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Today we launch the Acclaro Energy Programme, and with it comes a series of free guidance that opens up the world of energy management and policy. Today we begin with a jargon busting look at UK energy and carbon compliance.

The energy and carbon industry is so full of reporting acronyms, that sometimes it’s hard to keep up.  July (2018) brought yet another to the doors of the UK corporate world; SECR – Streamlined Energy Carbon Reporting. For the many businesses currently navigating the energy and carbon regulatory regimes, adding another to the mix should not be too difficult to handle. In many instances, reporting requirements utilise the same energy data in a variety of ways to translate into business energy and carbon. But, as new regulations are added, the harder the names roll off the tongue.

Let’s talk a bit about what currently exists.

CCL
Climate Change Levy is first of the two energy taxes targeted towards energy-intensive organisations. Introduced in 2001, the tax is applied to electricity and gas bills for all businesses and public sector organisations that pay the standard rate of VAT. Exempt from CCL are businesses using less than 1,000kWh electricity and less than 4,397kWh gas, per month. No reporting is required by business energy users. CCL seems to be here for the long haul.

MGHG
Mandatory greenhouse gas reporting (MGHG reporting), introduced in 2013, requires all UK quoted companies to publicly report their greenhouse gas emissions on all forms of energy used annually. At present this policy only affects around 1200 companies. The main focus is on transparency of carbon data for carbon management and reduction.

CRC
The Carbon Reduction Commitment Energy Efficiency Scheme, this one doesn’t exactly roll of the tongue, but luckily it is also known as the CRC scheme. CRC is second of the two energy taxes targeted towards large energy-intensive organisations. This tax and reporting mechanism, introduced in 2016, is levied to encourage eligible businesses and public sector organisations to consume energy more efficiently. Over 5000 undertakings report annually to the Environment Agency. The reports cover UK energy use and the purchase of allowances to cover their carbon emissions. The scheme phases cover emissions generated over UK financial year; March 2019 will mark the last phase – the end of the CRC scheme.

ESOS
Energy Savings Opportunity Scheme (ESOS) introduced in 2014; another which seems to be here to stay, is a mandatory reporting regulation that requires non-SME undertakings to audit their energy use. The key word in this scheme is opportunity; the aim is to identify opportunity to save energy and potentially cut related energy costs. However, whilst this scheme requires an element of reporting, the minimal nature of the reporting does not include public disclosure. In fact, unless formally audited, the compliance reports are not reviewed by the regulator, Environment Agency.

SECR
Streamlined Energy and Carbon Reporting framework, as the name suggests is aimed to simplify and bring together elements of the above reporting schemes into one clean process. This framework will be in play from April 2019 with a wider compliance qualification. Similar to MGHG reporting, it will be implemented through disclosure in annual directors reports with Companies House. SECR will replace CRC reporting, with a combination of MGHG and ESOS reporting elements. These changes will add value to robust reporting mechanisms and the opportunity to quantify ESOS outputs with energy efficiency action and carbon management into one streamlined approach.  It is estimated that the number of companies which will be required to comply with SECR will change from the 1,200 covered in MGHG to 11,900. This includes all quoted and large unquoted companies with some exceptions. In other words, many companies complying with ESOS will be scooped up into the SECR framework.

Our team of energy and sustainability experts have extensive experience in navigating the policy landscape and delivering reporting that meets regulatory requirements and business objectives. To find out more about the above reporting mechanisms and how they may affect your business, please get in touch.

The Acclaro Energy Programme helps organisations to adapt for and address the very visible responsibilities that sit within energy efficiency. We’d be happy to assist you in taking action whether mandatory or voluntary to manage risk, reduce cost or enhance business reputation.

The National Audit Office report on packaging recycling, (published 23rd July 2018) highlights real concerns involving UK waste that is exported overseas for recycling: there is little visibility on what happens with it, and a suspicion that much of it ends up dumped in landfill.

Such exports increased six-fold between 2002 and 2017, as a result of insufficient domestic recycling capacity to meet demand. The majority was exported to China – but as of January 2018, Beijing has banned almost all plastic waste imports. That creates a new challenge: who should we send our waste to now, and can they prove they will recycle it?

