WEST
MIDL
ANDS
CO
M
PA
NY
GUIDE29Ge
tti
ng
to
gr
ip
sw
it
ht
he
cl
im
at
ec
ha
ng
ea
ge
nd
a
Th
is
ye
ar
sees
sustainabilit
ya
nd
climat
e
change
leg
islation
become
mor
e
challeng
ing
.
Ri
char
d
Sh
ar
man,
par
tner
at
KP
MG,
looks
at
wh
yl
ocal
companies
need
to
be
aw
ar
e
of
these
changes
The
UK8217
sC
limate
Change
Bill
will
become
law
this
year
and
as
a
result,
local
companies
will
begin
to
feel
the
impact
of
the
Govern-
ment8217
ss
trategy
to
achieve
the
60
per
cent
reduction
in
emissions
by
2050.
The
Bill
contains
enabling
powers
to
introduce
new
trading
schemes,
such
as
the
Carbon
Reductio
nC
ommitment
(CRC),
which
comes
into
force
in
2010,
through
secondary
legislation
and
is
likely
to
require
companies
listed
on
the
Stock
Exchange
to
include
carbon
emission
information
in
their
annual
business
report.
The
CRC
is
am
andatory
emis-
sions
trading
scheme
which
was
announced
in
the
Gov-
ernment8217
sE
ner
gy
White
Paper
in
2007
and
covers
lar
ge
business
and
pub-
lic
sector
or
ganisations
across
the
UK.
In
total,
up
to
5,000
or
ganisations
nation-
wide
may
be
impacted,
covering
participant
s8217
direct
and
indirect
CO2
emissions
from
all
ener
gy
sources.
Designed
to
drive
ener
gy
ef-
ficiency
and
carbon
saving
by
giv-
ing
or
ganisations
afi
nancial
incentive
to
do
so
through
emissions
trading,
this
is
fur
-
ther
combined
with
corporate
social
respon-
sibility
incentives
through
publishing
an
or
-
ganisation8217
sp
erformance
in
al
eague
table.
The
CRC
will
cover
ener
gy
use
emissions
outside
of
Climate
Change
Agreements
and
the
EU
ETS.
The
Government
is
establish
-
ing
aC
ommittee
on
Climate
Change
(CCC)
to
advise
on
climate
change
issues,
and
it
is
this
group
that
will
advise
ministers
on
the
setting
of
emissions
caps
for
each
CRC
phase.
The
trading
will
begin
with
the
UK
Gov-
ernment
selling
tradable
emissions
allow-
ances
to
participants
at
auction.
Participants
will
be
required
to
purchase
sufficient
allowances
either
from
the
auc-
tion,
the
secondary
market,
or
via
the
safety
valve
with
the
EU
ETS,
to
cover
their
annual
ener
gy
use
CO2
emissions.
The
scheme
will
be
revenue-neutral
to
the
Exchequer
with
the
auction
revenue
being
recycled
to
participant
sb
y
means
of
as
imple,
direct,
annual
payment
propor
-
tional
to
averag
ea
nnual
emissions
since
the
start
of
the
scheme.
Ab
onus
or
pen-
alty
will
be
made
to
ac
om-
pany
based
on
the
or
-
ganisation8217
sp
osition
in
the
CRC
league
ta-
ble.
Those
involved
will
be
required
to
monitor
and
report
their
ener
gy
use
and
emissions.
All
of
this
will
be
backed
by
an
independent
risk-
based
audit
regime
of
around
20
per
cent
of
or
ganisations.
For
those
or
ganisations
involved
in
CRC,
the
work
needs
to
start
now
to
establish
re-
porting
systems
and
understand
responsibili
-
ties,
particularly
with
respect
to
landlord-
tenant
relationships.
To
be
involved
in
schemes
such
as
these
are
of
benefit
to
ab
usiness.
External
pressure
aside,
companies
meas-
uring
and
then
reducing
their
carbon
foot-
prints
see
real
direct
benefits.
