Proposal to introduce mandatory reporting of greenhouse gas emissions for companies in the UK

Discussions are underway in the UK as to whether large companies should be required to publish their greenhouse gas emissions each year. This step aims to give companies an incentive to reduce their emissions and ensure greater transparency for consumers. The Department for Environment, Food and Rural Affairs (Defra) produced a detailed cost-benefit analysis on the potential impact of this regulation, which was subsequently reviewed by adelphi. This resulted in an alternative cost-benefit analysis on the mandatory reporting scheme, which revealed that Defra's analysis had overestimated the costs by up to 4,600 million pounds and underestimated the benefits by up to 980 million pounds.

The Department for Environment, Food and Rural Affairs (Defra) and environmental protection organisations hope that the introduction of mandatory reporting of greenhouse gas emissions will motivate companies to cut their emissions. The companies could benefit in a number of ways, such as by saving on electricity and fuel consumption, while investors and customers would be better-informed when making purchasing decisions. Measuring and publishing emissions is thus viewed as an important step towards a low-carbon economy. There are, however, certain costs involved in implementing the measures required to achieve this goal.

In light of this, Defra produced a detailed cost-benefit analysis on the impact of introducing this regulation. It aims to facilitate the decision-making process, ensuring that any measures taken do not cause too great a burden on companies in economically difficult times. WWF UK, Aldersgate Group, The Co-operative and Christian Aid commissioned adelphi to review Defra's analysis and to produce an alternative cost-benefit calculation on the mandatory reporting scheme. adelphi's calculation revealed that Defra's analysis had overestimated the costs by up to 4,600 million pounds and underestimated the benefits by up to 980 million pounds. On the one hand, this was due to the high anticipated costs of introducing the requirements in companies, among other factors. On the other, Defra's calculation overlooked the benefits that would result from a cutback in freight transport emissions and the reduced risk to health from exhaust fumes.

adelphi discussed the results with Defra's environmental economists, who took many of the suggestions on board. The topic also caught the interest of the Financial Times, which subsequently published a report on the alternative calculations drawn up by adelphi. A vote will take place in the autumn to decide whether mandatory reporting should be introduced in the UK.