Companies must increase emission cuts to help meet carbon budgets

by Search Gate staff. Published Thu 13 Oct 2017 11:15, Last updated: 2017-10-13
UK plc needs to step up efforts to tackle carbon

Companies must set more ambitious greenhouse gas (GHG) emissions reduction targets if the UK is to meet its Carbon Budgets, according to the 2017 edition of the FTSE 350 annual Carbon Disclosure Project (CDP) report, published today.

Just 15% of companies’ emissions reduction targets currently stretch beyond 2020 and in carbon intensive sectors the average duration of a target is just 11 years to 2018 with a 2007 baseline.

This is despite the UK target of 80% reduction in emissions, from 1990 levels, by the year 2050 and the fact that 79% of FTSE 350 reporting companies are now citing climate change regulation as a risk to their business, up from 68% in 2010.

Business needs strong policy signals from Government to encourage further investment in longer term emissions reduction projects.

The report, entitled Can UK Plc help meet the Carbon Budgets?, was written by global professional services firm PwC on behalf of CDP and analysed disclosures from 236 FTSE 350 companies. It showed a rise in the number of reporting companies setting reduction targets from 58% in 2010 to 66% in 2017.

However, of these, just 22% have set absolute targets, with the remainder adopting intensity targets. Only 55% of the respondents from the carbon intensive materials, energy and industrials sectors reported emissions reduction targets, despite accounting for almost three quarters of the total emissions disclosed.

According to the report, just 38% of companies have reduced emissions from some or all of their business as a result of specific emissions reduction measures. Whilst this is an upward trend from 22% in 2010 companies need to implement more emissions reduction activities if the UK is to stay within its carbon budget.

The most popular emissions reduction initiatives related to energy efficiency measures such as building processes, building services and building fabric and behavioural change.

Encouragingly, those companies that have set absolute reduction targets have pledged to reduce emissions by 3.8% per year, a higher level than the 1.7 – 2.6% annual reductions set out in the Carbon Budgets.

There are positive signs that companies are beginning to adapt their strategies to stay ahead of new government regulation in this area. Almost all respondents (91%) have established some emissions reduction activities whether or not they have targets in place, up from 69% in 2010. Staff incentives to better manage climate change issues are now offered by 65% of reporting companies versus 51% in 2010.

CDP’s chief executive officer Paul Simpson said: “Business will play a crucial role in the UK Government meeting its Carbon Budgets and so we need to see a greater take up of long term emissions reduction measures.

"There is a need for new government policies that are both clear and long-term in order to support business setting more ambitious targets and encouraging more emissions reduction activities.”

Alan McGill, partner, sustainability and climate change, PwC said: “The UK Carbon Budgets are relatively new and many companies are still working out what this means for them both strategically and operationally.

"However, this year has seen an increasing number of companies setting demanding emissions reduction targets and critically showing how they derive financial value from tackling their emissions or those in their supply chains."

Defra Minister for Climate Change and Sustainability, Lord Taylor said: “It’s one of Defra’s top priorities to build a strong and sustainable green economy that is resilient to climate change. UK businesses are central to achieving this goal – some are already leading the world in carbon reporting and more and more are setting carbon reduction targets.

"With business, we are working to green and grow our entire economy, protecting our environment and creating new investment, technologies and opportunities for trade.”

A third (33%) of the FTSE 350 failed to respond to CDP this year. As the UK Government will decide later this year whether to mandate corporate reporting on climate change this raises questions about these companies’ preparedness for future regulation.

The Carbon Performance Leadership Index and Carbon Disclosure Leadership Index are revised annually based on company submissions and present the leaders of the FTSE 350 in carbon performance and disclosure respectively.

The top performing companies on both measures this year are Tesco, British American Tobacco, BG Group, Great Portland Estates, GlaxoSmithKline, Serco Group and Cable & Wireless Worldwide.



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