Nick Clegg, currently at the Rio+20 Summit where he visited part of a rainforest, said: "British companies need to reduce their harmful emissions for the benefit of the planet, but many back our plans because being energy efficient makes good business sense too."
Posted: 21st June 2012
Stock Exchange-listed companies are to be forced to publish data on their greenhouse gas emissions form next year, deputy prime minister Nick Clegg has announced.
This will link their share prices of the 1,800 or so firms listed on the main UK stock market to the cost of emitting climate-warming gases. They will have to include the data, in a universally consistent format, in their corporate earnings reports from next April.
Two years later, the rules will be extended to include all large companies. The intention is to encourage them to improve their impact on the environment, their energy consumption, and to make public the link between profitability and greenhouse gas emissions growth.
"Using resources responsibly is in business's own interests too. Pepsi depends on water, Unilever depends on fish stocks and agricultural land, and every firm relies on a stable fuel supply," Clegg wrote.
"While nine out of ten chief executives say sustainability is fundamental to their success, only two out of ten record the resources they consume."
The move was quickly applauded by the British Council of Shopping Centres. Helen Drury said that the “BCSC has long supported the aim to measure and manage carbon emissions through consistent and comparable reporting.
“However, government must now recognise the redundancy of the Carbon Reduction Commitment scheme, in particular the Performance League Table.”
Industry has long been calling for the abolition of the CRC. Speaking for the Confederation of British Industry, Rhian Kelly, its director for business environment policy, repeated the call for the CRC's abolition and added: “We have been calling for mandatory carbon reporting for some time. It is an important way to help businesses save money and emissions.”
The Institute of Environmental Management and Assessment said the full benefits will not be seen until the scheme does cover all of the 24,000 large UK businesses.
Some companies and lobby groups complained about unnecessary extra bureaucracy. "Almost without exception (paper manufacturers) already report GHG emissions," the Confederation of Paper Industries said in a statement, "either through the EU Emissions Trading Scheme, the UK's Climate Change Act and the Carbon Reduction Commitment, and/or through returns to the appropriate regulators through statutory returns and resource efficiency programmes."
All big emitters who are members of the EU-ETS have to report emissions from their European installations, but do not have to publish their carbon footprint.
Consultants PwC said that "It won't be seen as a burden, given the wholehearted support for the decision from business during the consultation process. Of the four options under consideration, business backed mandatory reporting," Alan McGill, a partner in PwC's sustainability and climate change unit, commented.
Andrew Raingold, executive director for the Aldersgate Group, agreed: “The vast majority of businesses strongly welcome the introduction of mandatory carbon reporting. Our detailed analysis demonstrates that this announcement will lead to huge cost savings for businesses as opportunities to reduce their energy use become more apparent. Over three quarters of UK adults expect that businesses should be required to report their emissions, as demonstrated by a Populus poll that we published last month."
Clegg said: "British companies need to reduce their harmful emissions for the benefit of the planet, but many back our plans because being energy efficient makes good business sense too. It saves companies money on energy bills, improves their reputation with customers and helps them manage their long-term costs too.
"Climate change is one of the gravest threats we face. The UK is leading the urgent action needed at home and abroad.”
Environment secretary Caroline Spelman said: “What [businesses] have asked for is a level playing field so that they can be fairly judged against one another, and we have delivered that today. Investors are now looking hard at the green credentials of businesses, and the reporting of greenhouse gas emissions will give them vital information as they decide where to invest their money.”
The Department for Energy and Climate Change (DECC) has also today unveiled a set of principles developed by Anglia Ruskin University to help mobilise private investment into climate change solutions.
They include a policy scoresheet that can be used to help test and develop investment grade policy, and identify barriers and opportunities for investment. Case studies such as power purchase agreements are included in an appendix.
With examples from around the world, it also looks at financial instruments that reduce risks for investors and picks out the best use of subsidies.
Story: David Thorpe, News Editor