Post-Budget Crucial Compliance Changes: What Do They Mean For Your Business?

Many of us were eagerly awaiting the Chancellor’s Budget 2016 statement last month, anticipating the changes to the Energy Efficiency Taxation Review. Following the announcement, on Thursday 14th April we gathered 60 companies at 15 Hatfields, London’s most sustainable venue, to host a Post-Budget Crucial Compliance Changes Workshop.

This workshop built on the success of our similar workshop in October 2015. Gary Shanahan, Head, Business Energy Taxes and Reporting at the Department for Energy and Climate Change (DECC) joined us to give the delegates an overview of the key changes to the CRC scheme, Mandatory Emissions Reporting (MER), Climate Change Agreements (CCAs), and the Climate Change Levy (CCL), and to explore what these changes meant for them as a business.

DECC’s invaluable insight into the current and future changes was evident in the outpouring of questions submitted to Gary following his presentation.

Another highlight was Terry Clarke, Group Sustainability Manager for Segro, who gave a detailed presentation on how Segro have used the Minimum Energy Efficiency Standards to drive their energy reduction efforts.

Throughout the morning workshop, we encouraged our own consultation process, before the official consultation begins later this year. Our CTO, Cian Duggan, led two roundtable sessions to encourage discussion among the delegates and provide feedback to DECC to inform the future process.

The Current Policy Landscape

Figure 1: The current policy landscape as discussed during the workshop

What attributes should an ideal simplified reporting framework have?

The delegates overwhelmingly agreed that the new reporting framework should be include:

  • Mandatory reporting on consumption/emissions to the government
  • Mandatory annual internal audit
  • Board-level sign-off, in the same manner as CRC and ESOS

Whether transport should be included in this mandatory reporting raised a great deal of debate among the roundtables. Many believed inclusion would help reveal opportunities and areas of productivity. However, the complexity of the data, meant that others were unsure.

The need for a single verified dataset was emphasised. For example, an online portal – similar to that of the CRC. Companies could submit multiple data streams, reducing the administrative burden. Furthermore, good data collection was highlighted as key, particularly when setting targets.

Despite uncertainty around existing funding metrics, it was also suggested that legislation might be used to oblige companies to implement certain carbon reduction projects – such as, those with paybacks of less than two years.

However, many also believed that companies should have the flexibility to pick and choose projects, in order to maximise impact.

Compliance Event 04 Edited

What data related challenges do we face in achieving robust and timely carbon reporting compliance?

A summary of the key challenges the attendees faced was as follows:

  1. Inability to use the same single data source for multiple reporting frameworks
  2. Reporting becomes a stressful end-of-the-year, reactive process. Large, complex datasets mean that despite extensive planning, the reporting period remains time-consuming and difficult
  3. Auditing and verification of our data is a difficult activity: Most delegates find that a lot of time and effort is spent cleansing their data
  4. Compliance data programmes do not clearly convert data into action and success for performance improvement. However, it was also noted that using data for performance had helped to grow the industry – more specifically, CRC had helped to engage energy managers with sustainability issues
  5. A lack of confidence in the integrity of data

So, what’s next?

Last year, despite these compliance schemes affecting over 10,000 companies, DECC received only 356 responses to the consultation. With the second consultation set to kick off later this year, DECC will be gathering awareness of the upcoming consultation across the UK.

A clear outcome of the workshop was the desire – both from DECC and the delegates – for a simplified reporting framework. Carbon Credentials will be holding a pre-consultation workshop to raise awareness and collect feedback to present to DECC, once the details are announced.

If you would like to have your say, subscribe to our blog for regular updates on the compliance changes and how you can get involved in DECC’s consultation later this year.

In the meantime, if you would like to discuss the evolving policy landscape and how to plan your compliance activities through to 2019, please contact us here.

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CRC Allowance Costs: Planning Ahead To The End of Phase 2

As we enter the April allowance purchase window (1 April to 29 April 2016), it is time to start making plans for the last few years of CRC. In this concise, but vital update, we lay out the options you have as a business.

DECC has now published (provisional) costs for allowances up to the end of the CRC in 2019. From 1 April 2019, the Climate Change Levy (CCL) will be increased to balance the revenue that will no longer be generated by the CRC. This is the first time we have had such clarity for Phase 2 costs and it provides some food for thought.

  • By 2019, the costs will have increased by a total of 17% between the earliest forecast cost (£15.60) in Phase 2 and the expected final buy to comply costs (£18.30*).
  • Companies have the opportunity to buy in advance to reduce the costs – an average saving of approximately 6% each year.
  • In 2019, the CCL will increase and potentially cause a “double hit” on cash flow in 2019 as companies pay the final CRC allowance costs at the same time as paying the higher CCL

Companies have several options to mitigate the “double hit” and take advantage of both the forecast options as well as the reduced emission factors to begin to get ahead on CRC payments.  Carbon Credentials explored several of these options at our Crucial Compliance Changes workshop on 14th April 2016.

