Is red tape drive heading for another green U-turn?
Despite evidence that businesses gain reputational and other benefits from an open approach to reporting their carbon footprint, the Coalition is set for a U-turn on plans for mandatory reporting, due this year. Ministers are apparently considering whether to limit the system to larger companies only. Yet Defra Minister Lord Henley said last autumn: “Disclosing good quality information helps investors to make informed decisions about where and how to invest, taking account of how well the company is managing its environmental impacts.” It seems the Coalition’s new drive against red tape trumps all. But does this make sense, when a regulation is good for business?
The gainsayers include Adam Marshall of the British Chambers of Commerce, who commented in the FT (8 April 2011): “In the middle of a major deregulatory push by the government it would be incredible to impose this requirement which could ensnare lots of medium and small companies, particularly manufacturers.”
Yet Lord Henley also said of his deaprtment’s research report into this issue: “It outlines how reporting of greenhouse gas emissions has played a part in helping companies to manage their emissions and improve transparency for investors.”
The facts point to the benefits of good, well thought out regulation. Here’s what the Institute for Environmental Management and Assessment (IEMA) said – it’s the UK’s largest membership association for environmental and sustainability professionals (over 15,000 members): 54% of practitioners say that reporting makes a valuable contribution to keeping emissions reductions on the agenda. Carbon reporting enables organisations to:
- inform decision making and prioritise action;
- improve visibility of greenhouse gas (GHG) management – internally and externally
- keep senior staff informed of progress
- benchmark performance
There’s also significant and growing interest from investors in GHG emissions data. Investor pressure is one of the major drivers for reporting. Investors consider climate change to be important to investment decisions. Carbon reporting is part of a wider process – reporting in isolation is not enough to drive emissions reductions and needs to lead to associated behaviour change. But companies say there are spin-off benefits associated with reporting – reputation, brand value and being seen as a market leader; and investor benefits, such as improving investor relations and being able to respond to shareholder requests.
A year go, Nick Clegg was among MPs who signed a letter calling for mandatory carbon reporting by companies, a decision that has to be made by April 2012 under the Climate Change Act.
In November 2010, Defra said the government would decide “in early 2011” whether to introduce compulsory reporting. Greg Barker, climate change minister: “We will announce a robust way forward in the new year that will require a clear route map on how companies are required to report their carbon emissions.” Four months later, however, the decision has still not been made and ministers are considering whether to limit the system to larger companies only.