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14 November 2011
Environmental Finance: UK government seen backing mandatory carbon reporting
Source:
www.environmental-finance.com
The UK government is to decide by the end of the year whether to make greenhouse gas emissions reporting mandatory – and observers are hopeful that it will compel at least the largest companies to report on their carbon emissions.
The issue was put on the regulatory table by the previous administration’s Climate Change Act, passed in 2008, which charged the government with making reporting mandatory, or explaining to Parliament why it has not done so, by 6 April 2012.
The coalition government has been consulting on the issue, and is considering whether to make reporting mandatory for all large companies, all quoted companies, or all large corporate energy consumers.
Supporters of corporate reporting fear that ‘no’ would seem the likely answer, since the idea was conceived by a Labour government, and the current Conservative-Liberal Democrat government has expressed its intention to lighten the regulatory burden upon business.
Campaigners at the recent Conservative party conference said the jury is still out. “We had heard rumours that they were going for mandatory reporting, but the feedback from the meeting was no concrete decision has been made yet ... they seem to still be weighing the options,” reported one NGO.
However, Andrew Raingold, director of the Aldersgate Group, a sustainability alliance, is optimistic, noting that “no-one has come out and consistently lobbied against it.” He suggests that, having attracted the ire of the environmental sector by slashing solar tariffs, the government may wish to burnish the pledge by the Prime Minister David Cameron to lead the “greenest government ever” with something that is not, after all, a public sector spending issue.
Business leaders have played their part. The CBI, the UK’s main employers’ federation, supports mandatory reporting as long as it is kept simple. Other influential organisations, such as the Association of Chartered and Certified Accountants, are also in favour.
Paul Simpson, CEO of the Carbon Disclosure Project, a database of investment-relevant corporate information on climate change, said a positive outcome is likely: “The ministers at DECC [the Department of Energy and Climate Change], Defra [the Department of the Environment, Food and Rural affairs], BIS [Business, Innovation and Skills] and the Treasury have to agree. Defra will propose it. DECC has already seen measurement leads to management. BIS has come round to it and is supportive. That leaves the Treasury, which has a reputation for blocking environmental regulations.” Its concerns are business costs.
But Craig Mackenzie, head of sustainability at asset management firm Scottish Widows Investment Partnership, suggested these have already been absorbed. “I'm guessing they'll back mandatory reporting for at least some companies, given the wide support for it and most of the cost involved is already required by CRC,” he said, referring to the Carbon Reduction Commitment, a regulation to improve energy efficiency.
A rule for a limited numbers of companies initially may be the way forward: “They may well take a phased approach: first listed companies, then those of a certain size,” said Simpson.
Elisabeth Jeffries
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Sustainable Investment Research Platform
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