Don't Panic - well not just yet
The Government's handling of the phantom tanker driver strike induced widespread public panic and generated a huge outcry, but an equally strong condemnation of further Government dithering, failed to attract the same publicity.
The criticism came from the CBI, big business, green groups and politicians, amongst others, as Defra announced that no decision had yet been reached on the decision to introduce mandatory reporting for greenhouse gas (GHG) emissions.
The reason for the no decision statement is the imminent 6th April deadline that was set by the 2008 Climate Change Act as the final date for a decision on mandatory carbon reporting (MCR), which could see reporting of carbon footprint data become a compulsory item in the annual accounts of larger UK companies. However, Defra claims ministers need more time to consider submissions to the consultation that ran between May and July last year, which detailed four different approaches.
This lack of decision-making only exacerbates an already frustrating situation for the 2000 or so organisations swept up in the CRC Energy Efficiency Scheme fiasco - a scheme which already requires many businesses and other organisations to measure and report on their carbon emissions associated with energy usage, and to buy permits for the privilege. The recent budget saw the Treasury announce it would scrap the CRC in favour of a much simpler green tax scheme, if the current arrangements were not simplified, to its satisfaction, within six months. Of course 'much simpler tax scheme' is often Treasury code for a scheme designed to affect more organisations and raise more revenue.
It's hard to argue with the fundamental premise behind the CRC - a regime of financial and reputational drivers providing a real boardroom incentive to improve energy efficiency. Yet the scheme is so complicated - and that's coming from a lawyer, trained from birth to view impenetrable legislation in a favourable light. And it's rather startling to reflect that the CRC was borne out of a consultation back in November 2006 - more than 5 years ago, a long time to get the design right, you would have thought.
In response to the Treasury's latest announcement, DECC is therefore consulting on a last ditch attempt to simplify the CRC, with proposals aimed at cutting administrative costs by up to £330m. But cost cutting is not the only problem. Despite the Environment Agency publishing its first CRC performance league table in November last year, many of those involved want it abolished. Some organisations claim the table fails to take into account the effort organisations had already made to reduce carbon emissions through energy efficiency measures, before the table was compiled.
And of the course the complaints continue to rumble on about the Government's fundamental redesign of the CRC not so long ago, changing the scheme so that the revenues raised now swell the Treasury coffers, rather than being shared amongst the best-performers on the CRC league table as originally intended; a move which renders the league table now rather more trouble than it's worth.
With a decision on mandatory reporting not now expected for a few months and Defra claiming there are no plans to tie reporting to the proposals on a revised CRC, one really has to wonder where all this is heading.
Many organisations caught by the CRC, not to mention those larger emitters caught by the EU Emissions Trading Scheme, support mandatory reporting in principle but not if it creates additional layers of administration and reporting, And that's the problem. The Government is in danger of appearing indifferent to the whole process by which organisations will measure, manage and reduce their carbon emissions. It is in serious danger of appearing interested only in the revenue it can raise and that's not how you 'sell' your vision or build momentum in your plans to help the UK transition to a low carbon economy.
Regardless of what any future mandatory reporting scheme might look like, carbon reporting is already commonplace, with many voluntary schemes around. The Prince's Mayday Network is one such scheme, and begins its annual reporting timeline in June, The Mayday Network is a collaboration of businesses taking action on climate change with nearly 4,000 organisations signed up to its principles. Free to join, it offers its members an excellent reporting framework within which to take action to reduce costs, engage employees and other stakeholders, build resilience to climate change and share best practice.
There are also a number of sector-based voluntary reporting schemes, including the Legal Sector Alliance (LSA), to which SGH Martineau has recently submitted its carbon footprint for publication. The LSA is a movement of law firms and organisations committed to reducing their carbon footprint and adopting environmentally sustainable business practices, and if you are Midlands based law firm which is not yet a member get in touch and I'll send you details.
So, the writing is probably on the wall - carbon reporting is here to stay. A mandatory reporting scheme will add wider take up and a measure of consistency and robustness of approach, but simplicity is key, and it is absolutely vital that the different schemes and strands of regulation in this area are coherent and do not overlap.