strategy is proving itself, resulting in a far more secure forward funding position than last year. The key challenges in moving forward are to manage our cash position, particularly June to December 2013, and begin to build our financial reserves to reduce the current high level of financial risk. We will achieve this by building on our work over the past year in enhancing our organisational systems and processes to deliver maximum value for every pound our funders donate to our work. Specifically, the board have set 3 objectives for each office in developing the 2013/14 budget:   

Adequate projected cash holdings in each country in each month to reduce dependence on the UK. Year-end targets for each country that will increase reserves at rates that will achieve our reserves policy target by year end 30 June 2015. A UK cash target at year end 30 June 2014 to ensure long term viability.

These targets are challenging, but we believe them to be fully achievable. Consequently, the Trustees are confident that The Climate Group will remain a successful and viable organisation over the coming year and beyond.

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27

Trustees’ responsibilities in relation to the Financial Statements The Trustees are responsible for preparing the Trustees’ Report and the financial statements in accordance with applicable law and regulations. Company law requires the Trustees to prepare financial statements for each financial year in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards) and applicable law. Under company law the Trustees must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of its net profit/loss for that period. In preparing these financial statements, the Trustees are required to: 

select suitable accounting policies and then apply them consistently;



make judgements and estimates that are reasonable and prudent;



state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and



prepare the financial statements on the going concern basis unless it is inappropriate to assume that the company will continue on that basis.

The Trustees are responsible for keeping proper accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Provision of information to auditors Each of the persons who are a Trustee at the date of approval of this report confirms that: 

so far as he/she is aware, there is no relevant audit information of which the company’s auditors are unaware; and



the Trustee has taken all the steps that he/she ought to have taken as a Trustee in order to make himself/herself aware of any relevant audit information and to establish that the company’s auditors are aware of that information.

Members of the Board of Trustees who are directors for the purpose of company law and Trustees for the purpose of charity law, who served during the period and up to the date of this Report are set out on page 22.

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Auditors A resolution to re-appoint Crowe Clark Whitehill LLP as auditors will be proposed at the forthcoming Annual General Meeting. This report has been prepared in accordance with the Statement of Recommended Practice: Accounting and Reporting by Charities (issued in March 2005). Approved by the Board of Trustees on 22 March 2013 and signed on its behalf by:

John R Coomber Chairman of the Board

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Independent auditors’ report to the Trustees We have audited the financial statements of The Climate Change Organisation for the year ended 30 June 2012 set out pages 32 to 46. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This Report is made solely to the charitable company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charitable company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of Trustees and auditor As explained more fully in the Statement of Trustees' Responsibilities, the Trustees (who are also the directors of the charitable company for the purpose of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Trustees’ Annual Report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion the financial statements: 

give a true and fair view of the state of the group’s and the charitable company’s affairs as at 30 June 2012 and of the group’s incoming resources and application of resources, including its income and expenditure, for the year then ended;



have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and



have been prepared in accordance with the requirements of the Companies Act 2006.

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30

Emphasis of matter – going concern In forming our opinion, which is not qualified, we draw attention to the disclosures in note 1(a) of the financial statements concerning the charitable company’s ability to continue as a going concern. The Climate Change Organisation, like many charities, is dependent on voluntary income to fund its activities and therefore does not have adequate committed funding in place to meet its future commitments. The Climate Change Organisation is continuing to implement a new strategy to generate income and is dependent on the success of this strategy in order to continue as a going concern. The Trustees therefore consider that a material uncertainty exists that may cast doubt on the entity’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern. Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Trustees Annual Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: 

the parent charitable company has not kept adequate accounting records, or returns adequate for our audit have not been received from branches not visited by us; or



the parent charitable company financial statements are not in agreement with the accounting records and returns; or



certain disclosures of Trustees' remuneration specified by law are not made; or



we have not received all the information and explanations we require for our audit.

