Mandatory greenhouse gas reporting for companies is on the way – or is it?
In case you weren’t aware (and many companies are not) the Government currently expects you to voluntarily report your greenhouse gas emissions using a reporting framework based on the international Greenhouse Gas Reporting Protocol Corporate Standard and ISO 14064-1.
Earlier this year , the Government consulted on making reporting mandatory for businesses. Under the terms of the 2008 Climate Change Act, it is required to make a decision on this before April 6 2012. However, this is a get out clause. The Government can decide to retain the status quo, but must go cap in hand to Parliament and explain itself.
Given the glacial pace at which our legislating bodies move, April 2012 is no time at all. A decision will need to be made soon. According to one Defra insider I contacted, a ministerial decision is widely expected this side of Christmas.
Who will need to report?
In its consultation document, the Government set out a range of options that would impact on anything from 1,000 (quoted companies listed on the London Stock Exchange) to 30,000 of the UK’s largest public and private companies.
They also threw in a hint that they may tie mandatory greenhouse gas reporting in with their planned ‘simplification’ of the widely criticised CRC Energy Efficiency Scheme (the consultation period for which starts spring 2012). The CRC currently affects around 4,000 companies, but this number can be easily increased, or decreased, by adjusting the 6,000 megawatt hour per year qualifying threshold.
The latter is certainly attractive to a Government committed to reducing the legislative ‘burden’ business and looks to me to be the most likely outcome. So, if you are covered by the CRC, be prepared for mandatory reporting.
What to report?
Whereas there remains some uncertainty over who will need to report, the Government is unlikely to deviate from its current (voluntary) guidelines on what companies will be expected to report.
In essence, companies will need to report direct GHG emissions (from owned transport, other fossil fuel use, fugitive gases and production processes) and the indirect use of energy (for example, from purchased electricity, heating and cooling). These are commonly called ‘Scope 1’ and ‘Scope 2’ emissions. Companies will also be encouraged to report other, Scope 3, emissions though it is unlikely that reporting these will be mandated in the first instance.
The real issue
Of course, all this fuss about reporting shifts the focus away from the business case for managing emissions, which is tied to the inexorable rise in energy prices, reducing supply chain volatility, responding to regulatory controls, brand building and reputational risk.
Ultimately, reporting should not be undertaken under duress. It is simply good management.