17th July 2013: The UK parliament has today passed amendments to the Companies Act 2006, which will require all UK quoted companies (ie with equity shares listed on London Stock Exchange Main Market, NYSE or NASDAQ, or any EEA regulated market) to report greenhouse gas emissions in their Strategic or Directors’ Reports.
The Climate Disclosure Standards Board (CDSB), which advances its mission by promoting and encouraging greater standardization of climate change-related disclosure in mainstream reports, strongly supports the amendments which recognise the need for both financial and non-financial information to be considered in assessing a company’s ability to create value.
CDSB’s Climate Change Reporting Framework has been listed in guidance that accompanies the legislation as one of the methods that may be used by companies in order to comply with the new greenhouse gas reporting requirement. The Climate Change Reporting Framework and its associated Guidance, provide companies with an approach to providing climate change-related information in mainstream reports in a manner that is standardized, consistent and decision-useful for investors and others.
By using the CDSB Reporting Framework to comply with the legislation, companies can ensure that reliable information is communicated to investors, providing transparency and building trust.
Whilst CDSB strongly supports the legislation, it looks forward to the elaboration and strengthening of some aspects of reporting requirements when it is reviewed in 2015. For example, CDSB would welcome clearer alignment between UK and international requirements on non-financial reporting, including proposed amendments to the Fourth and Seventh EU Company Law Directives (commonly known as the EU Accounting Directives). Furthermore, the legislation would benefit from greater clarity on the narrative and other information that is needed for readers of reports to understand the risks and opportunities associated with the emission of greenhouse gases as well as the actions companies are taking to respond to those risks and opportunities.
Lois Guthrie, CDSB’s Executive Director: “We welcome the legislation and encourage Defra to work with organizations to promote transparency in order to ensure the successful implementation of the measures announced today. We encourage the UK to promote greater consistency of approach to reporting practices on the international level so that a common language may inform decisions on which the long-term flourishing of the economy, the planet and society depend.”
The Climate Disclosure Standards Board, a CDP special project, was launched at the World Economic Forum in 2007. CDSB’s Climate Change Reporting Framework was released in 2010 and provides guidance for use by companies when making disclosures in, or linked to, their mainstream financial reports about the risks and opportunities that climate change presents to their business. CDSB’s framework is “standards ready” for adoption by regulators contemplating the introduction or development of climate change disclosure practices. In 2012 CDSB, in partnership with the OECD and UNCTAD, launched the consistency report which highlighted the need for a greater consistency of approach to the demand and supply of climate change-related information. For more information on CDSB visit www.cdsb.net or follow @CDSBglobal.
CDSB will be hosting a 2 part webinar series for affected companies on the practicalities of complying with the regulation. To find out more and register, visit cdsb.net/webinar.
For more information:
Managing Director, CDSB
+ 44 (0) 20 7415 7180
+ 44 (0) 792 046 3046