FLEET EMISSIONS’ AUDIT TRAIL ESSENTIAL FOR COMPANIES TO MEET NEW GREENHOUSE GAS REPORTING REGULATION
Recording fuel use, vehicle mileage and journey distances is becoming compulsory following the Government’s decision to introduce mandatory greenhouse gas emission reporting for publicly quoted companies from next April, according to fleet software company Jaama.
Approximately 1,800 companies listed on the London Stock Exchange will be subject to the new regulation, which could be extended to all large companies - a potential 31,000 businesses - from April 2016.
Greenhouse gas reporting includes emissions from vehicles ‘owned or controlled’ by companies including cars, vans and HGVs.
But, the forthcoming regulation excludes the mandatory reporting of business travel by means ‘not owned or controlled by the organisation’, which includes employees driving their own vehicles on business trips. The Government has said it has excluded such journeys due to logistical difficulties and the administration burden. Nevertheless, it is asking companies to voluntarily report emission levels linked to such vehicle use.
The leading fleet, leasing and rental management software supplier says technology such as its Key2 Vehicle Management system is an essential tool for businesses to effectively and efficiently compile an emissions audit trail.
The Government says that fuel consumption and car mileage can be converted into CO2-equivalent emissions by applying relevant conversion factors.
Additionally, while Government departments have compiled guidance to help UK firms measure and manage vehicle greenhouse gas emissions, which it says ‘can be a significant source of emissions for many organisations’, it acknowledges that they can be ‘a challenge to report’.
The UK is the first country to make it compulsory for companies to include emissions data for their entire organisation in their annual reports.
The introduction of the reports, following consultations with leading businesses, will, says the Government, enable investors and customers to see which companies are effectively managing the hidden long-term costs of greenhouse gas emissions.
Measuring emissions is an important first step to managing them, giving companies an understanding of where their main emissions are, says Jaama. Not only that, but the cost of operating company cars and vans is almost always second only to staff costs for employers.
Jaama sales and operations director Martin Evans said: “By accurately measuring and then reporting emission levels, fleet operators can gain board approval for introducing new measures to enhance environmental management, which could include introducing more low emission vehicles, trimming fuel use and implementing mileage management procedures. Overall the effect of introducing an emissions focus will be to operate a cleaner, greener fleet that overall clocks up fewer miles thus potentially cutting costs.
“Not only that, but just like the implementation of occupational road risk management solutions in recent years which has contributed towards improving organisations’ corporate social responsibility, so emissions reporting can enhance a company’s reputation and brand value.
“Just as occupational road risk management best practice dictates that companies have a comprehensive audit trail of drivers, vehicles and journeys so greenhouse gas emission reporting necessitates a similar audit trail in relation to vehicles, journeys and fuel usage.”
In making the greenhouse gas reporting announcement, Deputy Prime Minister, Nick Clegg said: “Counting your business costs while hiding your greenhouse gas emissions is a false economy.
“British companies need to reduce their harmful emissions for the benefit of the planet, but many back our plans because being energy efficient makes good business sense too.”
The UK is committed to cutting UK carbon emissions to 50% of 1990 levels by 2025.
Reporting is the first vital step for companies to make reductions in these dangerous emissions. It is estimated it will save four million tonnes of CO2 emissions by 2021.
Although the measure initially only applies to companies listed on the London Stock Exchange, Mr Evans believes that it is almost certain that the Government will extend greenhouse gas emission reporting to all large companies - defined by the Department for Business Enterprise and Regulatory Reform as one employing more than 250 people, with turnover above £22.8 million and gross assets above £11.4 million. Under the Companies Act 2006 to be classified as ‘large’ the company must meet the threshold for size on at least two of the three measures.
In the autumn the Government will publish a consultation on the draft regulations, which are likely to be effective from April 6, 2013. In late 2013/early 2014 the Government will issue revised guidance on how to measure and report greenhouse gas emissions to highlight regulatory obligations as well as continue to encourage additional voluntary reporting and, in 2015 it will conduct a review to decide whether the reporting requirement should be extended to all large companies in 2016.