Making a Decision on Mandatory Carbon Reporting

  • Author: Lucy d'Arville
Posted on 20-06-2011

In current debates around carbon reporting, many businesses are supportive of making this a mandatory rather than voluntary process.  We are at a place where we can no longer rely on voluntary reporting.  Unfortunately many businesses need to be mandated and have responsibility assigned to the Finance function in order to take the issue seriously and realise the benefits of carbon reduction.

However, in a recent speech at a recent event hosted by the Aldersgate Group, Mike Anderson emphasised that the decision on whether to implement mandatory carbon reporting would come down to an assessment of the benefits versus burdens for businesses. It is not enough for business to state that they support mandatory carbon reporting.  In order to introduce the regulation, data is needed to support the case. The necessity of businesses providing data was underscored by questions raised about the assumptions made by DEFRA in its Impact Assessment.  At present the upper end cost estimation of £6 billion for mandatory carbon reporting for all large companies, the preferred option by business in DEFRA’s consultation, far outweighs the benefits proposed.

In the process of consultation, business and industry bodies must not only provide input on the structure of the regulation (eg. size of company to be included, scope to be reported on, importance of independent assurance), but must also provide quantitative detail on the benefits their businesses have gained from reporting.

It is critical DEFRA makes this message loud and clear over the coming weeks ahead of the consultation deadline of 5th July 2011, as this is likely to be one of the last opportunities for businesses to be heard. Even though over 90%* of FTSE 100 companies measure their carbon footprint, fewer than 10 per cent report their carbon emissions to DEFRA UK standards according to a 2010 Deloitte survey+.

Achilles will be responding to the consultation and providing detail on its own benefits and costs from carbon reporting as well as its customers. For example, CEMARS certified Scottish Parliament is committed to becoming a low carbon organisation and reducing its carbon emissions by 42% by 2020 compared to the 2005/06 figures. If the medium term target of reducing emissions by 20% by 2015 is met, the estimated cost savings will be in the region of £245,000 for Scottish Parliament.

This is an opportunity that the UK cannot afford to miss. It should not be seen as reducing the UK’s competitiveness but improving it as businesses become more efficient and adopt a more sustainable model.

*Referenced in the meeting by Colin Baines (Campaigns Advisor at The Co-operative Group)

+Deloitte (2010) Carbon reporting to date: Seeing the wood for the trees. London.

Lucy d’Arville is the director of the carbonReduction programme at Achilles Information Ltd.

Time is running out for your CRC compliance

  • Author: Lucy d'Arville
Posted on 09-09-2010

The Carbon Reduction Commitment (CRC) Energy Efficiency Scheme, which requires organisations to measure, manage and report their emissions related to energy use, came into effect on 1 April 2010.

Current indications in the market are that a number of organisations are significantly behind in their preparations for CRC compliance. As of August 23, only a third of affected organisations had registered, according to Environment Agency figures. Registration closes on September 30, 2010.

There are three main areas where many companies are behind where they should be:

  • First, understanding whether they need to comply with the regulation. This has been driven either by confusion around the CRC rules or insufficient resources dedicated to compliance internally.
  • Second, correctly gathering the information needed for the CRC evidence pack and ensuring a transparent audit trail. Examples include identifying all half-hourly meters, completing the registration process, correctly collating information for the CRC evidence pack.
  • Third, registering to achieve the Early Action Metric for improved CRC League Table performance. This could drive significant financial benefits to an organisation equal to 10% of the total carbon allowances purchased.

With substantial penalties, including for example £5,000 which increases by £500 a day for a failure to register, the urgency of CRC compliance cannot be ignored.

We need greater collaboration on carbon reduction

  • Author: Lucy d'Arville
Posted on 23-03-2010

A source of supply chain risk that threatens to play a significant role in the near future is a supplier’s commitment to reducing carbon emissions. Only last month Wal-Mart, the world’s largest retailer, announced that it would cut 20 million metric tons of greenhouse gas emissions from its supply chain by the end of 2015 – the equivalent of removing more than 3.8 million cars from the road for a year.

To achieve such goals buyers across all sectors are starting to be tasked with finding suppliers that fall in line with their company’s policy on carbon reduction and are looking for suppliers that are active in monitoring and reducing their carbon footprints. This growing focus on the supply chain as a means to hitting carbon reduction targets is hardly surprising.

According to the McKinsey Global Institute Report 2008, ‘for consumer goods makers, high-tech players, and other manufacturers, between 40 and 60 per cent of a company’s carbon footprint resides upstream in its supply chain. For retailers, the figure can be 80 per cent. Therefore, any significant carbon-abatement activities will require collaboration with supply chain partners.’

Legislation is already pushing many organisations to think about their carbon usage. On the 1st April, five thousand companies in the UK will be affected by new legislation requiring all companies on half-hourly electric meters to register for the CRC Energy Efficiency Scheme, committing them to submit an information statement on their carbon usage.

Soon, the risk of carbon complacency may be one of the most significant for suppliers as buyers pursue a policy of reducing the carbon footprint of their supply chains.

However, suppliers, and buyers alike, are perplexed by the range of emerging standards, measurement techniques, reporting tools and management methods available and suppliers are challenged by the complexity of presenting varying data to many organisations.

Clearly, establishing an environment in which practical progress can be made requires a collaborative approach by an industry on a collective basis so that the challenges of interpretation and implementation can be clearly understood and used to develop best practice methodologies that may be shared throughout the community – research has already demonstrated the inaccuracy of ‘carbon calculators’ for instance. After all, it makes little sense for suppliers to work independently, each measuring in their own way and coming out with very different figures. By working together they can ensure that buyers are offered a true comparison and, what is more, the cost burden can be shared. But importantly, this process needs to be properly audited and suppliers certified to a common standard.

The utilities sector is leading the way in adopting a collaborative approach to this problem, working through the internationally recognised Certified Emissions Measurement and Reduction Scheme (CEMARS). It might be worth other sectors looking at collaborating in this way too.