Pesh Framjee FCA Senior Statutory Auditor for and on behalf of Crowe Clark Whitehill LLP Statutory auditor

- Annual Report 2011/12

St Bride’s House 10 Salisbury Square London EC4Y 8EH

31

CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES FOR THE GROUP (INCLUDING AN INCOME & EXPENDITURE ACCOUNT) For the year ended 30 June 2012

Consolidated Financial Statements Notes

Incoming resources Incoming resources from generated funds Voluntary income Donations & similar funding Grants Membership

2

Activities for generating funds Other

Investment income Total incoming resources Resources expended Costs of generating funds Costs of generating voluntary income Charitable activities Research Communications Education & engagement

Governance costs Total resources expended

3

Net outgoing resources for the period (being the net income) before other recognised gains and losses

4

Other recognised gains and losses Gain on revaluation of foreign currency subsidiaries Net movement in funds Funds at 30 June 2011 Funds at 30 June 2012

10

£

Year ended 30 June 2012 £

Year ended 30 June 2011 £

3,445 1,868,337 711,219 __________ 2,583,001

199,852 746,716 465,659 __________ 1,412,227

203,297 2,615,053 1,176,878 __________ 3,995,228

177,926 4,690,469 1,149,897 __________ 6,018,292

22,709 __________ 22,709

43,929 __________ 43,929

66,638 __________ 66,638

286,499 __________ 286,499

1,775 __________ 2,607,485 __________

__________ 1,456,156 __________

1,775 __________ 4,063,641 __________

2,080 __________ 6,306,871 __________

287,276

229,229

516,505

514,714

895,738 1,007,630 1,238,864 __________ 3,142,232

386,999 907,625 356,815 __________ 1,651,439

1,282,737 1,915,255 1,595,679 __________ 4,793,671

2,033,147 2,574,373 2,554,977 ___________ 7,162,497

52,487 __________ 3,481,995 __________

77,625 __________ 1,958,293 __________

130,112 __________ 5,440,288 __________

168,171 __________ 7,845,382 __________

(874,510)

(502,137)

(1,376,647))

(1,538,511)

11,624 __________ (862,886)

__________ (502,137

11,624 __________ (1,365,023)

26,678 __________ (1,511,833)

1,170,261 __________ 307,375

557,112 __________ 54,975

1,727,373 __________ 362,350

3,239,206 ___________ 1,727,373

__________

__________

__________

__________

Restricted

Unrestricted

£

All of the above results derive from continuing activities. There are no gains and losses other than those disclosed above. Movements in funds are disclosed in Note 10 to the financial statements.

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32

CONSOLIDATED CASH FLOW STATEMENT For the year ended 30 June 2012

Year ended 30 June 2012

Year ended 30 June 2011

£

£

(755,089)

(2,099,180)

Returns on investment and servicing of finance Bank interest received

1,775

2,080

Capital expenditure and financial investment Payments to acquire tangible fixed assets

(137)

(28,173)

Decrease in cash

(753,451)

(2,125,273)

Net cash at start of the year

1,767,874

3,893,147

Net cash at end of the year

1,014,423

1,767,874

Net cash (outflow)/inflow from operating activities (Note a)

NOTES TO THE CASH FLOW STATEMENT a)

Reconciliation of net incoming resources to net cash inflow from operating activities

Net (outgoing)/incoming resources for the year Bank interest received Depreciation Loss on disposal of fixed assets Foreign exchange differences, excluding gains arising on revaluation of fixed assets Decrease in debtors Increase/(Decrease) in creditors

Net cash inflow from operating activities

- Annual Report 2011/12

2012 £

2011 £

(1,376,647)

(1,538,511) (2,080) 70,703 23,970

(1,775) 64,554 2,133 10,301 34,462 511,883

(682,392)

(755,089)

(2,099,180)

29,130

34

NOTES TO THE ACCOUNTS For the year ended 30 June 2012

Notes to the consolidated Financial Statements 1 Accounting policies a) Basis of accounting The financial statements have been prepared under the historical cost convention and in accordance with applicable UK accounting standards and follow the recommendations in Statement of Recommended Practice, Accounting and Reporting by Charities (SORP 2005) and the Companies Act 2006. The statement of financial activities (SOFA) and balance sheet consolidate the financial statements of the charity and its subsidiary undertakings (see Note 15). The results of the charity and its five subsidiaries are consolidated on a line-by-line basis. No separate SOFA has been prepared for the charity alone as permitted by Section 408 of the Companies Act 2006. Going concern The Climate Change Organisation, like many charities is dependent on voluntary income to meet its future commitments. The Climate Change Organisation's ability to generate voluntary income going forward is significantly dependent on the charity's new strategy and planned income generation from strategic partners and trusts. As discussed in more detail in the Trustees' Report, as at March 2013 there was not sufficient committed funding in place to allow the charity to meet its forecast liabilities for the following 12 months. If income generation targets are not met then the charity would be unable to continue as a going concern The Trustees have considered the charity's new strategic plan and current income forecasts for 2012/13 and beyond. The Trustees are confident that the charity's strategy for future income generation will be successful. They have therefore prepared the Financial Statements on the going concern basis. The key issues and uncertainties in respect of the going concern assumption are set out in the ‘Financial Risk’ section of the Trustees’ Report.