DECC have confirmed the following prices for allowances for the remainder of the CRC Scheme:

Hilary Blog Table

Please note that the rates with an asterisk are provisional as there needs to be a revision to the CRC Energy Efficiency Scheme Order 2013. More details on this can be found here

If you want to discuss which of these options is the best for your business, contact us here. To find out more about our compliance expertise, click the button below.

Did you know we’ve completed over 300 CRC audits? To find out more, click the button below.

Sustainable Development Goals: Notes From The Crowd

Lord Mark Malloch-Brown, Co-chair of the new Global Commission on Business and Sustainable Development, introduced The Crowd this week to the UN’s Sustainable Development Goals (SDGs), and what risks and opportunities they pose for the private sector.

Replacing the Millennium Development Goals, which had a target date of 2015, the SDGs address the greatest challenges facing the global society today, and have been explicitly created in conjunction with businesses, as well as NGOs and governments. From ending poverty and hunger, to action on climate change and gender equality, the goals are wide reaching and aim to engage both the public and private sector in ensuring these targets are met by 2030. The involvement of businesses in designing the goals was borne out of the realisation that governments alone cannot change the world, as markets become increasingly global and have greater impacts on our daily lives.

Lord Malloch-Brown outlined the need for private sector investment in the developing world, in particular, to ensure that the SDGs are achieved. Namely, that we need to re-think aid, not just as charity, but as genuine economic improvement. He also highlighted the need for the scale that private sector investment brings, as opposed to the traditional grant based model.

The Crowd Blog Image

Figure 1: The Sustainable Development Goals

So why should the private sector invest in these areas as opposed to the lower risk, more maturely developed markets?

Investors are becoming increasingly concerned with the social responsibility of the organisations they look to invest in, this creates a more direct link between the financial success of a business and its business practices that relate to the SDGs. A clear example of this is this recent global divestment movement, which address Goal #13: Climate Action.

In addition to this push from investors, there is an opportunity for the private sector to help people out of poverty and create new markets for tomorrow. Empowering people today creates the end-payers of the next generations.

The main obstacle to this investment model is the short-termism inherent in today’s business practices. Lord Malloch-Brown spoke to how most CEOs agree that their businesses would be more successful if they had a longer-term perspective, but that this is trumped by the pressure to deliver within 2 years in post. The concept of “Patient Capitalism” was discussed as a way to overcome this challenge, with the privatisation of development and the socialisation of business leading to a mutual respect and understanding.

There were murmurs of discomfort around the privatisation of development efforts and the idea of profiting from international development, rather than acting in the interests of social responsibility. However, as the divestment movement has demonstrated, if there is a clear business case for action that aligns with overcoming wider social problems, then greater momentum and traction can be achieved than relying on organisations to purely act in the public good.

How would this work in practice?

There was debate around whether the SDGs should act as a source of inspiration for business to be creative as to how they operate sustainably or whether there should be a tick box exercise. Most agreed that by being too prescriptive we risk suffocating the smaller, disruptive companies that have the potential to make a real difference. However, how do we keep momentum and measure success without regular, clear KPI reporting?

Owing to the broad nature of the goals, it was suggested that businesses focus on 2 or 3 areas that they have a direct, measurable impact on. This approach seems the most likely to get results – through building the most relevant goals into your sustainability strategy and identifying key metrics that you can track to ensure your business is working to have a positive impact on wider society. Having said this, we must also be mindful not to cherry-pick goals that are easy to achieve and ignore those that may require more effort or the business may actively be going against.

For me, the take-home message was that there is a greater risk for businesses to ignore the problems highlighted by the SDGs until they get of out hand, rather than invest upfront and realise the potential opportunities, whilst acting as responsible global citizens.

Are You Up To Speed On Non-Financial Reporting?

In December 2016, legislation requiring qualifying large companies to disclose non-financial information will come into force. Here, we give an overview of the important updates to help you better understand the ‘what’, ‘why’ and ‘how’ regarding non-financial reporting, and how you can have your say.

What is the EU Non-Financial Reporting Directive?

The purpose of the Non-Financial Reporting Directive is to improve the quality and comparability of non-financial information across Europe. It will provide investors and other stakeholders with a more comprehensive view of a company’s performance.

Once transposed into national legislation, the non-financial reporting (NFR) information will sit alongside the usual financial statements in every EU Member State. The scope of disclosure will include the following areas:

  • policies
  • environmental risks
  • social and employee situation
  • respect for human rights
  • anti-corruption and bribery issues
  • diversity in their board of directors

EU Member States are required to have transposed the rules on non-financial reporting into national legislation by 6th December 2016. Companies will have to adhere to the NFR requirements in their corporate Annual Reports in 2017.

