Wednesday, 6 May 2009

UK businesses unprepared for CRC

In what could presage the introduction of legislation in other countries, a survey has shown that two thirds of Britain's bosses are unaware of the Carbon Reduction Commitment (CRC).

The CRC is a UK scheme which addresses CO2 emissions not already covered by Climate Change Agreements and the EU Emissions Trading System. Organisations will qualify as a CRC participant based on their half hourly electricity usage and participants will have to purchase allowances equivalent to their emissions each year. Around 20,000 organisations may be affected by the scheme which is due to start in April 2010.

The survey, by Business in the Community and available here, was commissioned to coincide with the Prince's May Day Summit last week, the UK's largest gathering of businesses committed to taking action on climate change. Among the findings were:

- Only 29% of UK senior executives are aware that their organisations will be affected by CRC.

- Larger firms are more likely to have taken first steps. Among firms with £10m+ turnover 54% of bosses have measured emissions, 62% have set targets to reduce them, 61% have audited energy consumption.

- 32% of bosses say their organisations need advice and support to meet CRC requirements. Surprisingly, the need is greatest among large organisations: 43% with turnover of £5m+ and 46% with 250+ employees.

- Most (54%) of the UK’s bosses have not yet considered whether their organisations should modify their processes to prepare for climate change. The figure is 74% for organisations with fewer than 50 employees.

- 30% of decision makers say their organisations do not do anything on climate change. One in five (21%) admitted that climate change is not even on the agenda.

- Only 36% of UK bosses say their organisations have audited their energy consumption, 30% say they have measured carbon emissions and 35% have set targets to reduce them (which suggests that some organisations have set targets without knowing their current emissions levels!). In any case, 71% of the UK’s directors and board members say they don’t externally report their emissions.

- Manufacturing, engineering and utilities firms are more likely to have measured their carbon emissions and have reduction targets, but even here only just over half (54%) of bosses say they have done so. These firms are likely to have audited their energy consumption because of the impact on the bottom line.

The results are generally disappointing for the lack of awareness and action, but they also give an indication of the backlog of activity that is likely to build as CRC introduction approaches. If Defra's estimate of companies affected is right, then the survey suggests that over 14,000 companies will need to put carbon counting and management systems in place over the next 11 months and nearly 6,500 already freely admit they need help.

It's almost inevitable that the need to count and manage emissions will spread to all businesses, either through regulation/legislation or simply market pressure. It represents a huge opportunity for the software providers that are springing up to supply the market.

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