b)

Income

Voluntary income is received by way of donations and gifts and is included in full in the Statement of Financial Activities when receivable. Donated services and gifts in kind are brought in at their value to the charity as income and the appropriate expenditure. Income is credited to incoming resources when the conditions of entitlement, certainty and measurement have been met. Where income relates to a specific future period, it is deferred. Membership and partnership income is recognised in the financial statements evenly over the period to which the fee relates. Legacies, if received, are credited to the Statement of Financial Activities when the entitlement has been established, the amount receivable is known and the likely date of receipt has been fixed. Grants for the purchase of fixed assets, if received, are credited to restricted incoming resources when received or receivable whichever is earlier. Depreciation on the fixed assets purchased with such grants is charged against the restricted fund.

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NOTES TO THE ACCOUNTS (CONTINUED) For the year ended 30 June 2012

c)

Expenditure

Cost of generating funds are those costs incurred in the charity seeking voluntary contributions Resources expended are recognised in the period in which they are incurred.

Resources expended include

attributable VAT which cannot be recovered. Resources expended are allocated to a particular activity where the cost relates directly to that activity. Remaining support costs are apportioned to activities based on staff time, which is an estimate of the amount attributable to each activity. Note 3 shows how support costs have been allocated to each activity.

d)

Fixed assets and depreciation

Fixed assets are stated at cost and such items of equipment are capitalised where the purchase price exceeds £1,000. Depreciation costs are allocated to activities on the basis of the use of the related assets in those activities. Depreciation is provided on all tangible assets at rates calculated to write each asset down to its estimated residual value on a straight line basis as follows: Office equipment

- 3 years

Furniture and fixtures

- 3 years

e)

Fund accounting

Restricted funds are to be used for specific purposes as laid down by the donor. Expenditure which meets these criteria is charged to the fund together with a fair allocation of support costs. Unrestricted funds are donations and other incoming resources receivable or generated for the objects of the charity.

f)

Governance costs

Governance costs include those incurred in the governance of the charity and its assets and are primarily associated with compliance with constitutional and statutory requirements.

g)

Pension costs

Contributions to the defined contribution scheme are charged to the statement of financial activities as incurred.

h)

Operating leases

Rental costs under operating leases are charged to the SOFA on a straight line basis over the lease life.

i)

Foreign currencies

Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Foreign currency balances have been translated at the rates of exchange ruling at the balance sheet date. The results of overseas operations are translated at the closing rates of exchange during the period and their balance sheets at the rates ruling at the balance sheet date.

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NOTES TO THE ACCOUNTS (CONTINUED) For the year ended 30 June 2012

2 Grants

Restricted £

Unrestricted £

Year ended 30 June 2012 £

Corporations

1,342,797

-

1,342,797

2,382,941

Government

138,136

-

138,136

397,862

387,404 __________ 1,868,337 __________

746,716 __________ 746,716 __________

1,134,120 __________ 2,615,053 __________

1,909,666 __________ 4,690,469 __________

Foundations & NGOs

Year ended 30 June 2011 £

3 Analysis of total resources expended

Cost of generating funds Research Communications Education & Engagement Governance

Total 2012 Total 2011

Total direct Support costs staff costs £ £

Other support costs £

Total support costs £

23,790

52,418

76,208

516,505

514,714

964,301

106,817

211,619

318,436

1,282,737

2,033,147

834,869

563,605 1,398,474

175,659

341,122

516,781

1,915,255

2,574,373

809,109

381,066 1,190,175

135,166

270,338

405,504

1,595,679

2,554,977

Direct staff costs £

Other direct costs £

378,908

61,389

440,297

699,996

264,305

Year Year ended ended 30 30 June June 2012 2011 £ £

96,006 34,106 130,112 42,986 53,020 11,502 22,604 168,171 ________ ________ ________ ________ ________ ________ _________ _________ 2,765,868 ________ 3,664,436 ________

1,323,385 ________ 1,952,291 ________

4,089,253 5,440,288 452,934 898,101 1,351,035 7,845,382 ________ ________ ________ ________ _________ _________ 5,616,727 7,845,382 686,964 1,541,691 2,228,655 ________ ________ ________ ________ _________

Support costs are apportioned to activities based on staff time, which is an estimate of the amount of effort attributable to each activity. Support costs include such expenditure as rent, office running costs and financial and legal services.

