Most finance heads at the UK’s largest companies anticipate that all businesses will be required to measure their carbon footprint (72%) and pay a price for the carbon they emit (76%), according to research announced today by the Carbon Trust Standard Company. 40% expect this to happen within the next decade, whilst 16% believe this will be the case within five years.
The Carbon Trust Standard Company’s survey explored the views of 200 UK finance heads on the switchover to the low carbon economy. Respondents were from companies with more than 500 employees in six key sectors - retail, professional services, financial services, technology and communications, fast moving consumer goods (FMCG) and leisure and entertainment.
It discovered that despite expecting an increase in legislation related to carbon and energy use, a surprising proportion of finance heads do not have a clear picture of where their businesses stand today on carbon emissions. Nearly half (48%) do not have a clear corporate target for carbon reduction and a further 16% don’t know if their company has a target or not. In addition, three quarters (74%) of finance decision makers admit that their business does not currently measure its carbon footprint.
Harry Morrison, General Manager of the Carbon Trust Standard Company - which offers independent certification for businesses that measure, manage and reduce their carbon emissions – said the research was timely, coming six weeks before the registration deadline for the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme.
Under the terms of the CRC around 5000 large businesses will need to purchase carbon allowances to cover their emissions from April 2011. CRC participants that take early action to reduce their footprint and that achieve the Carbon Trust Standard – or equivalent – by March 2011 will benefit from higher placement in the initial CRC league table and reduce their costs of compliance.
“The debate about whether or not carbon footprinting and payment will become mandatory for business appears to be over as far as finance heads are concerned. Yet only a minority have taken action so far and these early movers have a clear advantage. Building carbon management into the DNA of the business now not only ensures preparedness for future compliance requirements but also brings immediate cost and efficiency benefits and competitive edge," Morrison added.
When will the switchover to the low carbon economy happen?
Finance heads are agreed that the switchover to the low carbon economy will happen – only one in ten doubts this – but the research highlights uncertainty on when it will take place. The majority of respondents (59%) believe that it will happen over the next decade; with just over a quarter (28%) thinking it will take place in the next five years and 10% believing that it has already taken place. Despite these predictions, only 26% believe their organisation is prepared for the change and just over a quarter (27%) don’t know if their company is prepared or not.
Is the low carbon economy an opportunity for business?
When asked if they believe the low carbon economy provides an opportunity for their business, 43% of finance heads take a positive view for their companies but the differences between industries are marked. For example technology and communications organisations and FMCG companies are the most positive, with 88% and 63% respectively viewing the low carbon economy as an opportunity. This contrasts with only 22% of professional services firms, 30% of financial services organisations and 31% of retailers.
Rachel Sinha, Sustainability Manager, Institute of Chartered Accountants of England and Wales (ICEAW) commented:
“ICEAW thinks addressing climate change is one of the most important concerns for business and society today and that businesses should be actively working to promote a low carbon economy. We see finance heads having an increasingly important role to play in guiding their organisations’ carbon management strategy, not only in terms of setting budgets for purchasing carbon allowances and investment, but also in terms of managing carbon data as it becomes a regulatory requirement. They, therefore, need to be prepared to provide the evidence base and framework for their organisations to be able to turn this time of change into a competitive advantage.”
What are the most important business drivers in the switchover to the low carbon economy?
When thinking about the switchover to the low carbon economy, respondents rated the following as either ‘very important’ or ‘quite important’ drivers for their business:
- The opportunity to increase efficiency and cut costs by reducing energy use = 97%
- To comply with carbon legislation = 95%
- To meet customer expectations = 78%
- To meet employee expectations = 76%
- To protect corporate reputation = 74%
- To create new market opportunities = 48%
- Reduce carbon emissions to win business = 48%
Interestingly, less than half (45%) of all respondents cite investor expectation as important, but this figure almost doubles among finance heads at technology and communications companies (88%).
Morrison concludes, “About half of businesses appear to be on the front foot, seeing the business development opportunities in the low carbon economy rather than simply reacting to legislative requirements and cost incentives.
“Forward-thinking organisations are using carbon reduction to differentiate themselves with customers, potential employees and the investment community. Not to mention preparing for demand for new lower carbon products and services. We are urging companies to assess their carbon footprint today, so that they can measure the tangible benefits tomorrow.”
Notes to editors
The research was conducted on behalf of the Carbon Trust Standard Company by Vanson Bourne during July and August 2010. Opinions were sourced from 200 Chief Financial Officers, finance directors, finance managers and other qualified finance decision makers via telephone research in England, Northern Ireland, Scotland and Wales. All of the businesses surveyed employed over 500 staff and represented the following industry sectors: retail, professional services, financial services, technology / communications, fast moving consumer goods and leisure / entertainment.
About the Carbon Trust Standard
All businesses and organisations, both in the UK and internationally, are eligible to apply for the Carbon Trust Standard including FTSEs, mid caps, SMEs and public sector organisations. To date, over 350 organisations have achieved the Carbon Trust Standard by measuring, managing and reduction their carbon emissions. Organisations that are awarded the Carbon Trust Standard hold it for a two year period and to maintain the certification they must reapply and demonstrate that they have continued to make year-on-year reductions in their carbon emissions. Organisations wanting information about getting the Carbon Trust Standard can call: 0800 019 1443 or visit www.carbontruststandard.com. Organisations that are certified with the Carbon Trust Standard are listed at www.carbontruststandard.com/pages/Current-Standard-Bearers
About the Carbon Trust
The Carbon Trust is a not-for-profit company with the mission to accelerate the move to a low carbon economy, providing specialist support to business and the public sector to help cut carbon emissions, save energy and commercialise low carbon technologies. By stimulating low carbon action we contribute to key UK goals of lower carbon emissions, the development of low carbon businesses, increased energy security and associated jobs.
We help to cut carbon emissions now by:
- Providing specialist advice and finance to help organisations cut carbon
- Setting standards for carbon reduction
We reduce potential future carbon emissions by:
- Opening markets for low carbon technologies
- Leading industry collaborations to commercialise technologies
- Investing in early stage low carbon companies