29 June 2011
Carol Somper, Sustainability Associate Director for global management and technical consultancy, WYG, has worked in the environment industry for over 20 years and has witnessed businesses losing money unnecessarily.
She supports the consultation that Defra is currently undertaking on whether companies should be required to report their carbon emissions as a mandatory requirement and believes that businesses need to stop burning cash and start counting carbon, otherwise more profits will go up in smoke.
A recent survey by the Carbon Trust revealed that almost half of Britain’s top companies still don’t have robust, long term carbon emissions reduction targets, writes Carol. Too many of our top firms have short term, unambitious goals for emissions reduction and some of these have even slipped and haven’t been updated. Does this mean that carbon doesn’t matter to business strategy and a secure, profitable future? Far from it.
With ambitions to be the greenest government ever, David Cameron’s coalition government is ramping up measures to drive more resource efficient, sustainable business practice. For example, Vince Cable, Secretary of State for the Department of Business, Innovation and Skills (BIS) initiated a review of corporate reporting last October with the aim of reinstating director responsibility for full and effective corporate performance reporting in relation to social and environmental impacts. This consultation is part of measures for implementing the coalition agreement commitment to “reinstate an operating and financial review to ensure that directors' social and environmental duties have to be covered in company reporting and investigate further ways of improving corporate accountability and transparency”. It mirrors a European initiative that aims to bring greater consistency to corporate reporting. So far, the European Commission published its Green Paper on 'The EU Corporate Governance Framework' on 5 April 2011 on possible ways forward to improve the corporate governance framework across Europe. This means that at every level of policy-making, corporate reporting requirements are being reviewed with the aim of driving up quality, consistency and coverage.
Defra’s consultation sets out four options, the first of which addresses voluntary reporting whilst the other three consider varying levels of mandatory reporting, these include;
The department intends to keep the system simple and clear and has emphasised its intention "to work in line with international guidance." Whilst Defra works on mandatory carbon reporting, the BIS review of narrative corporate reporting will complete shortly and Defra has confirmed that the two processes are closely aligned. If businesses think they don’t need to worry about effective and transparent carbon measurement and emissions reduction then they need to think again. We know that addressing carbon comprehensively within an organisation’s business strategy and financial procedures is the most effective approach for reducing risk and optimising long term gains.
The Climate Change Act – a world first as a ground-breaking piece of UK legislation - requires that the government introduce regulations under the Companies Act for the inclusion of greenhouse gas (GHG) emissions in company reporting, if not reasons have to be presented to Parliament. Mandatory reporting is coming! Unless action to reduce carbon risks are taken businesses and their brand will be affected. De-risking a business will have immediate and rising benefits to the bottom-line.
Defra’s consultation, ending on 5 July 2011, will result in a decision on the direction the government will take this autumn.
I believe that mandatory reporting is inevitable to give market certainty, and strongly recommend that companies make their views known to Defra; it’s important to get this right first time.
To find out more, or to take part in Defra’s consultation visit:
