Steve Webb (Shadow Secretary of State for the Environment, Environment, Food & Rural Affairs; Northavon, Liberal Democrat)

I am grateful to the right hon. Gentleman. I concur that there are companies behaving well, and that others must be dragged, kicking and screaming, to the climate change agenda. It is entirely unacceptable that companies that accept their social responsibilities in this area can be undercut or face unfair competition from those that do not.

One of the aims that we intend through the retention of the clause is consistency and transparency. There is no great desire to impose swingeing burdens on business for the sake of it. If we can ensure that the reporting that takes place is to the greatest extent reporting that companies might be doing anyway, particularly in a world of carbon trading and carbon budgets, measures that enable that to be done consistently and systematically are entirely welcome.

All members of the Committee will have received the letter from the Aldersgate Group, a coalition of businesses, lobby organisations, academics and hon. Members, who are coming together to argue for the retention and strengthening of the reporting requirements. It is worth thinking about why those might be desirable. The first thing to observe is that at present, the extent of reporting in annual reports or equivalent, according to Christian Aid, is quite limited. Although many companies do some reporting, it found only 16 FTSE-100 companies reporting emissions in their annual report or a parallel report, and the coverage of the emissions that were reported was often limited.

Quoting from Christian Aid—I think hon. Members will have seen these figures—only 58 per cent. of the most direct and easily identifiable emissions are reported. Some emissions are omitted, and the indirect emissions caused by the company’s activities further down the chain are also omitted. It is important that there should be comprehensive reporting of the direct emissions from a company, and a view should taken on the indirect impact of the company’s activities and how far and in what way that should be measured. The idea of waiting more than a year for guidance and then three years for a review as to whether anything should happen is staggering in its lack of ambition.

Some companies already have similar obligations. For example, companies that fall within the carbon reduction commitment already have to monitor such matters closely, so for many companies the costs are marginal. Perhaps the data are being collected anyway and would have to be presented in a different or standardised way, but it is not an additional burden for many companies. No one expects the smallest businesses to be part of the scheme. Many of the largest businesses are already covered by such a scheme, but we want greater consistency.

It is worth stressing that we are moving into a new kind of world. In the discussion of earlier clauses, the Minister spoke about the setting of carbon budgets alongside the fiscal Budget. In a world where we are buying, banking and borrowing emissions, trading permits to pollute or selling excess permits where we have saved, such things will be almost literally part of the cash flow of major companies. Companies that have a significant impact on the environment through their activities will need to know what their emissions are, whether those are rising or falling and whether they can save more. As the scope of the emissions trading scheme increases, those issues will become the bread and butter of corporate life in Britain.

With an eye to the London stock exchange and a desire for Britain to be a leading part of carbon accounting and reporting, as the right hon. Member for Suffolk, Coastal has said on other occasions, there is an opportunity for Britain to be a world leader and to establish expertise and advice on such matters, rather than the Government dragging their heels, kicking and screaming, to a destination  that we all know we shall reach. That seems to be a key point. None of us believes that a Committee such as this in the next Parliament or so would imagine a world where businesses, and certainly big businesses, were not reporting such information systematically and on a comparable basis.

The attitudes of business are obviously important. Again, hon. Members will have seen that CBI members have been surveyed on the subject and some are enthusiastic, but the majority are willing to give it a try, with further work. Most businesses are not hostile to reporting. It is an area where, dare I say it, the climate is changing. In other words, people are starting to recognise that that will have to happen sooner or later.

There is inevitably an issue of cost on a matter such as this, but there are also benefits. I should be interested if the Minister gave us some idea as to what assessment the Department has made of the potential benefits in terms of carbon reduction from comprehensive, transparent and consistent reporting. Companies write to all hon. Members boasting of their credentials as socially responsible businesses, whether they sponsor computers in schools or whatever, and telling us what good guys they are. They increasingly do that in respect of carbon reduction, which is welcome, but we have no idea what the relative performance of those different companies is, because all we get are their figures on their definitions, with their coverage over time periods of their choosing. Therefore, there is limited scope for the competitive pressure to drive such things down, whereas if all the major companies had to report those figures consistently, the scope for pressure from shareholders, employees and consumers would be far greater. We all want to see a change of culture whereby this is as important a bottom line to many of the stakeholders in the business as the profit and loss account is to its shareholders.

There are costs involved. The Government have mentioned quite a high figure. We do not want something that is too onerous—it is pointless to be gratuitously onerous—but we want something that will build on the data that have already been collected by businesses and enables the public to know what is happening.

There is widespread support outside the House for the retention of guidance on reporting and, indeed, probably for beefing it up. I suspect that there is precious little support for removing what limited provision there is in the Bill—which the Government did not even include in the first place—and replacing it with lily-livered alternatives that are not worth the paper they are written on.

I urge the Committee to consider retaining clause 80 and rejecting the Government new clauses.

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