CBI: Green reports could duplicate workload

by Rachael Singh

More from this author

21 Jun 2012

  • Comments
A view of cooling towers at a nuclear power plant in the distance

A LEADING BUSINESS CONSORTIUM has warned the introduction of mandatory carbon reporting could increase regulatory burden on businesses and accountants through duplication.

This week, the government announced large listed UK companies will have to publish greenhouse gas emission reports in the next financial year.

However, accountants and business groups are concerned the regulatory burden will add further costs to companies during a time of economic uncertainty.

The Confederation of British Industry has suggested the government remove the Carbon Reduction Commitment (CRC), which was introduced last year, to reduce the chance of duplication.

The CRC requires organisations, that spend more than £500,000 annually on energy bills to pay for and report on energy-related emissions.

Rhian Kelly, CBI director for business environment policy, said: "We have been calling for mandatory carbon reporting for some time. It is an important way to help businesses save money and emissions.

"To avoid unnecessary duplication, the government now needs to scrap the Carbon Reduction Commitment."

Currently, large companies must report its carbon emissions under the Climate Change Act and the European Emissions Trading scheme, which could also lead to duplication. 

However, PwC sustainability partner Alan McGill, who worked on the world's first environmental profit and loss account for Puma, argued it may not create an increased workload.

"For many companies that are already reporting, this requirement shouldn't be too much of an extra burden, but the timetable for financial reporting may be a challenge, and there are issues around coherence of reporting and materiality," he said.

"Companies that aren't already reporting may worry about the additional regulatory burden. But this isn't just about reporting. It's about setting targets and driving efficiency, which should save money, as well as carbon."

However, McGill warned that "the immediate questions are whether it avoids duplication with other requirements (eg. the Carbon Reduction Commitment) and whether businesses can jump the hurdle in terms of accuracy of reporting against the deadline set for the next financial year".

Concerns have also been raised that accountants are unprepared to audit or advise on mandatory GHG reporting. Usually, environmental reports are largely focused on carbon emissions. However, GHG takes into account all forms of harmful gases released into the environment.

"With only nine months to go before reporting becomes mandatory, accountancy firms must urgently address how they respond to this new requirement," said Gary Davis, operations director at environmental accounting developer Ecometrica.

"GHG expertise, both in terms of measurement and audit, is scarce throughout the advisory sector and firms will need to ensure they have the capabilities and expertise to meet the new obligations.

"In deciding their future strategy, at the very least, firms will need a working knowledge of GHG accounting best practice, so they can advise their clients.

"Firms that decide to integrate such services into their current offering must also ensure they put in place Chinese walls between reporting and audit teams."

Michael Izza, ICAEW chief executive, said he welcomed the decision and suggested the government use the Climate Disclosure Standards Board (CDSB) framework, which links carbon, risk and performance in financial statements, as the way in which companies should report.

The latest announcement is likely to affect about 1,800 companies in the UK.

For more information on listed companies, visit the Share Price Centre.

Visitor comments

blog comments powered by Disqus
display:none

Add your comment

We won't publish your address


By submitting a comment you agree to abide by our Terms & Conditions

Your comment will be moderated before publication

Submit

Newsletters

Get the latest financial news sent directly to your inbox

  • Best Practice
  • Business
  • Daily Newsletter
  • Essentials

Careers

Search for jobs
Click to search our database of all the latest accountancy roles

Create a profile
Click to set up your profile and let the best recruiters find you

Jobs by email
Sign up to receive regular updates with the latest roles suitable for you

Briefings

budget-management

Why budgeting fails: One management system is not enough

If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.

cchcover

iXBRL: Taking stock. Looking forward

In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.