- Annual Report 2011/12

37

NOTES TO THE ACCOUNTS (CONTINUED) For the year ended 30 June 2012

4 Net incoming/(outgoing) resources is stated after charging: Year ended 30 June 2012 £

Year ended 30 June 2011 £

180,913

317,366

Depreciation

42,665

70,703

Fees payable to charity auditors: audit of the charity’s annual accounts

21,700

22,200

-

2,100

__________

__________

Operating lease rentals – buildings

Fees payable to charity auditors: audit of the charity’s trading subsidiary pursuant to legislation

The Trustees received neither remuneration nor reimbursed expenses during either period. 5 Employees Staff costs during the period amounted to:

Year ended 30 June 2012 £

Year ended 30 June 2011 £

2,619,643

3,622,479

Social security costs

184,839

250,805

Employer’s pension contributions

215,401

289,772

67,958

39,553

______________

______________

3,087,841

4,202,609

-

7,338

Wages & salaries

Other staff costs

Freelance staff Temporary staff

130,961 141,453 __________ __________ 3,218,802 4,351,400 ________________

_______________

2012 Number

2011 Number

£60,000 - £70,000 p.a.

0

1

£70,001 - £80,000 p.a.

2

1

£80,001 - £90,000 p.a.

1

2

£90,001 - £100,000 p.a.

2

4

£100,001 - £110,000 p.a.

-

1

£110,001 - £120,000 p.a.

1

-

£120,001 + p.a.

1

4

Number of employees with emoluments exceeding £60,000

- Annual Report 2011/12

38

NOTES TO THE ACCOUNTS (CONTINUED) For the year ended 30 June 2012

5 Employees (continued) Retirement benefits are accruing to the seven higher paid staff under defined contribution schemes. Employer contributions of £43,656 (2011: £64,190) were made during the year. The average weekly number of employees (full time equivalents) during the period was as follows:

Year ended 30 June 2012

Year ended 30 June 2011

Fundraising & publicity

5.0

7.5

Research

3.2

3.0

Communications

9.1

13.1

Education & engagement

28.3

30.1

Support

12.5

12.8

2.0

4.5

Governance

___________ ___________ 60.1

71.0

__________

__________

Office Leasehold Equipment improvements £ £

Total £

6 Tangible fixed assets (Group)

Cost 371,609

12,697

384,306

4,957

224

5,181

Additions

137

-

137

Disposals

(90,908)

(8,886)

(99,794)

__________

__________

__________

285,795

4,035

289,830

__________

__________

__________

252,644

10,006

262,650

3,634

224

3,858

63,209

1,345

64,554

(88,775)

(8,886)

(97,661)

__________

__________

__________

230,712

2,689

233,401

__________

__________

__________

At 1 July 2011 Revaluation on consolidation

At 30 June 2012 Depreciation At 1 July 2011 Revaluation on consolidation Charge for the period Disposals At 30 June 2012 Net book value At 30 June 2012 At 1 July 2011

- Annual Report 2011/12

55,084

1,345

56,429

__________

__________

__________

113,217

8,439

121,656

__________

__________

__________

39

NOTES TO THE ACCOUNTS (CONTINUED) For the year ended 30 June 2012

6 Tangible fixed assets (Continued) (Charity) Office Leasehold equipment improvements £ £

Total £

Cost At 1 July 2011 202,910 __________

4,035 __________

206,945 __________

122,937

1,345

124,282

Charge for the period

41,320 __________

1,345 __________

42,665 __________

30 June 2012

164,257 __________

2,690 __________

166,947 __________

30 June 2012

38,653 __________

1,345 __________

39,998 __________

1 July 2011

79,973 __________

2,690 __________

82,663 __________

And at 30 June 2012 Depreciation 1 July 2011

Net book value

7 Debtors Group 30 June 2012 £

Group 30 June 2011 £

Charity 30 June 2012 £

Charity 30 June 2011 £

Trade debtors

253,667

282,353

130,155

165,003

Other debtors

126,744

129,882

-

5,665

-

-

272,007

486,078

69,088

111,804

48,553

81,944

60,461 __________

20,383 __________

47,691 __________

__________

509,960 __________

544,422 __________

498,406 __________

738,690 __________

Due from subsidiary companies Prepayments Accrued income

- Annual Report 2011/12

40

NOTES TO THE ACCOUNTS (CONTINUED) For the year ended 30 June 2012

8 Creditors: amounts falling due within one year

Trade creditors Taxation & social security Other creditors

Group 30 June 2012 £

Group 30 June 2011 £

Charity 30 June 2012 £

Charity 30 June 2011 £

93,915

124,495

51,163

102,445

57,265

88,399

48,388

68,058

126,598

33,205

100,000

-

-

-

84,250

-

306,095

148,323

254,645

80,121

Due to subsidiary companies Accruals

634,589 373,752 312,157 209,237 __________ __________ __________ __________ 1,218,462 912,198 706,579 459,861 __________ __________ __________ __________

