Carbon Clear conducted a survey last month on corporate attitudes to Mandatory Carbon Reporting. Worryingly, we found that the lack of specifics has led nearly 3/4 of respondents to adopt a "wait and see" approach to the legislation.
We've been here before, with the Carbon Reduction Commitment Energy Efficiency Scheme (CRC). When the first consultation was launched in 2006 for what was then called the "Energy Performance Commitment", most corporates ignored it. By 2008, with the first qualification year underway, most companies with whom my team spoke were still in denial. "It will never pass into law," they claimed, "We're in the middle of an economic crisis!"
In March 2009, the full CRC consultation commenced and it became clear that the Labour Government wasn't going to back down. And still many firms decided to wait and see. At that point, the claim became, "The Tories are more business-friendly; they will cancel the scheme once they come into power."
Fast forward to October 2012, and as we all know the CRC hasn't been cancelled - at least not yet. However, it has changed considerably since 2008. The timings have shifted repeatedly, the rules for purchasing allowances were only finalised in 2010, the league table has been amended, and the specifics of the reporting requirements have been updated.
Most notably, the CRC has changed from a type of cap-and-trade scheme into something that looks suspiciously like a carbon tax. While the £12/tonne CO2 payment represents only a small portion of most companies' energy spend, it will bring billions to a cash-strapped Treasury.
What is most interesting and relevant for businesses potentially affected by Mandatory Carbon Reporting, is that it is the outputs remain a work in progress: the inputs have remained remarkably consistent. If your company is captured in the CRC, you must:
- Define the organisation
- Identify your locations
- Locate supplies
- Identify meters and suppliers, and
- Prepare your evidence pack.
Those who took a "wait and see" approach until March 2010 (or later) found CRC compliance to be a significantly more stressful process.
Something similar seems to be happening with Mandatory Carbon Reporting. The majority of companies so far have taken no steps to prepare, beyond setting up a watching brief.
I believe this is a missed opportunity. If history is any guide, the final Mandatory Carbon Reporting rules will only be released at the last minute. Companies that wait too long before taking action may be setting themselves up for unnecessary hardship.
While some uncertainty remains around the specifics, we already know what goes into Mandatory Carbon Reporting: firms must measure all their Scope 1 and 2 emissions for all Kyoto greenhouse gases. For some large and complex businesses, this will be easier said than done.
As I've stated previously, companies that already report their emissions to the Carbon Disclosure Project or other schemes will have a head start, even though the specific reporting outputs may differ. Once you are collecting your data in a robust and consistent manner, it is a relatively simply matter to produce a range of different reports.
What is more, we consistently find that firms who measure their carbon emissions begin to look at their operations in a different light and identify valuable efficiency and cost saving measures that strengthen their bottom line. Indeed, a sound carbon monitoring and reporting system sets the stage for a well-designed carbon management programme and transforming your company into a climate change leader.
There are scores of detailed policy lessons we can learn from the CRC. But the main lesson that we and our customers have learned is that uncertainty is no excuse for inaction. Indeed, early action is good for business.