Coverage and commentary on climate change and carbon emissions has never been more prolific. The government has now committed to significant changes over the next few decades, which will affect how we use, consume and produce energy. Underpinning this transformation are new and changing regulatory structures, and to come out ahead IT directors must be up to speed on the required compliance and how to adapt to maximise new commercial opportunities.

Directors must accept that new regulation is fast becoming a reality, and the time to think about it is now.

This year has seen the introduction of two key pieces of legislation for consultation. The draft Climate Change Bill, published in March, was the first of its kind in any country, and set out a framework for moving the UK to a low-carbon economy, including binding long-term emission reduction targets.

In May, the Energy White Paper also announced the specific measures that will ensure individuals, businesses and government reduce their emissions and save energy. As part of this, a new Carbon Reduction Commitment was proposed as a mandatory national emissions trading scheme, requiring large non energy-intensive companies, such as retail chains and public sector organisations, to account for their full range of carbon emissions and buy allowances from a government auction or trade on the market to cover them.

The EU Emissions Trading Scheme ­already in place ­ is one of the most significant pieces of legislation for energy-intensive businesses.

From January 2008 the legislation enters a new phase, and because of tough decisions by the European Commission in restricting the emissions caps set by member states across Europe, is likely to create a robust price for carbon and a need for businesses to efficiently manage their carbon dioxide emissions or purchase additional credits.

Working with trusted experts such as the Carbon Trust is fundamental to understanding legislation of this nature. Having this resource available will help businesses navigate through the often tangled web of compliance and requirements, enable them to get to grips with emissions and put action plans in place to increase efficiency and realise the broader business opportunities created by the transition to a low-carbon economy.

The risk of complacency in delaying compliance until it becomes legislatively binding could result in legal implications and loss of business confidence. Looking at the bottom line alone, those left behind will see their energy and related costs escalate compared with those of their competitors, and quickly find themselves in a position where they lose out on new market opportunities for low carbon goods and services.

Companies that act now will also have a strengthened reputation among increasingly discernable consumers, investors and other stakeholders.

IT directors must begin adapting their businesses now by learning about climate change policy and the opportunities related to the transition to a low-carbon economy. Small investments of time, planning and money in the short term could lead to significant rewards in the future, owing to the competitive edge of being a leader on a global issue in which the UK is emerging as a front-runner.

Protecting corporate reputation

Some people may have heard of a project to recover ice core from deep down in the Siberian ice by drilling down several thousand metres. Trapped in the ice are pockets of air, and within that air are various concentrations of carbon dioxide (CO2), the gas responsible for global warning at the moment.

The ice cores represent a continuous history going back about 400,000 years. The CO2 levels in the atmosphere shown in those cores have been plotted against the earth’s temperature going back all those years, and generally have been maintained within decent limits. By comparison, CO2 levels today are going off the scale.

We cannot be complacent. We have a long way to go to reduce carbon emissions to what are seen to be acceptable scientific levels.

The Carbon Trust works to help businesses reduce their energy consumption and put money on their bottom line.

One of the areas studied in wider detail is the effect of emissions on companies, and the best way to help them through a carbon management programme.
There are three things that affect businesses: regulation, cost
and reputation.

How does carbon management sit within a company? It’s about trying to deal with waste from the supply chain, with energy management and so on, as well as looking at corporate and social responsibility, and how it affects marketing.

You may have noticed that Tesco and Marks & Spencer have found carbon management to be an area where they feel they can get a competitive edge, and they are using an in-house energy management strategy to achieve that.

Some large FTSE 100 companies have capitalised some of their brand value on their balance sheet. If they do not look at their carbon footprint, their brand will suffer ­ and so will the balance sheet.

Companies are capable of going through a carbon management process, ending up with a carbon footprint and a series of ranked objectives for that company ­ targets and monitoring, for example.

That will drive down from those organisations to their suppliers, then down the chain to smaller companies, so the big firms understand their indirect carbon footprint as well.

Francis Rottenburg is a carbon management account manager at the Carbon Trust