The UK Government has announced that under the Companies Act 2006 (Strategic and Directors’ Reports) Regulations 2013, quoted companies are required to report their annual greenhouse gas (GHG) emissions in their directors’ report.
Carbon reporting is the first vital step for companies to make reductions in emissions. By measuring and reporting GHG emissions companies can begin to set targets and put in place carbon management initiatives to reduce emissions in the future. Defra (the UK Department for Environment, Food and Rural Affairs) has estimated that reporting will contribute to saving four million tonnes of CO2e emissions by 2021.
Who is affected?
All quoted companies have to measure and report greenhouse gas (GHG) emissions. Quoted companies are those that are UK incorporated and whose equity share capital is officially listed on the main market of the London Stock Exchange; or is officially listed in a European Economic Area; or is admitted to dealing on either the New York Stock Exchange or NASDAQ.
When does the legislation come in to place?
The legislation is applicable from October 2013. The requirement comes in to place for company reporting years ending on or after 30 September 2013. Since data from a 12-month period is required, this means that data back to October 2012 may be required.
What are the requirements for calculating the footprint?
There is no prescribed methodology under the regulations, but for effective emissions management and transparency in reporting it is important that you use robust and accepted methods. This means that companies need to ensure that:
- A suitable, widely recognised independent standard is used, such as the GHG Protocol Corporate Standard
- The accounting approach covers emissions from all activities for which they are responsible globally
- All relevant greenhouse gases are included
What are the requirements for reporting?
The regulations require that the report enables readers of the emissions data to have a clear understanding of the operations for which emissions data has been reported, and if and how this differs from operations within the consolidated financial statement. In addition:
- With the exception of the first mandatory reporting year, you must repeat the emissions data disclosed in your previous report alongside information on emissions from your present year
- Your emissions must also be expressed as an intensity ratio or ratios, such as emissions per unit of sales revenue or floor space.
Whilst assurance is not a regulatory requirement it is recommended as good practice. Independent verification/assurance on the accuracy, completeness and consistency of GHG emissions data will be beneficial to both internal decision-making and for external stakeholders.
How will carbon reporting impact on your business?
Clearly meeting the requirements of this regulation is a key priority for quoted companies. However, this presents a wider opportunity to gain business benefits though measuring, managing and reducing carbon emissions. This can include:
- Using the insights gained through footprinting as a baseline for strategy development to identify significant carbon and cost reductions and set targets
- Understanding the broader reporting landscape and how to maximise the reputation gains from demonstrating good environmental management and sustainability
- Using verification or certification schemes to communicate to customers and stakeholders, such as the Carbon Trust Standard.
- Measuring scope 3 and supply chain emissions. These are increasingly a part of voluntary schemes such as the GRI and CDP, and can expose current and future risks as well as unlocking cost savings in your supply chain.
Ultimately, carbon reporting will help your business understand its carbon emissions and identify opportunities to reduce costs, improve your reputation and manage long term business risks.
Our business advice service can help you ensure that your organisation's reporting meets regulatory requirements as well as your corporate objectives.
Want our help with carbon reporting?
Our team of policy and business experts can help you ensure that your organisation's carbon and sustainability reporting meets both regulatory requirements as well as your corporate objectives. We can also assist in taking action on carbon and sustainability – whether this is identifying and assessing cost reduction or revenue generation opportunities, managing risk, or enhancing your reputation.
Over the last ten years we have worked with 75% of the FTSE 100 and carbon footprinted hundreds of companies globally to help identify risks and opportunities, including:
Stagecoach - Stagecoach has achieved the Carbon Trust Standard for Carbon for all of its global operations – demonstrating best practice in carbon measurement, management, and reduction – becoming the first public transport operator to have its operations certified outside of Europe.
Tesco - Our work with Tesco, one of the world's largest retailers, has seen it set ambitious green targets, addressing the energy efficiency of its entire business, and engaging suppliers – reducing their own emissions as well as Tesco’s own supply chain carbon impact.
Our experience of corporate carbon footprinting and certification means that we understand how carbon reporting can deliver significant cost savings and enhance corporate reputation and provide new revenue opportunities.
Our results speak for themselves. To date, we have delivered 60MtCO2 and £5.5 billion cost savings for the companies we have worked with.
Get in touch
Get in touch to discuss how we can help your company benefit from carbon reporting - call us on +44 (0)20 7170 7000, or fill in our online contact form.
Some of the services we offer that can help you comply with the regulations include:
Find out more about the above and how our services can help your organisation on our business advice pages.