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The amendment would in any case not achieve the purpose intended by the noble Baroness. As worded, it would make the Export Credits Guarantee Department responsible for all emissions of its customers and their customers. So if it reported one Airbus, it would be responsible for reporting all the emissions for Airbus and all the emissions for all the airlines that bought Airbus aircraft. Leaving aside the work involved in gathering such information from organisations that would have no obligation to provide it to the Export Credits Guarantee Department, any such figures would be meaningless in the context of showing what emissions the Export Credits Guarantee Department is supporting.
I hope that is nice and clear in Hansard, so that when they come to look at amendments in the other place, they know what they need to do and not do.
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Baroness Miller of Chilthorne Domer: My Lords, I thank the noble Lord, Lord Dubs, for hurrying back to speak to this amendment, which both he and I think is important. The Minister has clearly grasped that there is an important point here. I certainly would not accept, as I said when I moved the amendment, that it creates a huge new burden of work for the department, because it already gathers all this information. All we are asking for is that it should be transparent and publish it.
The Minister also said that the department seems to think that it should gather information about environmental impact and so on “where appropriate”. In talking about carbon emissions, an extremely serious issue, it is surely always appropriate that that information is gathered. There can be no excuse for it not to be, and it needs to be made public. Whether it is the most improved department depends on where the baseline was.
I come back to the fact that about £1.8 billion of taxpayers’ money going to support things that the public cannot know about, and having emissions that they cannot be aware of, is unacceptable. I am sure that between now and Third Reading the Minister may be able to give me more interesting information on where the Government intend to go with this issue, even if not in the Bill. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 65 [Report on climate change: Wales]:
Lord Rooker moved Amendment No. 229:
“( ) The report must, in particular, set out how the Welsh Ministers intend to exercise the power to give directions under section 56 (directions to reporting authorities to prepare adaptation reports).
( ) Nothing in a report under this section affects the exercise of the Welsh Ministers’ power under that section.”
On Question, amendment agreed to.
Clause 69 [Fines for offences relating to pollution]:
Lord Davies of Oldham moved Amendment No. 230:
“( ) Regulation 39(2)(a) of the Environmental Permitting (England and Wales) Regulations 2007 (S.I. 2007/3538) (maximum fine on summary conviction of an offence committed before the commencement of section 154(1) of the Criminal Justice Act 2003 (c. 44)) is revoked.”
The noble Lord said: My Lords, the amendment will make a change to the environmental permitting regulations. These regulations are a recent better regulation measure which has integrated waste management licensing with pollution prevention and control permitting. However, because of an anomaly between two pieces of primary legislation, the fining powers of magistrates’ courts have had to be reduced significantly for waste management offences.
The Government are concerned about the potential effect on the deterrence of waste crime and the amendment will allow us to put things back as they were as quickly
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On Question, amendment agreed to.
Baroness Northover moved Amendment No. 231:
(1) The Secretary of State may issue, or cause to be issued by an authorised body, guidance regarding the information concerning a company’s greenhouse gas emissions which should be publicly disclosed by such a company as part of its annual reporting.
(2) The guidance may relate to the appropriate content and form of such disclosures and any matter necessary to promote the provision of transparent and comparable data regarding the greenhouse gas emissions of companies.
(3) The guidance issued under this section may distinguish between different categories of company according to criteria to be determined by the Secretary of State, such as turnover or market share or number of employees or any other criteria the Secretary of State deems relevant, and may contain different standards for each category of company in respect of the content and form of the disclosures and other matters referred to in subsection (2).
(4) Any company which is required to produce a business review under the Companies Act 2006 (c. 46) must report on greenhouse gas emissions having regard to any guidance given under this section and the Secretary of State may provide that compliance with any such guidance will be presumed to constitute compliance with section 417 of that Act in respect of reporting on such emissions.
The noble Baroness said: My Lords, I realise that it is late but this is a very important issue, first raised in Committee by the noble Lord, Lord Whitty. My name was on his amendment and his is on my amendment. This time the amendment has been redrafted to make it more in keeping with the provisions of the Companies Act in terms of the effects on companies of different sizes or natures. I moved some of the amendments to the Companies Bill on the subject of business reporting when it went through this House. I was struck then by how ready UK business was to accept these provisions, recognising that shareholders and consumers saw such reporting as important. They wanted such reporting to be standardised and transparent so that they knew exactly where they stood, not least in relation to their competitors. It was an area in which they were already ahead of the Government. Under that Act certain companies already have to report on their impact on the environment, as well as on other issues which I will not address here.
