Carbon Reporting for Business, Investors and Policymakers
This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
A seminar on “Carbon Reporting for Business, Investors & Policymakers” organised by the Embassy took place at Baker & McKenzie in Moscow
The event was dedicated to the new mandatory reporting requirements for companies that are UK incorporated and listed on the main market of the London Stock Exchange; or officially listed in a European Economic Area; or admitted to dealing on either the New York Stock Exchange or NASDAQ. The new requirement only applies to companies that meet both of these criteria.
The seminar, comprising speakers from UK and Russia, aimed to inform companies, policymakers, investors, and expert groups about the new requirements and highlight the benefits of carbon reporting.
Sue Whitehead (Head of Non-Financial Reporting, Department for Environment Food and Rural Affairs, responsible for the development of the requirements in the UK government) described the new UK requirements on carbon reporting. The new measures require directors’ annual reports to include details of their company’s carbon emissions after October 2013. The requirements were introduced following consultation with over 2000 companies and investors, who overwhelmingly support their adoption.
Bruno Bastit (Regional Head, Russia & CIS, Hermes Fund Managers, UK) explained why investors are so keen to see details of companies’ carbon emissions and carbon management; good carbon management is a proxy for good business management, and reassures investors that they are investing in a well-run company. Without this information, investors can only assume that nothing is being done in this area. And by providing this information companies often find they have greater access to lower-cost finance. For these reasons, many companies have already been voluntarily reporting on their carbon emissions.
Olga Rublevskaya (Deputy Head for the Business Development, Branch of the Vodocanal St Petersburg “Engineering and Innovative Centre”) described why Vodocanal had taken the decision to manage and report its emissions; as an organisation it aspires to high environmental standards, and in measuring its emissions it has also been able to identify areas of wasted resource leading to changes that make Vodocanal’s technical processes more efficient.
Julia Polonskaya (Sustainable Finance Program coordinator, WWF-Russia) described how more and more financial exchanges are looking at sustainability issues in non-financial reporting.
Alexander Averchenkov (UNDP Russia) explained the latest developments in Carbon reporting in Russia. Companies will have to start measuring and managing their emissions, before any form of emissions trading scheme can be developed in Russia. Voluntary carbon reporting is one way to do this.
From April 2013, new regulations will come into force in the UK, requiring quoted companies on the London Stock Exchange to report their greenhouse gas emissions. The regulations will affect just over 1000 companies which will have to report on emissions from all their operations, including those overseas.
There are a range of benefits to companies, customers and investors from company reporting of emissions.
You cannot manage what you cannot measure and effective carbon management can act as a strong indicator of a well run business. Energy management and carbon reporting are intrinsically linked and the poor management of energy negatively affects a company’s performance by wasting expensive resources, driving down the company’s profits whilst driving up its carbon emissions.
Instrument for attracting investment:
Whilst companies are the main users and beneficiaries of measuring and reporting on their emissions, investors are increasingly interested in incorporating climate change risks into their investment analysis. Investors with long-term horizons, such as pension funds, have an interest in companies taking action to reduce their emissions now, so as to minimise future costs from the rising price of carbon.
Public reputation and customer focus:
Failure to plan for a future of increasingly unstable environmental factors may risk the long-term future of a business, its public reputation and its ability to operate. Increasingly customers, particularly in the West, are demanding companies account for the environmental impact, most notably around their greenhouse gas emissions. Any company targeting customers overseas will need to implement structured, clear and consistent carbon reporting to demonstrate the efforts it is making to reduce its environmental impact.