If there is one thing business hates more than regulation it is uncertainty about regulation.
The government's realisation that it needs to set legally binding targets to reduce carbon emissions if Britain is to continue to take a lead role in the battle against climate change is welcome. But beyond yesterday's commitment in the Queen's Speech to slash emissions by 60 percent by 2050 the Climate Change Bill appears frustratingly low on content.
Besides the row over whether it should set annual or five yearly targets the bill is also unclear over precisely how the government plans to deliver the revolutionary reduction in carbon emissions that it will be legally obliged to deliver. These targets simply aren't going to be met without government intervention, so what exactly is it going to do?
Also what happens if governments don’t meet these targets? Is some future prime minister, or for that matter business leader, going to be thrown into Wormwood Scrubs if they don’t deliver on their emissions targets? And if not, what is the use of a target when there is no penalty if you don’t reach it?
Of course no one wants the government to rush into knee jerk legislation, but if it wants businesses to act now to reduce their carbon footprint - and the Stern Report makes it clear that action will prove more cost effective the earlier it is taken - then they need to know what legal and tax framework they are going to face while undertaking the shift towards low carbon business models.
Imagine the speed with which firms would shift towards more energy efficient servers if they knew for sure that the most power hungry models will definitely be banned. Similarly how can a firm do an accurate ROI calculation for web conferencing software if it does not know if we are going to see tax on aviation fuel or not?
If the government wants to take advantage of the current goodwill amongst the business community towards environmental issues then it needs to offer some clear guidance on what legislation, taxes, and perhaps more importantly subsidies, are on the way - and soon. In this light Gordon Brown's budget next year now takes on massive significance as an indicator of how serious the government is about meeting the Climate Change Bill's targets.
However, despite this lack of clarity there is at least certainty that more stringent environmental regulations are coming – and probably within the next three years.
Smart companies will act now to reduce their carbon emissions, aware that early investment will ultimately prove cheaper than complying with strict regulations as and when they are passed.
It may not be best practice to make investment decisions without any clarity about the tax and regulatory environment those investments will ultimately act in, but there is no doubt that the shift towards more energy efficient and sustainable IT and business models will deliver major savings for many firms and may just help avoid a regulatory nightmare in a few years time.
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