‘Greenest government ever’ turning out to be less radical than CBI on mandatory carbon reporting

By Willie Bain MP,  Labour shadow minister for Environment, Food and Rural Affairs

There are worrying signs that the  Government is backsliding on its commitment to introduce mandatory reporting of carbon emissions by the public sector and large companies based in the UK by 2012.

This has been identified by environmentalists as a key component of any plan to on reduce greenhouse gas emissions in line with Government targets, by 50% by 2025 and by 80% by 2050, relative to 1990 levels.

In going slow on this vital commitment, the Government is setting its face against advice from a coalition of interests as broad as the WWF and the CBI, and acting against the spirit on the Coalition agreement which pledged to introduce mandatory reporting by 2012. Currently just over a fifth of FTSE registered companies report emissions on a voluntary basis.

Consultants Adelphi have recently conducted their own independent assessment of the effects of mandatory reporting, on behalf of NGOs such as the Co-operative Movement, WWF, and Christian Aid, which differs radically from that issued a few months ago by DEFRA.

They discovered that in accepting too narrow a focus without considering the wider social and environmental benefits, DEFRA overestimated the total costs of carbon reporting by the 24,000 largest companies in the UK by up to £4.6bn, and that they had also underestimated the benefits by up to £980million, a difference of nearly £6bn.

DEFRA were also too cautious in modelling the benefits from carbon reporting as existing simply in the first year, without assuming that further carbon reductions could be generated in the following nine years.

Neither has DEFRA sufficiently considered the benefits which businesses will themselves which to derive from additional carbon reductions as they experience cost savings through increased innovation and productivity, and competition from competitor companies drives further reductions. The DEFRA study also omits the benefits from reporting of carbon emissions in the transport sector, particular from rail freight, freight on inland waterways, coastal shipping and aviation.

 The Adelphi research omits certain factors which could contribute even more beneficial effects, such as the reporting of international greenhouse gas emissions, health benefits from reduced emissions from freight transport other than road, and other competitive advantages for the UK in being a leading low-carbon economy. Allied to this, changing the time period in analysing the benefits of carbon reporting from ten to twenty years pushes the balance further in favour of additional benefits.

 The CBI have also published a robust response favouring mandatory reporting initially among Carbon Reduction Commitment participating companies, with a subsequent roll out to the larger corporate sector, which they see as key to incentivise change in companies attitude to emissions reduction, more effective energy use – as they say in their submission to the DEFRA consultation, what gets measured gets managed.

It is not as if the Government is not receiving strong advice from its own supporters in the public affairs community on this issue. Policy Exchange in their report on Boosting Energy IQ have strongly supported mandatory reporting in the public and large-scale corporate sectors.

Labour should be unambiguous in its commitment to the policy set out by Ed Miliband in Government and in the Climate Change Act 2008 before the General Election – mandatory reporting, including of Scope 3 emissions, by 2012 at the latest, reflecting the social and environmental responsibilities which the largest companies have, with the rest of society, in reducing the damage to the world through greenhouse gas emissions. Accurate reporting of emissions by the large scale corporate sector is the first step in fulfilling this crucial task.