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Carbon Audits – Heavy-Handed or Necessary for Green Recovery?

Carbon Audits – Heavy Handed or Necessary for Green Recovery?
07 April 2021
 

A draft proposal from The Department of Business, Energy and Industrial Strategy that hints at climate policy performance audits has been described as “draconian and intrusive” by lobby group The Global Warming Policy Foundation.

The Global Warming Policy Foundation (GWPF) believes that the government intends to put pressure on companies to engage specialist consultants in carbon emissions and energy consumption to audit their climate policy performance.

The new proposal for a separate energy and carbon audit, not only imposes further costs on businesses, but also creates a green profession focused on monitoring the requirements of the Streamlined Energy and Carbon Reporting Regulations, according to the GWPF.

The body feels that this type of legislation will be “Intrusive and heavy-handed” and will cause a strong disincentive to entrepreneurial behaviour at a time when growth in the British economy is urgently required.

Dr John Constable, the GWPF Energy Editor, said: "Government has already needlessly made it a criminal offence for businesses to misreport their energy consumption and carbon emissions, now it seems they are moving towards creating a separate professional class to police these regulations. This is not how to make responsible businesses feel welcome in the UK.”

 

Responsible Governance 

 

According the government website, the objective of these reforms is to ensure that the UK’s most significant corporate entities are governed responsibly and to keep the UK’s legal frameworks for major businesses at the forefront of international best practice.

Current legislation requires large unquoted companies that have consumed (in the UK), more than 40,000 kilowatt-hours (kWh) of energy in the reporting period to include energy and carbon information within their directors' report, for any period beginning on or after 1 April 2019.

Large companies are defined as companies that meet two or more of the following criteria:

  • Turnover (or gross income) of £36 million or more.
  • Balance sheet assets of £18 million or more.
  • 250 employees or more.

The proposal document states that directors are ultimately responsible for the company’s accounts and reports and have duties in relation to the auditing of those accounts and reports. However, the regulator currently has no direct powers to act if those duties are breached. The government, therefore, proposes to give the regulator investigation and enforcement powers to hold company directors of public interest entities to account.

It is also clearly stated that: "It is also only ever likely to be appropriate for the Insolvency Service to bring criminal prosecutions and directors’ disqualification proceedings against PIE directors in more serious cases, where it is in the public interest to do so." 

 

Emissions Data

 

In 2019, the UK became the first major economy in the world to pass binding legislation committing to net zero Greenhouse Gas (GHG) emissions by 2050, and a central part of this plan is emissions data.

According to TEAM Energy’s Head of Consultancy, Timothy Holman, there are a number of factors holding businesses back from change. 

As highlighted recently in the BSI’s Net Zero Barometer, eight out of ten organisations feel they need more guidance and 44 per cent of the businesses surveyed indicated cost as the most significant barrier to decarbonisation. 

Holman says: “As we see more hope for an end to the pandemic, businesses will emerge differently from when the government’s net-zero target and legislation was first passed, they may find themselves with less resource due to organisational restructure and tighter cash flows because of lack of revenue. However, whilst decarbonisation activities have lost momentum the targets have not gone away.”  

Picture: an aerial photograph of the earth 

Article written by Ella Tansley | Published 07 April 2021

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