UK IT Departments Unprepared For Carbon Trading

UK IT departments are not taking the necessary steps to prepare their organisation for the information management needed to comply with carbon reporting and trading schemes, according to new research.

In a report issued this week, Too Many Organisations Are in Denial About Carbon Management, analyst Gartner revealed that along with France, UK IT departments appear to be among the least prepared in the world for technical implications of carbon cap and trade despite impending carbon trading legislation due to take effect next year.

The analyst group reported that only 7.9 percent of UK companies believe carbon trading is influencing their organisation’s future planning. Gartner described this as “surprising” given the fact that the UK’s Carbon Reduction Commitment (CRC) goes into effect in 2010 and is estimated to affect 5,000 organisations.

“This apparent lack of preparation, and the inevitability that most organisations will come under increased scrutiny from customers, investors, partners, key stakeholders and, eventually, regulators, should come as a wake-up call to policymakers, boards, senior leadership teams and CIOs,” said Gartner research vice president Simon Mingay.

But despite the relatively low number of UK companies that believe carbon trading is influencing their companies’ planning, countries in Western Europe are still relatively ahead when it comes to existing systems for carbon reporting, tracking and management systems. Around 32 per cent of Western European companies claim to have some kind of system in place — twice as many as the Asia/Pacific region or the US, said Gartner.

But although some Western European companies are ahead,, Gartner claimed there were “some stark contrasts” with only 2.6 per cent of French organisations claiming to have such systems in place, compared with 74.4 per cent of German organisations.

And rather than the packaged carbon measurement and analysis applications being touted by Oracle and ERP specialists such as SAP, Gartner’s research indicated that most companies who said they had some carbon reporting IT systems in place were using basic spreadsheets.

“Organisations all over the world need to get more serious about greenhouse gas reporting,” said Mingay. “Despite the lack of specific regulations, midsize and large organisations in developed economies need to recognise that they will be paying for their emissions at some point — it’s just a matter of when, how much and through what kind of mechanism.

Mingay added that although dealing with the fallout of the the global recession may be a priority for most companies, carbon reporting was inevitable and businesses must be prepared. “Regardless of the recession, organisations will find themselves under increasing pressure from stakeholders, including investors and customers, to be more transparent about emissions and reduction programmes,” he said.

So-called carbon trading or cap and trade schemes are designed to apply market dynamics to the problem of burgeoning carbon emissions. Rather than introduce a tax on carbon, many nations including the UK, Australia and potentially the US and China, have decided to adopt a system where the amount of carbon that can be emitted is capped at an agreed level. Companies are then issued with permits or credits to be able to emit a certain amount of carbon. Companies that need to emit more can then purchase credits from companies that are able to emit less than their allowance.

The UK’s CRC is a mandatory cap and trade scheme, due to be introduced next year, that will apply to large organisations in the public and private sectors and could help cut carbon emissions by 1.2 million tonnes of carbon per year by 2020, according to government figures.

The CRC is already under fire because it conflicts with existing green energy subsidy schemes, causing some companies to kill renewable energy projects.

Some companies in the UK already have to comply with the European Union Emissions Trading Scheme (EU ETS) which mandates how much carbon large emitters such as power stations can release into the atmosphere.