Defra - Carbon Reporting Consultation

Defra announced today (27 March 2012) in a statement to parliament that it was delaying its decision on whether to introduce mandatory carbon reporting. 

The decision has been delayed while the government considers the fate of the CRC Energy Efficiency Scheme.

Last year, Defra sought views on whether or not regulations should be introduced to make it mandatory for some UK companies to report on their greenhouse gas emissions.

Covering the whole of the UK, the consultation was launched in May 2011 and closed on 5 July 2011 with the aim of carbon reporting coming into effect as early as April 2012, dependent on the outcome of the consultation.

Four options to promote more widespread and consistent reporting of GHG emissions are set out:  a voluntary approach and three mandatory approaches.

Option 1 - Enhanced voluntary reporting

There are already a number of companies reporting voluntarily on their GHG emissions.  Research by PwC/CDP for Defra highlighted a range of benefits for companies that do this:

  • brand building
  • improved stakeholder and investor relations
  • cost savings from measuring, reporting and then managing emissions.

Option 2 - Mandate under Companies Act for all Quoted companies

This option is proposed because the provision of information on greenhouse gas emissions by these companies is likely to be of interest to investors and potential investors.

Option 3 - Mandate under Companies Act for all large companies

This option would require all large companies - both public and private - to report on their GHG emissions. Statistics suggest that there are between 17000 and 31000 large companies in the UK.

Option 4 - Mandate under Companies Act for all companies whose UK electricity consumption exceeds a threshold

This option would require all companies whose UK consumption of electricity exceeded a minimum threshold of half-hourly metered electricity in one year to report on their GHG emissions.  It is proposed that this option would be linked to the qualification criteria in the CRC Energy Efficiency Scheme.

The consultation also considers whether verification of emissions should be sought; is internal verification of greenhouse gas emissions sufficient or should external third party assurance be employed?

As the consultation document states:

“Independent assurance provides a level of confidence in report and the use of the data for decision making,”

and

“There are risks to businesses of not obtaining verification of their emissions reports.  Verification statements are a statement of confidence in the information reported and unreliable data may lead to charges of ‘greenwash’.”

Keep checking back here for the latest news on the Defra consultation.