?The lack of transparency obscures the UK?s true contribution to carbon emissions, and would impede the setting of accurate carbon targets and budgets in the proposed Climate Change Bill. A carbon reporting standard would also help the UK reaffirm its leading position in the international financial markets? Mr Wilkes added.
The letter argues that carbon emissions are now a material commodity with an economic and financial value to business, investors and the city. They need to be properly defined, measured, accounted for, audited and reported in a similar way to other physical commodities and financial instruments.
A common protocol would demonstrate that companies have used the appropriate process to assess risks, define boundaries, measure and report emissions in a way that is meaningful, consistent and comparable. Such transparency would create a level playing field for UK businesses, allowing investors and consumers to make low-carbon choices and comparisons. It would also support the aims of the Climate Change Bill, and would make emissions trading schemes and other policy initiatives to cut emissions easier to design and implement. As a result, the London Stock Exchange could become a world leader in carbon accounting and reporting.
The Aldersgate Group are calling for enabling powers to be introduced in the Climate Change bill to ensure that carbon emissions and other factors relating to climate change are reported against by UK companies.
Sir John Harman, Chairman of the Environment Agency, said; ?The current regime undermines the comparative advantage which would accrue to companies that are taking a lead on cutting their carbon emissions. We need to re-address this bias to accelerate our transition to a low carbon economy?.
George Latham, Head of Sustainable & Responsible Investment (SRI), Henderson Global, states; “If the UK wants to be at the forefront of the transition towards a low-carbon economy, then we need a disclosure regime that is aligned with that aspiration. We believe the current system of accounting and financial regulation is not sufficient in a carbon-constrained world.”
Dr Sharon McClenaghan, Senior Corporate Sector Adviser, Christian Aid, said: ?Up to 15 per cent of worldwide CO2 emissions is financed by money raised in the UK. Morally we know we have to do something about this, as climate change is already having a devastating impact on some of the world?s poorest communities, but it is also a business problem ? a hidden liability for the London-based investors that fund these activities.?