The report also reveals that the government does not account for undetected fraud and error in its recycling records. Although official data indicates that 64% of packaging was recycled last year, the figures rely on estimates that are not sufficiently robust, despite the financial incentive for packaging producers to fail to report the volumes of material that enter the market, and for recyclers to overstate the quantities they handle.

The government will have the opportunity to address these concerns when it develops its new strategy for waste and resources, which it expects to do later this year. However consumers should be aware that sending harmful waste to be recycled isn’t always an effective way of eliminating it, and instead look for long-term solutions to cut back on their waste.

As the scandal of the UK’s plastic rubbish being dumped overseas deepens, businesses need to check if their data systems record reliable waste data, and if they store proof that waste contractors verify proper disposal. Smart businesses are saving costs and proving credibility by retaining the value of their materials with circular economy principles.

Acclaro Advisory can provide the expertise to help your organisation achieve this, so please get in touch if you would like to explore your options.

Both client and provider must invest in a long-term relationship to truly harness the potential of timely and specialist support.

While environmental requirements on companies – due diligence, transparency and performance progress – have increased over the last decade, environmental team sizes have rarely recovered from the contraction experienced during the recession. Beyond the sheer weight of the environmental workload, CR managers are increasingly finding that the diversity of skills needed to satisfy the requirements is rare to find contained solely within one team. Outsourcing some or all of the environmental functions is becoming more popular. But to be truly effective, long-term relationships are needed.

The sole “environment manager” within large corporates in the late 1990s – often tasked with an array of activities including health and safety, supply chain management, environmental management, social impact management, communications (if the company engaged in this), quality and community giving – began to be replaced in the early 2000s by a larger team, with more specialised roles.

Even so, the increasing external reporting requirements on large corporates – including the various rankings and the need to produce a complete CR report each year – effectively shut down progress on performance for around three months each year unless data collection and copywriting was outsourced, as well as verification. CDP, DJSI, FTSE4Good and GRI amongst others led to a fundamental shift by connecting the investment and fund bodies with environmental performance data. As reporting requirements became stringent – and a clearer picture of ‘best practice’ more prescribed – some companies struggled to keep up with the new imperatives, now with the additional impetus of potential investor sanctions. Additionally, stand-alone research pieces were commonly commissioned from consultancies, often focussed on a defined issue affecting strategy and frequently inspired by the latest ranking requirements.

Compliance and due diligence obligations also increased over this period, led initially by regulatory pressures and financial penalties, particularly in the US. Overall, outsourced support in this period tended to be piecemeal, with providers called on occasionally on a task-by-task-basis and changed frequently, without investment in a long-term relationship or a deep understanding of the company culture.

As reporting requirements became stringent – and a clearer picture of ‘best practice’ more prescribed – some companies struggled to keep up with the new imperatives,

The economic turmoil of the past decade saw environmental teams cut and a retrenchment in Government policy globally on green issues – but emerging from this came incentives for companies to promote their environmental and social credentials directly – particularly to a new generation more interested in social value, hungry for transparency and well acquainted with the new tools with which that need could be satisfied.

What does this mean for today and the future? Certainly, we can expect that the need for transparency will continue to play a stronger role in environmental progress than compliance alone. For a generation well-schooled in sustainability matters and sceptical of regulatory effectiveness, environmental performance inherently includes aspects of social value, well-being, and value chain impacts.

The skill sets required to deliver this change are becoming more complex requiring a mixture of change management, data analysis, strategic insight, in-depth and targeted two way communications, and operational management. The reporting calendar is still a huge influence, meaning different skills sets continue to be emphasised at different times of the year.

Outsourced environmental teams can provide the right kind of technical support for the time of the year, and give a pool of specialist skills to be dipped in to when necessary. To truly harness the power of an outsourced team – to truly have a ‘team’ – the provider needs to be able to invest in a long-term relationship with the client and become well-versed in the company culture, with their own internal network. Only then can they work semiautonomously, and ensure their work becomes business-as-usual within the client company rather than the dreaded report-gathering-dust-on-a-shelf.

Conclusion

Outsourcing isn’t for everyone and shouldn’t be seen as a panacea to achieve higher rankings scores and deliver better results – the outsourced parties still need to work within the bounds of the strategic direction that can ultimately only be set by the company. If a company is willing to invest in a long-term relationship and truly immerses the provider within the day-today running, an outsourced team can become an invaluable pool of insight and workforce in the face of shifting priorities and constrained resources.

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