UK mandatory GHG and environmental reporting

New regulations in the UK are changing the way companies report information regarding environmental and social aspects. Comply with the new and existing regulations using the CDSB reporting frameworks.

With the transposition of the EU Directive 2014/95/EU on the disclosure of non-financial and diversity information (NFR Directive), the UK regulatory landscape for non-financial reporting has taken a step forward towards greater transparency and accountability for corporations.

The transposition comes as an amendment to the Companies Act 2006, now known the Companies, Partnerships and Groups (Accounts and non-financial reporting) Regulations 2016. The UK government maintains a distinction between this regulation and the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013, which applies to a different group of companies. 

Here we provide an overview of how companies in the UK can comply with the two current regulations by using the CDSB reporting frameworks.

Who?

  • All UK incorporated quoted companies (Companies Act 2006 definition) with less than 500 employees will continue to comply with the previous regulation, (2013 amendment). These include companies with equity shares listed on London Stock Exchange Main Market, EEA regulated, NYSE or NASDAQ.
  • All UK companies with over 500 employees have to comply with the Companies, Partnerships and Groups (Accounts and non-financial reporting) Regulations 2016. These include traded companies, banking companies, authorised insurance companies or companies carrying on insurance market activity.

Companies, Partnerships and Groups (Accounts and non-financial reporting)

    What?

    • The NFR Directive gives a general indication of the information companies need to provide regarding non-financial matters. The UK regulation states that the information reported must be adequate to understand a company’s “development, performance and position and the impact of its activity”;
    • Companies are required to disclose information regarding environmental matters (including the impact of the company’s business on the environment), the company’s employees, social matters, respect for human rights and anti-corruption and anti-bribery matters;
    • The information reported must refer to the company’s business model, the policies, outcomes, risks and KPIs related to those matters.

    Where?

    • Non-financial information must be included in the Strategic Report. If the company’s strategic report is a group strategic report, the non-financial information statement must be a consolidated statement (a “group non-financial information statement”) relating to the undertakings included in the consolidation.

    Why?

    • To help companies identify sustainability risks and increase investor and consumer trust;
    • To manage change towards a sustainable global economy by combining long-term profitability with social justice and environmental protection;
    • To help measure, monitor and manage the undertakings’ performance and their impact on society;
    • As a step forward in the roadmap to a resource-efficient Europe, as investors’ access to non-financial information will help reach the milestone of having in place by 2020 market and policy incentives that reward business investments in efficiency.

    How?

    Next steps

    Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013

    What?

    • Global emissions must be reported, not just those in the UK. Several boundary settings are possible, including that of the Climate Change Reporting Framework which takes into account both financial and GHG reporting standards. Find out more in the guidance to the regulation;
    • Emissions of all greenhouse gases: Companies are responsible for all greenhouse gases as outlined by the Kyoto Protocol, not just their CO2 emissions;
    • Scopes 1 and 2 only. The reporting requirements are only for direct emissions and indirect emissions from purchased electricity and gas.

    Where?

    • Emissions must be included in the Annual report to Directors or Strategic Report (see our guidance for details).

    Why?

    • To allow investors to incorporate climate risk into analyses;
    • To meet Government’s emission reduction objectives;
    • To increase the number of companies reporting GHG emissions.

    How?

    Next steps