The noble Lord, Lord Whitty, rightly pointed out in Committee that,
- “much of the reduction in carbon is going to have to be achieved by commercial private enterprises”.—[Official Report, 30/1/08; col. 733.]
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He said that he wished to put in place the kind of provision that ensured there was “behaviour change” among managers, decision makers, shareholders and investors so that carbon reduction was seen as relevant to the company’s reputation. The Conservatives did not support this amendment in Committee though I hope they may have shifted their position now. The Minister said that he supported the intention of the amendment but argued that it was premature as it could, in effect, cross with the first reports under the Companies Act which should come out in late 2008 or early 2009. However, he expected that many companies would include information about climate change and other environmental issues in their reports. He said:
“This is going to happen but not in the way and at the speed suggested by the amendments”.—[Official Report, 30/1/08; col. 736.]
We are keen to push this further. The Minister agrees that it is a good idea and that certain companies will need to report on their environmental impact anyway. We state here that the Secretary of State should be able to give guidance on this matter, obviously on a voluntary basis, but that any company that is already required to produce a business review must report within that on greenhouse gas emissions. Such companies might be about to do that anyway. This would make it clear that indeed they should. Although I heard what the Minister said last time about this being premature, I do not think that any of us finds it premature given the scale of the problem we face. It should fit well with what companies are expected to do anyway. This seems to be an opportunity that should not be missed. I beg to move.
Lord Teverson: My Lords, I have also put my name to this amendment, though we had a rather stronger amendment on this subject from these Benches in Committee. I was persuaded by the noble Lord, Lord Whitty, that what we needed was something that—as my noble friend Lady Northover said—is more in line with the companies legislation. This is an important part of what the Bill could do in major corporations and businesses. The definition of what the Secretary of State has to do, and when he or she has to do it, has been left to their discretion in this clause.
This is an enabling Bill that could achieve that effect in an area that really counts—business reporting. One of the most important things for enabling government to move ahead in this area is the provision of standards so that the companies that are ahead of the game and report this information have a consistent and understandable framework within which to do so. That would put pressure on the corporations that do not report greenhouse gas emissions or carbon emissions to come into line and do so.
How does the Minister see international and European standards coming together with regard to the climate change disclosure board and the international accounting organisations that set standards for company reports? From looking at its website, I seem to remember that Defra suggests its own ways for companies to report carbon emissions. We need to bring this together so that there is consistency and others have to catch up with the corporations that are already well ahead in this regard and willing to do this. I agree that that has
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Lord Rooker: My Lords, if my memory serves me correctly, when this matter was raised in Committee we had an incredibly truncated discussion. I cannot remember the cause of that but I remember telling my noble friend Lord Whitty that we had to finish at a certain time for various reasons. It may have been a Wednesday but the debate was truncated. I apologised to my noble friend and to others because the amendment was discussed at a late hour and I think the whole thing took about 10 minutes. Therefore, my response will be a bit longer than the speeches we have heard although it will not be too long.
The noble Lord, Lord Teverson, and the noble Baroness, Lady Northover, are right—these are incredibly important issues. Like them, the Government are very keen to promote transparency of carbon reporting by companies. I want to discuss the activity that is already going on in this area. It is not as though we start from a clean sheet.
At present a large number of companies are in fact already required to report on their carbon emissions. There are mandatory reporting requirements for approximately 1,000 UK companies included in the EU Emissions Trading Scheme, and about another 5,000 additional companies will also be subject to mandatory reporting requirements when the carbon reduction commitment comes into force in 2010. This amendment would make additional blanket mandatory requirements for companies to disclose their greenhouse gas emissions in their annual reports.
As I mentioned in Committee, albeit briefly, the Government see the main objective of narrative reporting within business reviews as providing shareholders and investors with the information they need to assess how directors have performed in their duty to promote the success of a company. Clause 417 of the Companies Act 2006 requires directors of quoted companies to include information on environmental matters, including the impact of the company’s business on the environment. In my 27 years in the other place the only time I was ever successful in the ballot for Private Members’ Bills was when I came twelfth. I thought that I was not going to get anywhere but I introduced a Bill on environmental disclosure in company reports, which we later added to the freedom of information process. Needless to say, that Bill was blocked by the Tory Government of the time, but that was the subject I chose as there was a gap in companies reporting on that area. The fact that the relevant information may be included in company reports to shareholders is neither here nor there; these are public documents and it is very important that this information should be included. I hope that I have given this issue a bit of a push. I am not all bad as a Minister. I had another life when I was a “goodie”.