Deferred income

Deferred income Deferred in the year

At 30 June 2012

£

Released to incoming resources £

£

£

200,904

(200,904)

373,751

373,751

At 1 July 2011

Membership

8,333 (8,333) __________ __________ __________ __________

Grants Charity total

209,237

(209,237)

373,751

373,751

9,364

(9,364)

235,320

235,320

39,460

(39,460)

21,683

21,683

-

-

2,064

2,064

10,000

(10,000)

-

-

The Climate Group Inc The Climate Group Limited The Climate Group (Hong Kong) Limited The Climate Group (India) Limited The Climate Group (China) Limited

1,771 44,096 (44,096) 1,771 __________ __________ __________ __________

Consolidated total

634,589 312,157 312,157 634,589 __________ __________ __________ __________

- Annual Report 2011/12

41

NOTES TO THE ACCOUNTS (CONTINUED) For the year ended 30 June 2012

9 Analysis of net assets between funds (Group) Restricted Unrestricted funds funds £ £

Total funds £

Tangible assets

16,431

39,998

56,429

Current assets

881,020

643,363

1,524,383

Current liabilities

(590,076) (628,386) (1,218,462) __________ __________ __________

Net assets

307,375 54,975 362,350 __________ __________ __________

Analysis of net assets between funds (Charity) Restricted Unrestricted funds funds £ £ -

Tangible assets

39,998

Total funds £ 39,998

1,074,175 335,268 738,907 (912,198) (188,268) (723,930) __________ __________ __________

Current assets Current liabilities

147,000 54,975 201,975 __________ __________ __________

Net assets

- Annual Report 2011/12

42

NOTES TO THE ACCOUNTS (CONTINUED) For the year ended 30 June 2012

10 Movement in funds (Group) Incoming

2011

resources

£

£

£

£

£

286,110

-

(179,110)

-

107,000

HSBC Climate Partnership

-

588,032

(588,032)

-

-

Global Alliance

-

88,840

(68,840)

-

20,000

Smart 2020

-

64,002

(44,002)

-

20,000

Clean Revolution Initiative

-

48,597

(48,597)

-

-

IIGCC

63,161

213,309

(276,470)

-

-

Electric Vehicles

31,000

-

(31,000)

-

-

380,271

1,002,780

1,236,051

-

147,000

125,981

746,021

785,387

13,518

100,133

69,683

194,636

354,538

2,035

(88,184)

US Programme

290,681

531,708

882,982

7,511

(53,082)

Australia Programme

272,815

115,422

219,157

(4,545)

164,535

Restricted Funds Carbon Capture and Storage (CCS)

China Programme Hong Kong Programme

India Programme Total restricted funds Unrestricted funds Total funds

Outgoing Transfers and Exchange Resources differences

At 30 June

At 1 July

2012

30,830 16,918 3,880 _________ __________ __________ 1,170,261 2,607,485 3,481,995

(6,895) 36,973 __________ __________ 11,624 307,375

557,112 1,456,156 1,958,293 _________ __________ __________ 1,727,373 4,063,641 5,440,288 _________ __________ __________

54,975 __________ __________ 11,624 362,350 __________ __________

Total incoming resources for the charity were £2,458,936 (2011: £4,253,571) and the deficit for the year was £735,408 (2011: £1,545,944 deficit).

- Annual Report 2011/12

43

NOTES TO THE ACCOUNTS For the year ended 30 June 2012

10 Movement in funds of the Group (continued) Purpose of funds Carbon Capture and Storage (CCS) HSBC Climate Partnership

Global Alliance

Smart 2020 Clean Revolution Initiative IIGCC

To promote investment in and policy support for Carbon Capture and Storage technology internationally.

