11:30 The Minister for Energy and Clean Growth (Claire Perry)

Our clean growth strategy looks at the other side of the problem. Reporting on emissions should encourage companies to take action to reduce them, so we have set out several measures for leading global efforts to cut greenhouse gas emissions by working with businesses, with the aim of improving energy efficiency in business and industry by at least 20% by 2030. In order to take action, however, organisations must know the quantum of the problem, and the first step is measuring energy use and emissions.

The Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 introduced a requirement for approximately 1,200 quoted companies to state in their directors’ report their annual greenhouse gas emissions alongside an intensity metric, and to disclose the methodology used. The draft regulations will introduce a new obligation for those companies to report their underlying global energy use, to better reflect the true impact of their operations.

The draft regulations will also introduce new requirements for more than 10,000 large unquoted companies and large LLPs to report information about their UK energy use and greenhouse gas emissions in relation to electricity, gas and transport, and to disclose the methodology used to calculate the relevant disclosures. They will further introduce a new requirement to report on the principal measures that the organisation has taken to increase energy efficiency in the financial year. As per the existing requirements, those disclosures are to be included in annual reports—specifically, the directors’ report for companies and a new energy and carbon report for LLPs. We believe that not only will they provide improved transparency for senior management, investors and stakeholders but will enable energy and carbon performance to be in line with both financial and operational performance. Companies might well take interesting learnings from considering what other peer group companies are doing.

If approved, the regulations will be introduced for financial years starting on or after 1 April next year. As always, we consulted widely on the policy and we received 155 responses. The majority of respondents agreed that mandatory reporting is important and that it should apply UK wide, be aligned with best practice in the UK and internationally, and build on the existing mandatory reporting of greenhouse gas emissions by quoted companies and mandatory energy audit under the energy savings opportunity scheme.

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11:37 Dr Alan Whitehead (Southampton, Test) (Lab)

The essential element of this statutory instrument is what companies should do to report their emissions, energy use and various other matters. I completely concur with the Minister that reporting arrangements provide sunlight as a disinfectant. It is right that a scheme should allow that to happen. There was a previous scheme that allowed that to happen under the original carbon reduction commitment. The CRC arose from the Climate Change Act 2008; in its design, it not only required reporting but had a trading element, which was sub-traded between companies. It allowed an extension of the trading arrangements alongside reporting arrangements, which had originally been envisaged in the Climate Change Act for larger companies.

The third whittling away was the complete closing down of the CRC. It will finish in the 2018-19 reporting period and will be the end of the CRC as a whole. This replacement arrangement for the reporting elements of the CRC is very welcome, but it is the least one might expect following the closure of the CRC. Yes, in introducing additional requirements to the climate change levy on smaller companies the Government have introduced an element of revenue-neutral arrangements for trading, but the arrangements are a welcome successor to the reporting arrangements under the CRC. To some extent they extend those reporting arrangements, as a substantial number of non-quoted companies will now be included. Some 11,000 companies will be required to put these directors’ reports in their company filing.

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11:44 Ronnie Cowan (Inverclyde) (SNP)

Any move to tackle climate change is welcomed by the Scottish National party. We see it as the greatest risk we face this generation. We are concerned that allowing directors to decide when to be exempt from making statements because of such a statement being

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