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Deputy PM, Nick Clegg, speaking at the Rio+ 20 Summit, said Britain would be the first nation to force companies to publish emissions data for their organisation in their annual reports.
All businesses listed on the Main Market of the London Stock Exchange must clearly report their greenhouse gas emissions from April next year.
The move follows extensive consultations with leading businesses and will ensure investors can see how companies are managing the long-term costs of greenhouse gas emissions.
Secretary of state for the environment, Caroline Spelman, said: ‘The discussions we’ve had with businesses show that they want to cut down their greenhouse gas emissions, and they want to be open and transparent about it.
‘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.’
The CBI backed the move as long as it was done in a “sensible way” and urged the government to scrap the Carbon Reduction Commitment.
Michael Izza, ICAEW’s chief executive, said: “The UK government is setting a lead to the global community by going further than the draft agreement reached at Rio+20. The argument as to whether reporting should be mandatory or not, has passed – it has been widely accepted that it is going to happen.
‘But we need a method and system that works and one that will drive behaviour change from business, which is why this reporting is to be introduced. We believe the Climate Disclosure Standards Board (CDSB) framework which links carbon footprint to strategy risk and performance is the best way to achieve this.’
The new regulations are set to be reviewed in 2015, to consider extending the approach to all large companies a year later.
Doug Johnston, Ernst & Young’s UK climate change and sustainability services chief, said: ‘The introduction of mandatory carbon reporting will be broadly welcomed. A recent survey of 153 major companies by Green Mondays found that 86% were in favour of a mandatory carbon reporting regime.
‘For most major companies, the introduction of mandatory reporting will not create an undue burden, as many are already voluntarily disclosing their carbon emissions. Companies recognise that what gets measured gets managed, and that there are clear opportunities to enhance value through managing and reducing emissions.
‘However, there is also a clear need for simplification of the regulatory landscape for carbon reporting. UK businesses have long voiced concerns about undue burdens and overlapping objectives in the existing regulatory framework for carbon emissions. Companies will be hoping that the new requirements bring clarity to an area of business regulation that is widely recognised as playing a key role in how the UK responds to the challenge of climate change.’
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