For financial reporting years ending on or after 30 September 2013, under the Companies Act 2006 (Strategic Report and Directors Report) Regulations 2013 all UK quoted companies will be required to report their annual greenhouse gas emissions in their Directors Report.
This requirement affects all UK incorporated companies listed on the main market of the London Stock Exchange; or is listed on a European Economic Area market; or whose shares are dealing on the New York Stock Exchange or NASDAQ.
This document aims to outline the key requirements introduced by this new regulation which at a high level include:
- Reporting will be in the annual Directors Report and so will be subject to your auditor’s review.
- The reporting scope will cover the entire organisation’s operations, not just the UK based portion.
- The regulation requires that you report the 6 main greenhouse gases arising from your global operations, not just the carbon emissions arising from consumption of electricity and gas, as is currently the case with the UK’s Carbon Reduction Commitment (CRC).
- Beyond the initial year, you will be required to repeat the emissions data disclosed in your previous report alongside the present year, in effect creating a 1-year rolling comparator.
You will be required to express your emissions by way of at least one intensity ratio, either business metric or financial indicator such as sales revenue or square meters of floor space. This will allow for performance comparison with similar companies.
Based on our experience of delivering environmental reports and analysis over the last 5 years to 250 clients across all industries, we have provided a checklist of recommended early actions that you should seek to implement in order to be best placed to comply with this new Statutory Reporting requirement.
What will you be required to report?
You will be required to report all CO2e from:
- The combustion of fuel, both stationary and mobile.
- The operation of any facility including process & fugitive emissions.
- Emissions resulting from the purchase of electricity, heat, steam or cooling.
Who will be required to report?
Simply put, UK based quoted companies are all covered by this regulation. This will include not only companies quoted on the main market of the London Stock Exchange (LSE), but also UK based companies who report on European or US Stock Exchanges.
What will the GHG emission report include?
You will be required to include:
- All emissions (i.e. all 6 GHGs – CO2, CH4, N2O, HFCs, PFCs & SF6) arising from all operations (not just the UK portion). You are not required to report the total of each individual gas, but must report on the sum total of CO2e (carbon dioxide equivalent).
- This year’s and the previous year’s emissions (after year 1), creating a 1 year rolling comparison figure. The exception to this is in year 1 when no comparator is required.
- The methodology used to calculate the emissions. It is recommended that you use robust and accepted methods, such as existing independent and widely recognised standards (for example the GHG Reporting Protocol or Defra Reporting Guidelines).
- An appropriate intensity metric (e.g. GHG emissions per revenue £).
When will i be required to start reporting?
The GHG emissions reporting requirement comes in to place for company reporting years, ending after 30th September 2013.
To be clear, if your current annual reporting period started on or after 1 October 2012, then your next Statutory Financial Reports will need to comply with the new Mandatory GHG Reporting legislation.
Based on these dates, you might be required to report on data from a period that occurred before the regulation was made a requirement. In this instance you can:
- Provide an estimate and submit the methodology you used with your report.
- Provide an explanation as to why it is not possible to provide 12 months of data.