Wednesday, 24 November 2021
Companies (Emission Reporting) Bill 2021: Second Stage
Lynn Ruane (Independent)
I move: "That the Bill be now read a Second Time."
I thank the Minister of State for joining us. I thank my colleagues in the Civil Engagement Group for their support and for allowing this business to be taken in our group Private Members' time, particularly in the context of the recent COP26 climate conference. I also thank Sebastian McAteer, who drafted the Bill and has been involved in every stage of its journey to date. I also thank my secretarial assistant, Tadhg Browne, for his ongoing support in preparation for today. Finally, I thank the Minister of State and the officials in his office for their constructive engagement with this Bill as well as for meeting with me in my office on three occasions over the past year to discuss the Bill's provisions.
My motivation for introducing the Bill before us today is rooted in my belief that our long-term climate policies are not sustainable if the State's response continuously focuses solely on the targeting of individual emission consumption. This belief arises from the 2017 Carbon Majors report, which found that just 100 companies had been responsible for over 70% of global greenhouse gas emissions since 1988. Two things are clear for me. First, corporations are making significant contributions to global carbon emissions on a scale unmatched by individuals. Second, they must be accountable and transparent in reporting these emissions if we are to combat the climate crisis properly.
This should not just be viewed as an abstract, global problem to be left to our international counterparts or promised EU legislation. This is a pattern we find repeated across the world at national level and Ireland is no exception. In 2018 Ireland's 200 largest energy consuming corporations collectively used 21% of the total national primary energy and accounted over 50% of the total industrial energy use. Considering that the European business registry records 181,000 companies as 'live' in Ireland, this translates to less than 1% of Irish companies consuming 21% of the national primary energy. As I said, Ireland is not exceptional in these figures but we have an opportunity today to be exceptional in how we respond to them. The Bill I am progressing would ensure private companies operating in Ireland would have to make mandatory public disclosures on their greenhouse gas emissions every year. The idea is to require companies to publish their emissions and promote a culture of public scrutiny, allowing us to hold companies to account. It ensures corporations make decisions based on proper environmental considerations and adopt company policies that will reduce their emissions in line with national targets.For this Bill to be effective, we cannot wait. I want to comment on the 12-month delay the Government will propose for the legislation. It is difficult to understand how such a move can be justified considering the extraordinary time pressure we are under to use every moment of the next decade to prevent the collapse of the climate and irreversible damage to the planet. At COP26, Mia Mottley, the Prime Minister of Barbados, spoke of how, without a fundamental change of approach to climate policy, island nations such as hers could simply cease to exist within a few short years. That is the scale of the existential crisis we face and it is this reality that must animate every single debate in these Houses on climate change. We have a moral responsibility to hold large companies to account rather than burden marginalised people in the global south who have contributed the least to climate change. We will be able to count every day we delay important climate change legislation in every metre of rising sea level faced by people in countries such as Bangladesh and Fiji as their land disappears before their eyes. Delay is not an option. Since when has Ireland needed to wait for the European Commission to do the right thing? We must act today.
This Bill should be viewed by the Government as an opportunity for Ireland to become the benchmark in company emission reporting policy. If the Government chooses to support and implement the Bill, it would see us immediately join France as the only two EU member states with emissions reporting legislation. Ireland would be a continental leader in corporate climate legislation. The Bill would offer the Government a platform to promote good practice already present in the commercial sector through schemes like Business in the Community Ireland. For example, Kingspan already engages in emission reporting as part of the RE100 programme under which it committed to 100% renewable energy by 2020. The Bill offers the Government an opportunity to see which specific sectors and companies are struggling to meet emission targets. This will offer the Government a chance to further promote schemes such as excellence in energy efficient design, EXEED and the accelerated capital allowance scheme for energy-efficient equipment. It will also allow the Government to tailor future schemes to the needs of specific sectors that are struggling to meet the agreed climate targets with the benefit of clear, accurate and regular data. I count at least a dozen actions in the section of the climate action plan relating to the Department of the Minister of State that would be made easier with this information and the incentives required of businesses under the Bill.
I stress that the Bill should not be viewed as unachievable or idealistic. There is already a level of emissions reporting taking place in the Irish economy at both an EU level under the non-financial reporting directive and the emissions trading scheme and at local authority level for businesses seeking to access various licences under the Air Pollution Act 1987. In effect, the Bill would standardise the reporting that is already taking place.
This is a relatively short Bill. Section 3 sets out the main reporting obligation on companies operating in Ireland. Such companies will be required to disclose the volume of their greenhouse gas emissions annually to the Minister for Enterprise, Trade and Employment. Section 4 sets out certain important parameters in applying these obligations to companies. It is important to note that any company with fewer than 50 employees will be excluded from reporting. Reporting will then be introduced on a phased basis which is based on the size of the company. The intentional focus on large companies first is expected to create a standardised framework for reporting greenhouse gas emissions which can later be matched by smaller and medium-sized companies.
Section 5 sets out the type of information the Bill requires to be disclosed in companies' annual reports. This includes a breakdown of emission scopes into three distinct categories. The first category is the direct combustion of fuel, scope 1; the second is the operation of any facility, such as powering an office building, scope 2; and scope 3 relates to the measurement of greenhouse gas emissions created in the company's supply or value chain.
The Bill creates several other important environmental requirements for companies. Disclosures must set out the measures being taken by businesses to ensure their future plans are in line with the principles of a just transition and to limit global warming to 1.5° Celsius required by the Paris Agreement. It should be noted that much of section 5 is directly reproduced from the European Commission's revised non-financial reporting directive to ensure this legislation is completely aligned with the expected new European requirements on companies. The section also requires that company disclosures be independently audited by a statutory auditor to ensure accountability.
Section 8 is the central public transparency mechanism of the Bill which will allow us to hold companies to account. The section also compels the Minister to publish the report online to ensure public access. Sections 9 to 11, inclusive, set out enforcement provisions. If companies do not comply with the law, they will be fined and prosecuted by the Office of the Director of Corporate Enforcement. Insufficient progress in achieving reductions will also incur a penalty.
Having laid out the Bill, I will finish with this. When it comes to climate policy, there are neither rewards nor punishments, only consequences. The Bill represents an opportunity for us to shape what those consequences will look like. I urge the Minister of State to reconsider the proposed delay and I look forward to working with him in the future.