Coalition calls for common carbon reporting standard

An open letter addressed to the Prime Minister has called for the introduction of enabling powers in the Climate Change Bill for mandatory carbon reporting standards.

The letter, written by the Aldersgate Group and supported by a wide ranging coalition of businesses and MPs, maintains that the lack of a standardised carbon reporting and accounting system for British companies is impeding the UK Government’s long term goals of reducing emissions and creating a low carbon economy.

The letter is signed by a range of organisations and private companies across a variety of sectors, as well as the Mayor of London and twenty five MPs representing the three major political parties, who all support the need for companies to report clear and comparable information on their greenhouse gas emissions and other factors relating to climate change.

The initiative follows on from the launch of a report by the Aldersgate Group entitled Carbon Costs: Corporate Carbon Accounting and Reporting, which finds that very few FTSE 350 companies have credible carbon reporting mechanisms in place, and those companies that do cannot be compared because they calculated emissions differently. The report argues that the lack of a clear definition and protocols is impeding progress and that the UK urgently needs a common reporting standard, which is driven by Government and delivered by business.

“We need a clear and common standard so that we can track and compare CO2 emissions from businesses. We can still avert catastrophic climate change, but it will require very significant and immediate emissions reductions, which can only be achieved if all parts of society - governments, businesses and individuals - take responsibility for making their own contribution.

The Mayor of London, Ken Livingstone

The Mayor of London, Ken Livingstone, said: ‘We need a clear and common standard so that we can track and compare CO2 emissions from businesses. We can still avert catastrophic climate change, but it will require very significant and immediate emissions reductions, which can only be achieved if all parts of society - governments, businesses and individuals - take responsibility for making their own contribution.’

Adrian Wilkes, chairman of the Aldersgate Group said: ‘The number and diversity of signatories to this letter demonstrates the wide concern that urgent action is needed. The current lack of comparable, standardised measures means that companies that are reducing their carbon emissions are unable to demonstrate their success, while those that are not reducing emissions cannot be effectively challenged. Yet only recently Gordon Brown stated that Chancellors of the Exchequer will now count the carbon as they currently count the pounds.’

Wilkes added: ‘The lack of transparency obscures the UK’s true contribution to carbon emissions, and would impede the setting of accurate carbon targets and budgets in the proposed Climate Change Bill. A carbon reporting standard would also help the UK reaffirm its leading position in the international financial markets.’

The letter argues that carbon emissions are now a material commodity with an economic and financial value to business, investors and the city. They need to be properly defined, measured, accounted for, audited and reported in a similar way to other physical commodities and financial instruments.

“The current regime undermines the comparative advantage which would accrue to companies that are taking a lead on cutting their carbon emissions. We need to re-address this bias to accelerate our transition to a low carbon economy.

Sir John Harman, chairman of the Environment Agency

In a release the The Aldersgate Group said: ‘A common protocol would demonstrate that companies have used the appropriate process to assess risks, define boundaries, measure and report emissions in a way that is meaningful, consistent and comparable. Such transparency would create a level playing field for UK businesses, allowing investors and consumers to make low-carbon choices and comparisons. It would also support the aims of the Climate Change Bill, and would make emissions trading schemes and other policy initiatives to cut emissions easier to design and implement. As a result, the London Stock Exchange could become a world leader in carbon accounting and reporting.’

Sir John Harman, chairman of the Environment Agency, said: ‘The current regime undermines the comparative advantage which would accrue to companies that are taking a lead on cutting their carbon emissions. We need to re-address this bias to accelerate our transition to a low carbon economy.’

George Latham, head of Sustainable & Responsible Investment (SRI), Henderson Global, stated: ‘If the UK wants to be at the forefront of the transition towards a low-carbon economy, then we need a disclosure regime that is aligned with that aspiration. We believe the current system of accounting and financial regulation is not sufficient in a carbon-constrained world.’

Dr Sharon McClenaghan, senior corporate sector adviser, Christian Aid, said: ‘Up to 15 per cent of worldwide CO2 emissions is financed by money raised in the UK. Morally we know we have to do something about this, as climate change is already having a devastating impact on some of the world?s poorest communities, but it is also a business problem a hidden liability for the London-based investors that fund these activities.’