Businesses still not ready for new carbon laws

Only one third of businesses are fully prepared for the Carbon Reduction Commitment (CRC), despite concerns that league tables associated with the legislation will have a negative impact on their reputation.

The law will see all organisations whose electricity consumption exceeded 6,000MWh during 2008 required to buy allowances equal to their annual emissions.

About 5,000 organisations will qualify, including supermarkets, water companies, banks, local authorities and all central government departments.

But despite the fact that the new law is due to come into effect in April 2010, some 20 per cent have not yet started planning for it or have no idea about what action needs to be taken.

In addition, only 53 per cent have started budgeting for carbon allowances, which they will need to purchase for each tonne of CO2 that they emit.

These are the findings of a survey commissioned by enterprise applications vendor SAP and undertaken by Coleman Parkes Research among senior business and IT managers in 400 UK businesses in the public sector, financial services, retail, utilities, manufacturing, communications and high-tech industries.

The study indicated that respondents’ biggest concern related to receiving a low CO2 emission rating in CRC league tables, which are due to be published at the end of 2011.

Such fears were underlined by the fact that 44 per cent of financial services firms said they would not invest in a poorly performing business, while a majority believed that CRC compliance would become an increasingly important factor in their investment decisions.

Clive Longbottom, a service director at analyst Quocirca, said the CRC Energy Efficiency Scheme could act as both an opportunity and a threat to the organisations involved.

"Those that do not make plans for managing their exposure will face stiff penalties. However, those that can plan accordingly and set themselves achieva ble and sensible targets will find that they can benefit in solid financial ways through the future trading of their CRC credits," he said.

But the survey showed that a key challenge in achieving compliance today was that many organisations did not have a clear programme owner.

Uncertainty was also rife as to whether such initiatives should belong to the chief executive’s office, operational management or the IT department. As a result, under half had no IT system in place to help them manage their carbon footprint or to track their progress in cutting emissions.

But although 77 per cent of those questioned said that CRC would provide an opportunity to improve their carbon footprint, about 42 per cent felt that more far-reaching legislation would be needed to ensure that they succeeded in decreasing emissions to sustainable levels in time to hit the deadline.

About four in 10 respondents also believed that CRC compliance would detract from existing carbon-reduction activities, and two thirds were worried that it would add to their current administrative burden in respect to environmental issues.