Defra outlines four options for carbon reporting

The Department for the Environment Food and Rural Affairs has outlined options for improving carbon reporting among businesses, including making it a legal requirement.
The four options, three of which propose mandatory reporting and one voluntary, are being put forward in a consultation launched by Defra in an attempt to reach a decision on how to improve greenhouse gas (GHG) emissions reporting by companies. The 2008 Climate Change Act requires the Government to make GHG reporting mandatory by April 2012, or explain to Parliament why it is not. Defra aims to reach a final decision by the autumn and said it was launching today’s consultation in order to ensure it does not put “unnecessary burdens” on businesses.

“Our aim is to increase the number of companies which actively manage and report their emissions, so we want to hear from businesses how they think we will achieve more widespread and consistent reporting,” said Environment Minister Lord Henley.

The regulatory options are all aimed at large companies and would require firms to report their GHG emissions in their directors’ report, in line with the 2006 Companies Act. This requires directors to report on environmental matters in their annual reports and accounts.

Under option one, all quoted companies would be mandated to report on their GHG emissions,.

Option two would make it a regulatory requirement under the Companies Act for all large companies. The Companies Act defines large companies in terms of their number of employees, gross assets and turnover.

The third option would make it a legal requirement for companies that consumed a certain level of electricity to report on their emissions. Under this option, Defra is proposing companies should have to report following the same qualifying criteria as the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme, a mandatory UK-wide scheme that targets emissions from large public and private sector organisations. Under the CRC, organisations who are supplied with more than 6,000 megawatt hours of qualifying electricity must register as participants.

The fourth option proposes maintaining a voluntary system, but enhancing it. A report released last week by the Environment Agency showed that more companies were reporting their GHG emissions, but the quality was varied and in some cases was too basic.

Under new voluntary proposals, Defra said reporting could be improved either through the Government increasing awareness of the benefits of reporting. Other options it put forward were increasing support and collaboration for reporting organisations, such as the Carbon Disclosure Project, developing sector specific voluntary agreements, or creating bilateral agreements between Government and companies.

A Defra spokesperson today confirmed that smaller companies were not being included in any of the mandatory options so as not to increase unnecessary red tape. However, he said that some larger companies were calling for mandatory reporting. “The feedback we have received is that some larger companies want to create a level playing field.”

Defra research has shown that reporting emissions has helped companies improve their environmental footprint, as well as improve their image and made them more attractive to investors.

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