UK Deputy Prime Minister Nick Clegg has said more than 1,800 companies are going to be mandatorily required to report greenhouse gas emission levels from April 2013.
Clegg’s confirmation comes as he is expected to attend the Rio +20 summit and demonstrate the UK government’s commitment for increased sustainability.
In an article for the Guardian, Clegg wrote that while nine out of ten chief executives say sustainability is fundamental to the success of their business only two out of ten record the resources they consume.
“So, the UK will press for governments to come together, working with those companies already blazing a trail, to give ‘sustainability reporting’ a global push. And in the UK, from the start of next financial year, all firms listed on the London Stock Exchange will have to report the levels of greenhouse gases they emit,” Clegg said.
PwC UK sustainability and climate change partner Alan McGill said this requirement shouldn’t be too much of an extra burden, but the timetable for financial reporting may be a challenge, and there are issues around coherence of reporting and materiality.
“Companies that aren’t already reporting may worry about the additional regulatory burden. But this isn’t just about reporting. It’s about setting targets and driving efficiency, which should save money, as well as carbon,” McGill explained.
“For government and investors, it lifts the lid on environmental efficiency and carbon productivity in UK business.”
He added that the main surprise is it’s not just all large companies who will have to comply with the new regulation but all listed ones.
“But it’s a bit early to see the government going much further than listed companies at this stage. There may be fears that extending it beyond large listed companies, into private small or medium sized enterprises could be too much of a burden,” McGill said.
Deloitte UK head of sustainability Guy Battle said increased regulation will create a step change in carbon measurement and reporting and add value for businesses. “This isn’t purely about compliance. It’s about ‘good’ business sense and taking this regulatory push as an opportunity to identify new carbon strategies and potential cost savings,” he said.
Institute of Chartered Accountants of England and Wales (ICAEW) chief executive
Michael Izza said that by this move the argument as to whether reporting should be mandatory or not has passed. But warned a method and system is needed “that works” and will “drive behaviour change from business, which is why this reporting is to be introduced”.
“We believe the Climate Disclosure Standards Board (CDSB) framework which links carbon footprint to strategy risk and performance is the best way to achieve this,” Izza recommended.