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In June 2012 we reported on Government plans for mandatory
reporting of greenhouse gas (GHG) emissions for UK quoted companies
from April 2013. The proposal is for this reporting to be included
in the directors' report in the annual reports. The Government
intends to make a decision in 2016 whether to extend the
requirement to all large companies.
On 25 July 2012 the Department for Environment Food and Rural
Affairs issued a consultation on the draft regulations which are
intended to implement this GHG reporting. The consultation, which
covers the UK, is open until 17 October 2012.
Proposed regulations
The draft regulations, to be made under the Companies Act 2006,
propose that:-
The annual reporting will come into force for years ending
after 6 April 2013. (The consultation recognises that separate
regulations on other aspects of reporting are expected later
this year and these regulations may propose changes for reporting
years ending after 1 October 2013. Therefore the consultation
expressly asks whether implementation of these regulations should
be timed to coincide with each other).
The GHG covered are carbon dioxide, methane,
hydrofluorocarbons, nitrous oxide, perfluorocarbons and sulphur
hexafluoride. These are to be reported in the well known form of
tonnes of carbon dioxide equivalent.
Annual GHG emissions to be reported are those
resulting:
(a) directly from the:-
combustion of fuel in any premises, machinery or equipment
operated, owned or controlled by the company;
the use of any means of transport, machinery or equipment
operated, owned or controlled by the company;
the operation or control of any manufacturing process
undertaken by the company.
The emissions reported must include the leakage or other escape
of emissions (i.e. fugitive emissions) resulting directly or
indirectly from any of the activities referred to above.
and
(b) from the purchase of electricity, heat, steam or cooling by
the company.
The methodology used to calculate emissions must be stated. It
is not obligatory to follow government guidance.
The use of data from specified schemes i.e. the CRC Energy
Efficiency Scheme, the EU ETS or Climate Change Agreements is
allowed (but must be declared).
The report must include a ratio which expresses annual
emissions in relation to a quantifiable factor associated with the
company's activities (an intensity ratio) e.g. emissions per
£ turnover, or per tonne of production.
There will be flexibility to report emissions via a reporting
year which differs to the company's financial year, if this is
expressly stated.
The regulations shall be reviewed in 5 years.
Enforcement
The Conduct Committee of the Financial Reporting Council is the
body which will enforce the provisions.
Separate relevant consultation launched
Also on 25 July a consultation was issued on revised voluntary
guidance for UK businesses and public bodies on measuring and
reporting their environmental impacts using environmental key
performance indicators (KPIs). The KPIs identified are air
quality and emissions, water, biodiversity and ecosystem services,
natural materials and waste.
Responses to both consultations must be submitted by 17 October
2012.
Documents
For access to our earlier Lawnow on mandatory reporting for
quoted companies click here
For access to the consultation document click here
The consultation on reporting guidance for business on
Environmental KPIs is available here
This article was written for Law-Now, CMS Cameron
McKenna's free online information service. To register for
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Law-Now information is for general purposes and guidance
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give professional or legal advice. All Law-Now information relates
to circumstances prevailing at the date of its original publication
and may not have been updated to reflect subsequent
developments.
The original publication date for this article was
26/07/2012.
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