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This is a matter of judgment for directors, according to what they think is necessary to understand the company’s business. Although I anticipate that many directors will include information about climate change and other environmental issues in their reports, there is not yet a robust picture of what reporting is actually taking place, as the requirement came into force only on 1 October last year, as I said in Committee. The Government understand that and have committed to monitor how the narrative reporting requirements are implemented in practice.
9.45 pm
During the passage of the then Companies Bill in another place, Margaret Hodge, the then Minister of State for Industry and the Regions, committed to review implementation of the statutory business review provisions of the Companies Act 2006. This review is expected to take place in 2010. The detail of the review is yet to be determined but we envisage that it will provide an opportunity to look at whether information is being provided to shareholders and investors on climate change and other environmental issues in the context of the development, performance or position of a company’s business.
Under the Companies Act 2006, the Secretary of State may also vary the reporting requirements on business—although, as I have made clear, we should not use these powers to impose unnecessary burdens on business. We also think that it is important to recognise that many companies in addition to those involved in trading schemes which are obliged to do so already voluntarily report these data. For example, in 2007, 92 per cent of the UK FTSE 100 companies provided information on their climate change strategies and emissions to the voluntary investor-driven Carbon Disclosure Project.
In terms of guidance on reporting, company law has recently been through a radical reform. The House will recall the debates during the passage of the Companies Act in 2006. Those debates concluded that the introduction of mandatory standards were not in the best interests of shareholders as directors would be best placed to judge what is relevant to report on in the context of their particular business. Mandatory guidance risks companies producing standardised responses designed to comply with guidance rather than proper consideration of environmental and other issues relevant to their business. However, wider support and guidance is available for companies; for example, best practice guidance prepared by the Accounting Standards Board— a body of the Financial Reporting Council—in the form of a reporting statement. This guidance covers environmental issues including emissions management.
Defra has also produced environmental reporting key indicators which help companies through the process of reporting on greenhouse gas emissions data. The Government have also responded to calls from investors and business to make emissions data more comparable, and we support the work of the Climate Disclosure Standards Board to develop an acceptable international framework for corporations to report on climate change issues.
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Given those arguments, and with all that is going on, we could not at present support a mandatory requirement for companies to report on their CO2 emissions or for the Government to issue statutory guidance.
The noble Lord, Lord Teverson, asked what the Government were doing on common international reporting. I have touched on the issue. There is no determined and agreed international standard. As I said, we support the work being done by the Climate Disclosure Standards Board. We have also done the work. Defra is supporting the secretariat to the Climate Disclosure Standards Board launched at the World Economic Forum in 2007, which David Miliband attended. That was in response to increased calls for action from corporations and the markets to address global warming. The objectives of the member organisations of the board is to align their core requests for information from companies in order to ensure that they report climate change-related information in a standardised format and in a way that facilitates easier comparative analysis by investors, managers, above all the public, and, I imagine, the parliaments.
We are not starting from a clean sheet: an enormous amount of work is going on. We do not think at present that it would be right to support this extra mandatory requirement on companies. Nevertheless, we entirely share the desire for transparency put forward by the noble Baroness, Lady Northover.
Baroness Northover: My Lords, I thank the noble Lord for his reply. We do not doubt that his heart is in the right place—and that piece of history rather confirms it. However, I am somewhat disappointed by some of the things he said. There were some mixed messages. As he may remember, the Companies Act was preceded by an agreement between the Government and business on what the nature of the reporting might be but the then Chancellor of the Exchequer, surprising business, knocked that into the long grass. During the passage of the Companies Act we steadily brought back bits of what had been originally agreed but which had been knocked sideways. That came up at just about every stage of that legislation in the Lords, and to some extent also in the Commons. I was involved in the sessions in the Lords.
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I hope that we can take this further. It is unfortunate that this issue has come up so late both tonight on Report and did so in Committee, and that we have not therefore been able to give proper consideration to it, because it is extremely important, as my noble friend Lord Teverson said. It is one of the weapons in our armoury in this regard, and many of the businesses that have to report on a mandatory basis would welcome it. Given the lateness of the hour, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 70 [Territorial scope of provisions relating to greenhouse gas emissions]:
[Amendment No. 232 not moved.]
Clause 76 [Meaning of "national authority"]:
[Amendment No. 233 not moved.]
Clause 79 [Index of defined expressions]:
Lord Rooker moved Amendments Nos. 234 to 239:
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“devolved functions”, in relation to a reporting authority (in sections 51 to 58) |
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““devolved Welsh functions”, in relation to a reporting authority (in sections 51 to 58) |
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