UK companies will come under scrutiny in the first mandatory carbon cap and trading scheme. By Adrienne Baker:

For many UK companies, the job of communicating their climate strategy is about to be put to a new test. Around 5,000 organisations operating in the UK will soon be participating in the country’s first mandatory carbon trading scheme: the Carbon Reduction Commitment (CRC). This government-led scheme targets large non energy-intensive organisations and aims to deliver carbon savings of at least 4Mt of CO2 per year by 2020. It covers sectors including hotel chains, retail banks and telecoms as well as large public sector organisations like hospital trusts and universities.

A mandatory carbon cap and trading scheme, CRC marks the first time participants will be legally required to calculate, report on and trade CO2 emisions. It is also the first time organisations will be publicly compared in a league table showing scheme participants’ carbon performance. With a financial and reputational price on carbon now imminent, the quality and effectiveness of any organisation’s climate communications today are critical.

Inclusion in the CRC is based on electricity consumption. Companies and public sector organisations with half-hourly metered electricity consumption greater than 6,000 MWh per year – which translates to roughly £500,000 in electricity bills – are implicated in the scheme. All UK billing addresses with half-hourly meters will receive letters from the Environment Agency by early 2009 and will have to determine whether their sites qualify. Electricity providers will help energy managers with this process, including registering the organisation as a CRC participant.

Ensuring corporate communications is part of the CRC compliance team is vital, even though it is not directly involved in the registration and assessment process. Implementing CRC will involve a variety of job functions, including energy, facilities, environmental, operations, EHS, logistics, sustainability, regulatory affairs, CSR, communications, and finance managers.

A recent report by London-based Verdantix warns that as many 10 percent of affected organisations will fail to comply with the CRC within the first two years. Reasons for failure are expected to include insufficient energy management expertise, inadequate planning and a dearth of financial resources to pay for outside help. There will be financial penalties for organisations which fail to register or abide with the scheme, as well as for those who under-report their carbon emissions.

This is why getting an accurate picture of the business’s CO2 emissions so important. Even companies with the most progressive and robust climate strategies will do well to review their emissions data ready for the CRC. Corporate communications can play an integral role in CRC compliance by ensuring that the information it presents about carbon emissions and reduction targets is accurate, and in line with CRC compliance.

What is critical from a communications perspective is the CRC’s league table comparing participants’ carbon scores. It will no longer be possible for organisations to “greenwash” or exaggerate their carbon credentials. CEOs will be watching to see where the company fits in the league table – increasing the pressure to accurately measure and communicate emissions data.

The first league table will be released in October 2011, six months after the first compliance year ends. This compares participants’ carbon performances in 2009/10 and 2010/11. According to Verdantix, the second league table will be based on the percentage change in emissions between the average of 2009/10 plus 2010/2011 and the 2011/2012 period. This core metric is designed to demonstrate that absolute carbon emissions reductions are the scheme’s target.

The need to communicate a company’s carbon reduction strategy reached a tipping point in autumn 2006, with the release of the UK’s Stern Report and former US vice president Al Gore’s documentary An Inconvenient Truth. Both warned of disastrous consequences as a result of the earth’s rising temperature, and pushed the climate change debate to the forefront of media and public interest.

British supermarkets have been particularly competitive in the race to prove their green credentials. It began when Tesco announced a 10 point plan to improve its green status, including a £100 million investment in green technologies and a customer reward scheme for recycling carrier bags. Sainsbury’s, Waitrose and Marks & Spencer were among others already working on energy efficiency, carbon reduction and recycling, but Tesco’s move put the pressure on to promote an eco-friendly image.

Large food retailers also fall within the CRC remit and the league table will undoubtedly attract media stories about who achieves high and low on it. Other sectors will come under scrutiny, and communications will be in the front line when it comes to explaining their organisation’s position in the table. Communications needs to be part of the CRC compliance process now; understanding the methodologies used for
tracking an organisation’s absolute CO2 emissions is an essential part of this.

By putting a price on carbon emissions, the government hopes to push climate response to the top of the management’s agenda. CRC participants will need management-approved budgets for carbon allowances and CEOs will be aware of any reputational damage resulting from a poor placing in the league table. In gaining an understanding of how energy, facilities and CSR is preparing for the CRC today, communications can help develop the messages needed to explain a company’s carbon score. In some cases, this may mean rethinking how a company positions its carbon credentials to fit with this new compliance regime.

Communicate magazine will be sponsoring the Carbon Reduction Commitment Summit on June 1-2 2009 at the Queen Elizabeth II Conference Centre in London. Organised by Green Power Conferences, the event will offer latest information and best practice advice on compliance with the scheme.
www.greenpowerconferences.com

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