Every firm on the London Stock Exchange must include carbon emissions in its annual report, says Nick Clegg
Green software got a boost last week, with the announcement that all businesses listed on the Main Market of the London Stock Exchange will have to report their levels of greenhouse gas emissions from the start of the next financial year.
The announcement, made by Nick Clegg at the Rio+ 20 Summit in Mexico, affects around 1600 organisations and is intended to encourage them to slim down their emissions in response to investor pressure. It was welcomed by green industry lobbyists and firms providing carbon accounting.
Carbon emission reports are a must
The UK is the first country to introduce compulsory emissions reporting for companies, meaning they will have to include emissions data for their entire organisation in annual reports. “The introduction of the reports, following consultations with leading businesses, will enable investors to see which companies are effectively managing the hidden long-term costs of greenhouse gas emissions,” said the government’s announcement.
“Counting your business costs while hiding your greenhouse gas emissions is a false economy,” said Deputy Prime Minister, Nick Clegg. “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.”
Carbon accounting was expected to be a major growth area driven by carbon credit schemes, such as the UK’s CRC Energy Efficiency programme, but these have mostly withered. Green business lobbyists, the Aldersgate Group, have been pushing to get carbon reporting made mandatory, and approved the announcement.
“Our members strongly welcome the introduction of mandatory carbon reporting following extensive input into the process,” said Andrew Raingold, executive director of the Aldersgate Group. “This is an area where corporate executives have been demanding more regulation from government to provide greater clarity and transparency.”
The Carbon Disclosure Project, which has assisted firms in publishing carbon emissions data, also welcomed the announcement. “This latest move from the Government is a much-needed response to market needs and an important step towards improved valuation of environmental risk,” said CDP’s executive chairman Paul Dickinson. “After ten years of driving forward corporate disclosure on ghg [greenhouse gas] emissions and climate change information, I’m delighted that the UK government recognises the value of disclosure in accelerating emissions reductions. Regulation is essential in moving us towards a low carbon economy.”
Dickinson urged the government to use a standard reporting framework defined by CDP’s Climate Disclosure Standards Board (CDSB), designed to make greenhouse gas reporting an international standard, in the hope that other governments will follow Britain’s lead. “We look forward to sharing our expertise with the Government as they prepare the forthcoming regulations,” said Dickinson.
Carbon accounting companies also welcomed the chance to remind customers of their existence: “This new rule, being mandatory, is great news for UK business as they have been calling for stringent policy and not something you can opt-out of or something that only covers part of the market, said Peter Grant, CEO of CloudApps.
“Now, businesses can focus on creating a reporting process in time for the April 2013 deadline. In the long term, this law will save businesses money as they will recognise the areas where energy is overused and be able to control it.”
A CloudApps spokesman said the company was “expecting a flurry of inbound salse enquiries”.