Finance teams unprepared for CRC reporting responsibilities
The registration deadline for the Carbon Reduction Commitment scheme is approaching but many finance leaders are still unaware of their reporting obligations, according to research by the Carbon Trust Standard Company.
Under the terms of the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme around 5000 large businesses will need to purchase carbon allowances to cover their emissions from April 2011.
While 72% of finance leaders surveyed by the Carbon Trust Standard Company were aware that they will have carbon measurement responsibilities, 40% expect it to happen within the next decade, while 16% believe this will be the case within the next five years.
The survey also found that many finance heads do not have a clear strategy in place for managing carbon emissions in their businesses. Nearly half (48%) said they do not have a clear corporate target for carbon reduction and a further 16% don’t know if their company has a target or not. In addition, three quarters (74%) of finance decision makers admit that their business does not currently measure its carbon footprint.
“The debate about whether or not carbon foot printing and payment will become mandatory for business appears to be over as far as finance heads are concerned. Yet only a minority have taken action so far and these early movers have a clear advantage,” noted Harry Morrison, general manager of the Carbon Trust Standard Company - which offers independent certification for businesses that measure, manage and reduce their carbon emissions.
“Building carbon management into the DNA of the business now not only ensures preparedness for future compliance requirements but also brings immediate cost and efficiency benefits and competitive edge," Morrison added.
When asked if they believe the low carbon economy provides an opportunity for their business, 43% of finance heads take a positive view for their companies but the differences between industries are marked. For example technology and communications organisations and FMCG companies are the most positive, with 88% and 63% respectively viewing the low carbon economy as an opportunity. This contrasts with only 22% of professional services firms, 30% of financial services organisations and 31% of retailers.
The most commonly cited drivers towards a low carbon switchover were said to be the opportunity to increase efficiency and cut costs by reducing energy use (cited by 97% of respondents) and the need to comply with carbon legislation (95%). Other drivers were a desire to meet customer and employee expectations as well a need to protect the corporate reputation.
Less than half (45%) of all respondents cite investor expectation as important, although this figure almost doubles among finance heads at technology and communications companies (88%).
“About half of businesses appear to be on the front foot, seeing the business development opportunities in the low carbon economy rather than simply reacting to legislative requirements and cost incentives,” said Morrison.
“Addressing climate change is one of the most important concerns for business and society today and that businesses should be actively working to promote a low carbon economy,” said Rachel Sinha, sustainability manager, Institute of Chartered Accountants of England and Wales (ICEAW).
“We see finance heads having an increasingly important role to play in guiding their organisations’ carbon management strategy, not only in terms of setting budgets for purchasing carbon allowances and investment, but also in terms of managing carbon data as it becomes a regulatory requirement. They, therefore, need to be prepared to provide the evidence base and framework for their organisations to be able to turn this time of change into a competitive advantage.”
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Time for common sense
This is another example of Britain shooting itself in the foot by piling yet more regulation on our business sector whilst international competition, particularly in China, India, and Russia, laughs at us and rubs it's hands with glee because British business will become even less competative.
Changing business DNA?
What a great way of putting it.
At its simplest, biological DNA changes by selecting a makeup that is more likely to survive changes in conditions. The problem here is that for most people and their businesses the changes in conditions are not yet impacting sufficiantly to make change "natural". The irony is that once they do, it is likely to be too late. Scientists warn us of what we have done and continue to do and what the logical results will be but untill a few million or so start perishing (on a regular basis) or the power goes off for a week or two not a lot will happen.
I've read the posting twice and can't see any reference to businesses recognising the need to change their impact on the environment for the environment's sake, and therein lies the problem. It's like asking a ferry company why it keeps its ships seaworthy and them answering "because the legislation requires it" or "if we didn't people would be scared of using us putting us out of business" rather than because we think it's wrong to kill people.
It gets worse...
Those businesses have paid the CRC scheme any notice have focused on what they need to do now, and missed some key points in future sections which need immediate attention too. In particular, no-one is acting on the fact that the qualification period for the second phase of the CRC scheme is this financial year, meaning that right now smaller businesses who could possibly drop out of the inclusion criteria by cutting emissions have only 8 months left to do so!
For more information, check out this CRC strategy guide!