U.K. to Make Public Companies to Report CO2 Emissions

The U.K. will make publicly listed companies report their greenhouse-gas output, the first country to do so as it calls on big business to clean up its act.

All companies listed on the main market of the London Stock Exchange will have to include emissions data in their annual reports starting in April, the Department for Environment, Food and Rural Affairs said today in a website statement.

Large public- and private-sector organizations account for about 10 percent of Britain’s emissions. Tackling the pollutants pumped out by factories, utilities and other big companies may help the U.K. meet a European Union target to cut carbon output to 50 percent of 1990 levels by 2025, a goal that’s also driven the growth of renewables from wind and biomass to solar power.

The requirement on companies to report the data could save 4 million metric tons of carbon-dioxide emissions by 2021, according to Defra.

The Confederation of British Industry, the U.K.’s biggest business lobby, welcomed the move for saving companies money on their energy bills, while the Institute of Environmental Management and Assessment said the program doesn’t go far enough because it fails to include all large businesses.

Good Business

“British companies need to reduce their harmful emissions for the benefit of the planet,” Deputy Prime Minister Nick Clegg said in the statement. “But many back our plans because being energy efficient makes good business sense too.”

The government will decide in 2016 whether to extend the obligation to all large companies, according to the statement.

The program won’t put an undue burden on most major companies, which already voluntarily disclose their emissions, said Doug Johnston, leader of U.K. Climate Change and Sustainability Services at consultants Ernst & Young LLP.

“Companies will be hoping that the new requirements bring clarity to an area of business regulation that is widely recognized as playing a key role in how the U.K. responds to the challenge of climate change,” he said in an e-mailed statement.

Clegg outlined the plans at the Rio+20 conference in Rio de Janeiro, where delegates from 190 nations are discussing steps to stem environmental degradation. The summit was preceded by a corporate sustainability forum at which companies were urged to standardize and improve sustainability reporting after divergent guidelines emerged on world stock exchanges in the past decade.

Guide Investment

“Investors are now looking hard at the green credentials of businesses, and the reporting of greenhouse-gas emissions will give them vital information as they decide where to invest their money,” Caroline Spelman, U.K. secretary of state for the environment, said in the statement.

Exchanges in Sao Paulo, Copenhagen, Johannesburg and Singapore already have begun requiring members to report material data about environmental risks in a way that allows investors to make comparisons. Others have yet to make such demands.

“Provided this is done in a sensible way, this announcement is to be applauded,” Rhian Kelly, CBI director for business environment policy, said in a statement. Kelly urged the government to scrap a separate tax on emissions known as the Carbon Reduction Commitment, which covers 5,000 organizations, to avoid “duplication” by providing simpler rules.

Catch All

The full benefits of mandatory reporting will only materialize if it applies to all large businesses, of which there are about 24,000, Martin Baxter, executive director of policy at the Institute of Environmental Management and Assessment, said in an e-mailed statement.

EEF, a U.K. manufacturers association, echoed the call for a broader application.

“Government should have waited and taken a much wider view in the context of the future of other related issues such as the Carbon Reduction Commitment and the shape of climate-change agreements,” said Gareth Stace, head of climate and environment policy at EEF. The Carbon Reduction Commitment has twice been delayed and criticized by businesses for its complexity.