The government has published draft regulations to make changes to UK corporate energy and carbon reporting requirements. If approved by Parliament, the regulations will come into force on 1 April 2019 and have effect in relation to financial years beginning on or after that date.

The draft Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 would make changes to existing 2008 reporting regulations by introducing additional obligations for quoted companies and new reporting requirements for large unquoted companies and large LLPs. The regulations would apply in England, Wales and Scotland (and by agreement in Northern Ireland).

Principally the draft regulations would require:

  • quoted companies to state (in their directors' reports) energy use from activities for which the company is responsible (including fuel combustion and facility operation) and from purchases of energy for its own use, together with details of principal measures taken to increase energy efficiency. The report must draw a distinction between UK (including UK off-shore) and non-UK areas;
  • large unquoted companies to state (in their directors' reports) greenhouse gas emissions, energy use from activities for which the company is responsible (involving, more narrowly than quoted companies, the combustion of gas or the consumption of fuel for the purposes of transport) and action taken to increase energy efficiency (if any). In basic terms, "large" unquoted company in this context means one satisfying two or more of the following tests (1) more than 250 employees (2) turnover of more than £36m and (3) balance sheet total of more than £18m. There are further rules in relation to group companies; and
  • large LLPs (defined in a similar way to large unquoted companies for these purposes) to state (in an energy and carbon report for each financial year) similar information to that required for large unquoted companies.

Various rules govern reporting requirements in group contexts and these should be checked carefully. All reporting requirements under the draft regulations would be on a "comply or explain" basis – in other words, businesses would not have to report information where it would be impractical to do so, but must state in that case what information has not been included and why. Additionally there are exemptions where only a small amount of energy (40,000 kilowatt hours or less) has been used, or where (in exceptional circumstances) making such statements would be seriously prejudicial to the interests of the company (or LLP).

Detailed guidance is expected to be published by January 2019.

Draft Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018

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