Studies
have
shown
that
when
ab
usiness
begins
to
measure
how
much
ener
gy
it
uses,
it
tends
to
result
in
lower
usage.
In
addition,
an
adequate
measurement
framework
with
forecasts
allows
perform-
ance
to
be
managed
ef
fectively
against
the
tar
gets
set.
For
companies
subject
to
carbon
regulation,
reporting
will
need
to
be
in
line
with
defined
standards.
For
those
businesses
that
want
to
report
voluntarily
,h
owever
,
there
are
national
guidelines
such
as
those
published
by
Defra.
The
challenge
of
measuring
ac
ompany8217
s
footprint
begins
with
choosing
the
right
re-
porting
standard.
It
is
important
to
use
ar
ec-
ognised
methodo
logy
in
order
to
ensure
credibility
.
Measurement
of
ap
roduct
or
service
is
generally
where
most
confusion
occurs
in
relation
to
consistency
and
accuracy
of
ap-
proach.
Measuring
emissions
from
ap
roduct
or
service
requires
information
from
the
entire
life
cycle
8211r
ight
back
to
the
extra
ction
of
raw
materials
and
right
up
to
final
dispos
al.
Requesting
emissions
information
from
suppliers
and
service
providers
can
prove
difficult
as
they
may
regard
such
data
as
sen-
sitive,
or
they
may
not
collect
releva
nt
infor
-
mation.
Even
if
data
is
provided
it
might
be
ag-
gregated
and
difficult
to
breakdow
nt
ofi
nd
out
where
emissions
come
from
and
how
re-
ductions
can
be
achieved.
Currently
,t
here
are
no
established
stand-
ards
to
measure
product
or
service
emis-
sions.
There
is,
however
,as
tandard
being
developed
by
the
British
Standards
Institute,
in
partnersh
ip
with
the
Carbon
Tr
ust.
An
important
part
of
carbon
measurement
and
reporting
is
to
define
boundaries
and
sources.
Each
or
ganisation
must
set
its
re-
porting
boundaries
clearly
.T
here
are
a
number
of
accepted
ways
to
do
this.
Or
ganisational
boundaries
define
how
a
company
will
account
for
its
own
operations
and
those
entities
in
which
it
has
as
take.
Or
ganisations
should
then
focus
upon
the
development
of
internal
procedure
st
oc
ol-
lect
data.
It
is
essential
to
ensure
engagement
from
the
right
management
team
and
gain
board
level
sponsorship
if
this
is
to
be
successful.
Establishing
data
requirements
including
format,
frequency
and
the
treatment
of
anomalies,
together
with
quality
con-
trol
and
monitoring
procedures
will
be
important,
as
too
will
be
ways
to
incentivise
em-
ployees
to
provide
accurate
reporting.
After
the
emissions
data
is
collected
ab
aseline
and
tar
gets
can
be
defined,
based
on
the
quality
of
data
available
and
the
message
the
or
ganisa-
tion
wishes
to
commu
-
nicate
to
its
stake-
holders.
An
historic
baseline
will
dem-
onstrate
progress
already
made,
but
it
is
es-
sential
to
disclose
any
assumptions
and
estimates
that
have
been
used
to
arrive
at
this
historic
picture.
Wi
th
the
CRC,
emissions
reduction
regu-
lation
is
progres
sing
to
cover
not
only
car
-
bon
intensive
sectors
such
as
manufacturing
and
engineering
but
also
the
wider
busines
s
community
.
Busines
ses
that
are
already
reporting
will
be
at
an
advantage.
They
will
understan
dt
he
implicat
ions
of
regulation
already
on
the
horizon
and
will
be
able
to
participate
in
the
debate
about
future
climate
legislation.
As
standards
and
regulations
tighten,
more
companies
will
face
caps
and
will
have
to
look
seriously
at
their
carbon
footprint.
Reduction,
of
fsetting
and
reporting
will
become
part
of
am
odern
business
and
for
those
companies
that
get
it
wrong,
serious
financial
penalties
could
occur
,e
ither
through
bad
investment
decisions
or
direct
fines.
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