How does this compare to the current requirements?

The directive indicates that companies may be able to rely on frameworks like the Global Reporting Initiative (GRI) and ISO 26000 to structure and fulfil their NFR response.

The GRI G4 framework encourages organizations to report only on their most relevant impacts. This promotes clear and well considered messaging; stakeholders are engaged in the assessment of relevant impacts, which improves the credibility and completeness of the reported impacts.

URGENT – Have your say!

The European Commission launched a public consultation in January 2016 to explore how, exactly, NFR can be best deployed to harmonise various non-financial disclosures.

The UK government has also initiated a ‘call for views on effective reporting’ in February 2016, with a view to raising awareness and inviting relevant stakeholders to share their views. All users and those preparing non-financial reports are called to participate in the consultation via this webpage. The deadline for responding is 15th April 2016.

How can Carbon Credentials help your organisation to lead the change?

Not only does non-financial reporting provide transparency for investors and other stakeholders; it can also help companies to base their decision-making on a more holistic appraisal. The Crown Estate, for example, has developed industry-leading Total Contribution methodology, which it uses to measure and communicate its environmental, social and economic impact. By measuring these impacts, The Crown Estate can show that it is managing its material issues, and adding value to the business and society.

Carbon Credentials supports the Crown Estate with Total Contribution by collating, managing and reporting a wide range of The Crown Estate’s data, from greenhouse gas emissions to employee salary ratios by gender. The below illustration of The Crown Estate’s ‘Our People’ report, designed by Carbon Credentials’ in-house Graphic Designer, is an example of the output of this engagement:

Inge Blog Image 2

If you are interested in finding out more about our compliance expertise, get in touch or click the button below for more information.

 

Kingston Hospital Sustainability Week: Building Awareness & Communicating Success

“It was good to meet lots of different people and talk about the progress being made with sustainability at Kingston Hospital. There is a genuine interest among the staff about the issues, which encourages us to ‘sustain’ our efforts.” Chris Sims, Estates Maintenance Manager at Kingston Hospital

Carbon Credentials has been working with Kingston Hospital since 2014 to raise awareness of their efforts to improve the Trust’s environmental sustainability, and to encourage behaviour change that will have a lasting impact on energy performance.

As part of the Sustainability Awareness Programme at Kingston Hospital, and to link in with the NHS Sustainability Day on 24th March 2016, Carbon Credentials worked collaboratively with the Trust to plan a week of activities to engage staff on sustainability and communicate this across the Trust.

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Figure 1: Photo displaying the sustainability stand and team on NHS Sustainability Day on 24th March 2016

This was an extremely successful campaign and resulted in 20 new Green Champions requesting to join the programme. Green Champions are our eyes and ears around the Trust, encouraging their peers to be responsible by turning off equipment not in use, and recycling where possible. They are instrumental in raising awareness of the sustainability programme.

Building Awareness & Understanding

Staff were given the opportunity to discuss their challenges and issues with our consultants, and to gain information from a number of Kingston Hospital’s suppliers who attended the event, including Veolia, ISS and Sharpsmart, the world’s most responsible sharps management system. This provided a great insight into how Kingston Hospital is dedicated to managing their waste and energy consumption in the most sustainable way.

As part of the campaign, staff were invited to enter a Sustainability Initiative Competition to generate the best idea on how to better their environment at Kingston Hospital, and reduce their environmental impact. Carbon Credentials also developed a Sustainability Quiz that was distributed to all staff across the Trust. Over 80 quizzes were completed by staff at the Hospital, and ideas and initiatives from the competition will feed into the wider Sustainability Awareness Programme.

Kingston Sustainability Day Infographic

Figure 2: A poster used to communicate and raise awareness of the Big Easter Switch-Off

Successful Communications

Carbon Credentials developed the Sustainability Week programme for Kingston Hospital, and provided a suite of communications material to help drive awareness over the week.

The key to successful communications and engagement for the Sustainability Week was providing engaging communications material that staff could relate to. During Sustainability Week screen banners, such as in Figure 2, were used to remind staff to switch off all non-essential equipment before they left for Easter.

Top Tips for Running a Successful Sustainability Day

  • Key facts and information to demonstrate successes
  • Detailed communications plan, highlighting when and who to target key messages to
  • Identify most effective form of communications
  • Get some well-known faces involved
  • Get backing and an endorsement from senior management
  • Ensure you have the right people with the right knowledge to answer questions
  • Invite suppliers to display a stand and provide handouts
  • Run initiatives and competitions with prizes
  • Be enthusiastic!Kingston Sustainability Day Banner

Figure 3: Infographic displayed at Kingston Hospital to communicate the sustainability achievements made in 2015

To understand how you can effectively communicate and embed your sustainability objectives throughout your organisation, please contact us or click the button below to find out more about our engagement services.