The British government's recent announcement that it will mandate carbon reporting from the nation's largest corporations is being greeted with enthusiasm by supporters of sustainable corporate growth. But skeptics say the required carbon reporting will add new economic burdens to affected companies.
"Now [a] firm has the cost of measuring the emissions, the tax it has to pay, and the potential costs if it changes production methods to reduce emissions," said Mac Clouse, a professor of finance at the University of Denver's Daniels College of Business. "Overall, its costs have increased."
He also questions a statement by a top UK official that reducing carbon emissions would help with long-term management of a company's energy costs. "If the production method with the least emissions was the most efficient and lowest cost, firms would choose to use that method," Clouse wrote in an email. "The fact that they aren’t and the fact that legislation and regulation are necessary to force firms to change to less emissions refutes [British deputy prime minister Nick] Clegg’s claims."
Clouse wonders if U.S. firms would be willing accept what he thinks would be seen as "even more government regulation, in a period when the size and activities of the government are big election issues."
But some multinational companies, including those with high level stakes in the British market, already have long-term commitments to sustainabilty.
Global snack food giant Kraft Foods Inc. (NYSE: KFT) is one company that's been very public about its green efforts. "We’ve been a part of the Carbon Disclosure Project (CDP) since 2005." said Michael Mitchell, Kraft's vice president of corporate external communications. "From the beginning of our participation, we have formally reported Scope 1 and Scope 2 emissions. In 2009, we began reporting on a portion of Scope 3."
Mitchell notes British confectionary company Cadbury, acquired by Kraft in 2010, has also reported to the CDP since 2005 -- and that Kraft submitted a combined report to the CDP in 2010 "that included emission data from both legacy Cadbury and Kraft Foods."
Next page: Pressure to falsify results?