Lord Whitty
Main Page: Lord Whitty (Labour - Life peer)
Lord Whitty
My Lords, I congratulate the coalition on rectifying what I thought was part of a very bad mistake by the previous Government whereby, even though the noble Baroness’s department was all lined up to introduce operational and financial review provisions that would have required companies to report on social and environmental objectives, the carpet was pulled from under them by the Treasury, as the noble Lord, Lord Newby, said. I am glad that the intention is there; now let us see the reality.
I am going to dwell largely on carbon reporting, and I declare an interest as a member of the Environment Agency’s board. In that capacity, I chair the Environment Agency’s pension scheme, whose chief officer my noble friend Lord Harrison has already quoted, which attempts to ensure that our investments help to induce some more effective environmental and social reporting.
Clear environmental reporting, particularly on greenhouse gases, has a major effect not only on transparency but also on internal management behaviour and external investors’ priorities. Without clear, effective and audited reporting, we will not meet the changes that are required in company behaviour in order to meet the climate change objectives that were laid down with all-party support in the Climate Change Act.
The Climate Change Act provides enabling powers in this respect. It is also important to recognise that, as far as the institutions, particularly pension funds, are concerned, there is no conflict between a proper interpretation of fiduciary responsibility, an interest in climate-change proofing the activities, objectives and balance of activities of companies and investors of funds. Indeed, all such large bodies should include within their objectives a climate-change proofing strategy, but that is not the case.
As others have said, only just over half of large companies have any reporting of climate change objectives and, of those, only 22 per cent have any reporting that relates to the Defra guidelines. As the noble Lord, Lord Newby, said, only 9 per cent of larger companies fully comply, according to the Deloitte survey. That does not indicate—and I am afraid I have to differ with the noble Lord, Lord Patten—that there has been a change in the DNA of corporations, or at least in that of their auditors and accountants. As the noble Lord, Lord Moynihan, said, it may be that the good intentions of the board are not being reflected through the technical reporting responsibilities. However, without those indicators internally and externally, we cannot achieve the climate change objectives that we need, so they are a vital tool for those objectives.
I hope that the Minister will be able to say tonight that the wind is moving in the right direction on this and that we will see some action. I look forward to her response.