- 60% of firms listed on London Stock Exchange already submit some form of report
- These reports are not classed as in line with DECC guidelines
- Large business not listed may have to report from 2015
- CRC Scheme criticised as ‘green tax’
Speaking at the Rio+20 summit recently, Deputy Prime Minister Nick Clegg announced that all companies listed on the Main Market of the London Stock Exchange will soon be forced to report their annual carbon emission levels. Some 1,049 businesses will be required to submit mandatory carbon emission reports from April 2013.
Clegg announced: “Counting your business costs while hiding your greenhouse gas emissions is a false economy…. British companies need to reduce their harmful emissions for the benefit of the planet, but many back our plans because being energy efficient makes good business sense too. Climate change is one of the gravest threats we face. The UK is leading the urgent action needed at home and abroad.”
Officials have calculated that the move will save around 4 million tonnes of CO₂ by 2021, but this has not stopped it being heavily criticised by some as little more than adding further bureaucratic directives to companies already working to reduce their greenhouse gas emissions and carbon footprint.
The CRC Scheme is one such directive that is under fire: initially, the intention was to introduce a ‘credits’ system, where companies could buy credits for each ton of their CO₂ emissions, and sell unused credits on to companies that could not meet requirements.
However, a government u-turn now means that those companies which perform poorly will be subject to penalties – with the money going directly into the public finance purse. This leaves companies seemingly without incentive to perform well, as essentially all companies look to be subject to a stealth ‘green’ tax, regardless of size.
The news that other large businesses which are not listed could also be subject to the same regulations has raised concerns over prospective growth, and indeed the very future of many UK businesses.
Fiona Slater, Director at Slaters Electricals, said of the announcement:
“I agree that we need to make a sustainable future for the future generations. However it scares me that companies that trade on the international market are being taxed in the UK for carbon use – it puts them at an immediate competitive disadvantage. In some cases taxing these companies for their carbon use could put them out of business. For example Rio Tinto’s Alcan plant in Northumberland is closing this year, due in part to the carbon tax. They were probably the biggest single user of energy in the North East and they may now no longer have carbon emissions but at the price of the plant’s closure – is this really a good result for the UK?”
The Environment Agency estimates that 60% of all firms listed on the Main Market of the London Stock Exchange currently submit some form of report of their carbon emissions: but that these reports are not in line with DEFRA or DECC guidance.
There is evidence that current directives greenhouse gases are reducing the level of emissions from UK businesses, but there is a growing concern that the number of schemes may cloud the waters: it may be that businesses focus more on compliance, and less so on looking at genuine, practical emissions reduction.