CARBON REPORTING - 29.11.2012

Get ready for mandatory carbon reporting

In 2013, large businesses will be hit hard by new mandatory greenhouse gas emission reporting regulations. But smaller businesses will bear some of the impact too. Why is this, and what should you be worried about?

Mandatory reporting is coming

Next April, every company listed on the main market of the London Stock Exchange (LSE) will have to measure and report how much greenhouse gas they have emitted during the year. Mandatory carbon reporting is an important first step by the government towards making companies reduce their carbon impacts - and this is a core part of the overarching Climate Change Act 2008, which is aiming at a 50% cut to the UK’s emissions by 2025.

How must they do it?

Emissions will have to be reported in the Annual Report and Accounts. The new regulations will be introduced in April 2013, but companies will be expected to align their greenhouse gas emissions reporting with their own financial reporting year, so we won’t see emissions reported until early 2014.

Why should you care about it?

Although the legislation affects only large, LSE-listed companies, all businesses are likely to be affected - even small and medium-sized ones. This is because it’s the first step in ensuring large companies take their carbon footprint seriously. With regulation as the driving force, the likelihood is that big businesses will employ more complex measures to manage and report their emissions, including the impact of their supply chain.

Once their so-called Scope 1 and 2 emissions are under control (the emissions coming from within their own four walls and those attributed to the energy they purchase), these companies will start to address their Scope 3 emissions that come from their suppliers, i.e. you.

Should you be worried?

Not yet, but these regulations are just the start of government efforts to drive emissions down. Although the legislation isn’t directly aimed at the smaller business, it is designed to target you as SMEs are responsible for 45% of UK business energy use.

Note. According to the Confederation of British Industry, if this proves successful, there’s a very good chance that the regulations will be extended beyond those businesses which are publicly listed. Increasingly, these newly regulated businesses will refuse to work with suppliers that don’t have a handle on their carbon impact.

What can you do?

If you sell products and services into big companies, be prepared. There’s a good chance that these businesses you supply will soon ask you to provide details of the carbon emissions created by your organisation. In fact, they could make it a “condition of business”. So, in short, if you want to continue to supply them, you’ll have to provide the information.

Tip. Be proactive. You can carry out a simple carbon footprint analysis by using one of the tools or guides you can find online, such as that provided by the Carbon Trust (see The next step).

Although large businesses will bear the brunt of these regulations, because they will need to know their suppliers’ and contractors’ carbon footprints, it’s likely to affect smaller businesses too. Be warned, those who can’t provide this information may lose out on contracts.

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