At the Rio +20 Earth Summit Nick Clegg yesterday announced the intention to make GHG reporting mandatory from April 2013. This has been a long awaited announcement following a consultation in June last year. At the time, there were mixed views from stakeholders on whether the government should mandate on GHG reporting and what followed was a year of behind-the-scenes negotiations and detailed assessment of costs.
The announcement was broadly welcomed yesterday with a growing number of groups, BCSC included, welcoming the decision as a step in the right direction of managing GHG emissions and raising awareness. There is a also a growing consensus that the introduction of mandatory reporting now further makes the case that the CRC should be replaced with a simplified environmental tax, possibly through the Climate Change Levy (CCL) and complemented with GHG reporting instead of a Performance League Table.
So, now the announcement has been made, what does this mean for business? At the moment, only companies who are listed on the London Stock Exchange are required to report on their GHG emissions in their annual reports to Company House. Defra will then review the case in 2015 with a view to extend the regulations to all large companies in 2016. This seems like a sensible approach to me as listed companies are likely to already be reporting and will be able to disseminate best practice to large companies as they are brought into the mix.
It is not yet clear exactly what the reporting requirements will be, but looking back at the Defra consultation proposals from last year, it is likely the following will be need to be included in the report:
• Organisational boundary, but it is still unclear whether type of boundary setting will be flexible or stipulated
• Overseas emissions, in order to limit 'off shoring' of emissions
• The six Kyoto Protocol gases
• Scopes 1 and 2 but not 3 which is recognised as being significantly more difficult to calculate
• An intensity ratio of your choice
• The report will need to be included in Director's report of the annual report
• The methodology used for data collection
Defra will consult on the Draft Statutory Instrument ahead of the implementation in April 2013.