To promote low carbon solutions and practices in five world cities: Hong Kong, London, Mumbai, New York and Shanghai, engaging businesses, governments and consumers in carbon emissions reduction. Funding to mobilise our global alliance of leading governments, businesses and opinion formers towards low-carbon leadership, and to engage them in our market transformation, research and communications projects. Funding to showcase key city-based ICT solutions, and to advocate policies that support scale up and replication. Funding for a three year, global communications initiative with a compelling vision of a low carbon future and a strategy to persuade a critical mass of the worlds most powerful and influential leaders to support that vision. Funding for the Institutional Investors Group on Climate Change, a forum for collaboration on climate change for European investors.

Electric Vehicles (EVs)

Funding to speed up the deployment of plug-in electric vehicles as part of our sustainable mobility future.

China Programme

Funding to engage China’s government, cities and businesses.

India Programme

Funding to engage India’s government, cities and businesses.

Hong Kong Programme

Funding to engage Hong Kong’s government, cities and businesses.

US Programme

Funding to develop The Climate Group's outreach to US state governments, cities and businesses. The programme includes the development of relationships with key US states, cities and corporations.

Australia Programme

Funding to engage Australia’s government, cities and businesses.

- Annual Report 2011/12

44

NOTES TO THE ACCOUNTS (CONTINUED) For the year ended 30 June 2012

11 Taxation The Climate Change Organisation has charitable status and as such is partially exempt from tax on its income and gains to the extent that they are applied to its charitable objects.

12 Related party transactions There were no related party transactions during the 12 month period to 30 June 2012.

13 Leasing commitments The annual commitments under non cancellable operating leases are as follows:

2012

2011

Land and

Land and

Buildings

Buildings

£

£

Expiring within 1 year

79,046

45,000

Expiring between 1 and 2 years

24,403

63,250

Expiring between 2 and 5 years

84,383

101,800

=========

=========

14 Subsidiaries Advantage has been taken of the exemptions available under FRS8 from the disclosure of certain intra group transactions. The charity is represented by legal entities incorporated in the United States (registered on 5 March 2004), Australia (registered on 19 May 2005), China (registered on 7 December 2007) and Hong Kong (registered on 10 January 2008). The charity also has a trading subsidiary in the UK called The Climate Change Organisation Services Ltd (registered on 1 May 2007). These entities operate in close conjunction with the UK charity with a relationship maintained via places on the boards for members of the charity’s management team. All of these entities have a year-end date of 30 June except for the Chinese entity which has a 31 December year end due to local regulations.

United States – The Climate Group Inc 2012

2011

Net assets as at 1 July 2011

£290,681

£342,023

Income for the year to 30 June 2012

£531,708

£1,728,021

£(343,733)

£(51,342)

£(53,082)

£290,681

Net (deficit)/surplus for the year to 30 June 2012 Net assets as at 30 June 2012

- Annual Report 2011/12

45

NOTES TO THE ACCOUNTS (CONTINUED) For the year ended 30 June 2012

14

Subsidiaries (continued)

Australia – The Climate Group Limited

2012

2011

Net assets as at 1 July 2011

£276,815

£286,291

Income for the year to 30 June 2012

£115,422

£262,980

£(112,280)

£(9,476)

£164,535

£276,815

2012

2011

£126,837

£133,336

£1,014,541

£1,110,310

£(32,874)

£(6,499)

£93,963

£126,837

2012

2011

£69,683

£6,857

£194,636

£476,519

£(157,867)

£62,825

£(88,184)

£69,683

2012

2011

£100

£100

£29,898

£98,184

-

-

£100

£100

2012

2011

£40,831

-

Income for the year to 30 June 2012

£6,916

£77,084

Net surplus for the year to 30 June 2011

£3,858

£40,831

£36,973

£40,831

Net deficit for the year to 30 June 2012 Net assets as at 30 June 2012 China – The Climate Group (China) Limited

Net assets as at 1 July 2011 Income for the year to 30 June 2012 Net deficit for the year to 30 June 2012 Net assets as at 30 June 2012 Hong Kong – The Climate Group (Hong Kong) Limited

Net assets as at 1 July 2011 Income for the year to 30 June 2012 Net (deficit)/surplus for the year to 30 June 2012 Net assets as at 30 June 2012 UK – The Climate Change Organisation Services Limited

Net assets as at 1 July 2011 Income for the year to 30 June 2012 Net surplus for the year to 30 June 2012 Net assets as at 30 June 2012 India – The Climate Group (India) Limited

Net assets as at 1 July 2011

Net assets as at 30 June 2011

- Annual Report 2011/12

46