UK Climate Change Programme 2006 - JNCC - Defra

54
Business
provides interest free loans of between £5,000
and £100,000 for up to four years for qualifying
energy efficiency projects. The purpose of the
scheme is to overcome a common barrier to
investment – where the project is financially
viable but the capital budget is constrained by
short-term cash flow requirements. The Scottish
Executive funds an equivalent scheme in Scotland
called Loan Action Scotland.
55. In the 2005 Pre-Budget Report, the
Chancellor announced extra funding of £15m
for the Carbon Trust to support the roll-out
of the Energy Efficiency Loans scheme for
SMEs, building on the current pilot. Defra
will provide additional funding to allow the
Carbon Trust to expand the scheme further.
The Government estimates that the scheme could
save 0.1 MtC by 2010.
56. The Government will introduce further
measures to encourage and assist SMEs to
take up energy saving opportunities. Defra
has commissioned work to examine some
different possible policy options. Initial
analysis suggests that these measures could save
0.1 MtC by 2010.
Improving company reporting on
climate change
57. There is an increasing recognition that good
environmental performance makes good business
sense. Climate change risks and uncertainties
impact to some extent on many companies, and
affect investment decisions, consumer behaviour
and Government policy. Management of energy,
natural resources or waste will affect current
performance; failure to plan for a future in which
environmental factors, such as climate change,
are likely to be increasingly significant may risk
the long-term future of a business.
58. Some good progress has been made – the
Carbon Disclosure Project’s third information
request in 2005 received a record high 71 per
cent disclosure rate from Financial Times Global
500 companies, with 54 per cent disclosing
emissions data. In the UK, 140 companies in the
FTSE250 now report on their environmental
performance. However, the number of FTSE All
Share companies linking climate change and
financial performance is markedly lower. For
example, only 17 per cent of companies refer to
climate change risks in their Annual Report and
Accounts, and only 6 per cent provide
quantitative information.
59. From April 2005, the EU Accounts Modernisation
Directive introduced requirements for quoted and
large private companies to produce an Enhanced
Business Review. Companies will need to report
on environmental matters to the extent necessary
for an understanding of the company’s
development, performance or position.
60. In January 2006, the Government published
‘Environmental Key Performance Indicators:
reporting guidelines for UK business’ 5 . The use
of Key Performance Indicators (KPIs) will help
companies both manage and communicate the
links between environmental and financial
performance, and meet their reporting
obligations under the EU Accounts Modernisation
Directive, which requires, where appropriate,
analysis using KPIs relating to environmental
matters. For most sectors, greenhouse gas
emissions is the most significant KPI, which
means that KPIs provide a mechanism for
Government to challenge the FTSE All Share and
large private companies to report on their climate
change performance in a transparent and
meaningful way.
Investors and climate change
61. Investors’ primary interest in climate change is
financial, and based upon the need to protect the
value of the investments under their care. Climate
change brings with it compliance, reputational,
strategic and physical risks for many sectors.
Investors are beginning to check that companies
have carbon management systems in place
(including through the Carbon Disclosure Project).
There are also many opportunities for companies
to create shareholder value, for example through
5 www.defra.gov.uk/corporate/consult/envrep-kpi/envrep-kpi.pdf
6 The full statement can be found at www.defra.gov.uk/environment/business/scp/ems.htm