Isra-Mart srl : Climate minister and Sainsbury's boss clash over carbon reporting rules

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Sainsbury's chief executive Justin King has clashed with Climate Change minister Greg Barker over government proposals to force businesses to report greenhouse gas emissions and transform the Carbon Reduction Commitment (CRC) incentive scheme into a tax.

Speaking during an event at Sainsbury's London headquarters yesterday, King warned the government that making carbon reporting mandatory would create an arbitrary regulatory system, which could fail to drive some companies to reduce their carbon emissions.

The government is currently consulting on how to encourage wider corporate reporting on carbon emissions, including one proposal for a voluntary reporting system and three mandatory reporting schemes that would force larger businesses to deliver annual carbon reports.

The proposals for a mandatory reporting regime have considerable support from across the business community, with the CBI leading calls for new reporting rules.

However, King argued that mandatory reporting rules could create an onerous regulatory burden for firms, comparing the proposals to existing requirements on food retailers to demonstrate good levels of hygiene, which he argued had created "a lot of work for a lot of people without adding to the sum total of human knowledge or equipping consumers to really make choices".

"We generally don't support [mandatory reporting], not just on emissions but more widely, for the simple reason that everyone then starts looking at the score rather than trying to hit the ball," he said.

King argued that consumer-facing businesses, such as retailers, are driven more by the reputational risk of not reporting emissions than policy. He said that consumers trust non-governmental organisations more than ministers, and that the voluntary sector should therefore play an increasingly important role in exposing the practices of companies in order to drive change.

Speaking at the same event, Barker said that he supported mandatory reporting as a way of creating a level playing field to help investors make informed decisions about a particular company's greenhouse gas emissions or reliance on fossil fuels.

However, he tempered his enthusiasm for the proposed reporting rules by saying that the government was loath to regulate unless it was necessary, and that any regulation should ensure minimal damage to the UK's economic growth.

"We know from the banking crisis that the lack of transparency and the inability of investors ... to price in accurately to a company is a huge inhibitor to long-term growth and investors," he said.

"Clearly in the current climate there is a big concern right across the coalition about imposing anything that could be deemed as an extra burden on business at this particular point in the economic cycle when the absolute imperative is returning the country to growth and fixing the deficit.

"But equally it is a first choice to think that doing anything other than embedding green growth in our recovery is the right thing for Britain."

Defra is currently conducting a consultation exercise on whether to adopt mandatory reporting rules, and is expected to reach a final decision in the autumn.

King also used the opportunity to slam the government's decision to remove the revenue recycling element of the CRC, claiming that businesses will make 90 per cent less investment in improving their environmental impact as a result of the change.

"The way that businesses will respond to a tax will be different to the way businesses will respond to an incentive," he said. "There are investments that would have been made if it stayed as an incentive that we will not make now it's a tax, because it was the difference between the economics of those investments."

Responding to King's accusation, Barker admitted that the change will not help companies, but is nevertheless an important part of government efforts to reduce the UK's budget deficit.

However, he denied that the reduction in overall environmental investments would be as high as 90 per cent, and maintained that some businesses were keen for the "fiddly" revenue recycling element to be scrapped.