Updated: FDs fail to see benefits of GHG reporting

14th June 2012

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More than one-third of finance directors in the UK oppose the introduction of mandatory greenhouse-gas (GHG) reporting, according to a survey by Lex Autolease

Just 2% of the 452 finance directors polled believe that mandating GHG reporting would encourage business growth, with 63% stating it would “make no difference” and 25% arguing that its introduction would actually hinder growth.

The results are out of line with research conducted last year by IEMA, which found that the vast majority of environment professionals are convinced that forcing firms to publicly disclose their GHG emissions will deliver cost savings (69% of 1,000 respondents) as well as produce tangible environmental benefits.

A number of high-profile organisations representing industry and big business, including the CBI, the EEF and the Aldersgate Group, have also backed the introduction of mandatory reporting.

Mark Chessman, commercial director with responsibility for sustainability at Lex Autolease, agreed that the financial managers’ view was much more pessimistic than others, but warned that without their support GHG reporting could fail.

“It [mandatory GHG reporting] can only be truly effective if those responsible for signing off reports – financial directors – are aware of and fully convinced of the benefits it can create for their organisations,” he warned.

“The government must act now to educate key decision makers, demonstrating the clear business benefits and implications of emissions reporting.”

Under the Climate Change Act 2008, the government was due to introduce legislation mandating GHG reporting for UK businesses by April 2012, but in late March Defra announced that ministers needed more time to make a decision and policymakers are yet to confirm whether they will back mandatory reporting. Chesswell complained: “In dragging their feet, legislators are only adding to the uncertainty.”

Lex Autolease’s poll confirmed that almost two-thirds of finance directors were in complete ignorance of the potential implications of the 2008 Act. However, considering this level of awareness, IEMA’s executive director of policy, Martin Baxter, argued the results could be seen as positive.

“It’s therefore pleasing that most do not see a mandatory reporting requirement impacting negatively on the ability of their business to grow,” he said.

Peter Young, chair of the business body the Aldersgate Group, which backs mandatory disclosure, described the results as depressing, but unsurprising.

“There’s a strong correlation between those who are unaware of the effects of climate change and the GHG emissions agenda, and those that don’t see a need for reporting,” he said. “If they don’t see the problem, then it’s not surprising they don’t see the need for their company to explain how it’s contributing to it or reducing its burden.”

The poll’s results reflect a wider problem in the mandatory reporting debate, according to Young. “We have the same issue in government, where we seem to have a chancellor (who is effectively the government’s financial director) not voting in favour when most other people are.”

Ignorance is the biggest challenge, argued Young. “Once business leaders understand the issues they are very much in favour of disclosure, on the simple premise that you can’t manage what you don’t measure.”

He is, however, optimistic the government will introduce mandatory reporting, but warned its deregulation agenda means a quick decision is unlikely.


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