Last month, the Department for Business, Energy & Industrial Strategy (BEIS) opened a consultation on their new proposed framework for energy and carbon reporting. This process has the potential to bring environmental data smoothly into the mainstream, but could also just create further tangles in the knot that is the current energy reporting landscape.
Between the CRC, ESOS, climate change agreements (CCAs), and mandatory greenhouse gas reporting (MGHG), there’s a lot of existing legislation that either encourages or coerces companies into monitoring, reporting, and acting upon energy and carbon data. It must be easy for companies to get lost in this complex legislative landscape so, with this in mind, the basic premise outlined in the BEIS framework consultation document of streamlining the reporting process makes a lot of sense.
The million-dollar question, however, is how exactly should this new framework be designed? In particular: who should report and what should be reported?
Firstly, who? There are different ways to scope the policy that fit into three broad categories: employee numbers, financial turnover, and energy consumption. Any one or a combination of these could be used to define what counts as a ‘large’ company and hence who will be required to report under the proposed scheme(s).
The consultation also asks whether Limited Liability Partnerships, which are not subject to the Companies Act (meaning they are not covered by the framework in its current form), should be made to report too. This would increase the burden of implementation, but would also greatly expand the coverage of the scheme and the volume of data being reported.There are different ways to scope the policy that fit into three broad categories: employee numbers, financial turnover, and energy consumption. Click To Tweet
Secondly, what? There are also different things that companies could be made to report. Centrally, there is total energy use, which can be broken down into electricity, gas, transport, and potentially some other categories, and emissions, which can be broken down into scope I, II and III. There are also additional options such as intensity metrics, or listing opportunities identified in audits and whether they have been acted upon. This last one could be a channel to formally tie ESOS requirements into the framework.
This last one could be a channel to formally tie ESOS requirements into the framework.
Finally, another question that should be given more attention is: how? Specifically, how will these large companies manage the data collection process, and how will its quality and accuracy be assured. The presence of good data is integral for pursuing the far-reaching energy reduction goals of the UK Climate Change Act and the Paris Climate Agreement, but the consultation document only asks for recommendations of the guidance that might ease reporting burdens for companies towards the end, and offers even less on how the Government intends to ensure the quality of data.
At EVORA, we recognise the frustrations and resourcing it can take to collate, analyse and report energy data on a national and international scale. It is why we developed SIERA to seamlessly collate, verify and report data to enable decisions to be made on portfolio and building optimisation programmes. Our clients are seeing the positive impact of SIERA, which has helped one portfolio achieve a 3% like for like reduction in one year and individual buildings save up to 26% through operational improvements.
Our clients are seeing the positive impact of SIERA, which has helped one portfolio achieve a 3% like for like reduction in one year and individual buildings save up to 26% through operational improvements.
The consultation also asks for recommendations on possible complementary policies that might help drive further emissions reductions. Currently, there is no additional incentive proposed to help reduce consumption beyond the fact that the published report will be available to third parties and therefore be subject to investor and public scrutiny.
Personally, the outcome I would like to see is a framework that requires large quoted companies & LLPs to report global energy use, total emissions and intensity, whilst requiring large unquoted companies & LLPs to report UK energy use, total emissions and intensity, with all of the above required to undertake ESOS-style audits every four years and then report the opportunities identified and whether they have acted upon them each year. I would align the definition of ‘large’ with the UK Companies Act definition to minimise confusion, and give it a stand-alone bespoke report in the annual report portfolio to exemplify its importance. Such a design would streamline the CRC, ESOS, and MGHG schemes all into one package, greatly simplifying the reporting landscape.Such a design would streamline the CRC, ESOS, and MGHG schemes all into one package, greatly simplifying the reporting landscape.Click To Tweet
But the important takeaway here isn’t my opinion, it is that this consultation has the potential to radically change the environmental reporting landscape. Therefore, businesses need to make sure they are aware of the proposals and what it could mean for them. We here at EVORA are in the process of producing a company response to the consultation, and if you wish to do the same then the full consultation document as well as information on how to respond is available on the BEIS website.