More than 1,000 UK
companies must as of the 1 October 2013, include information on their carbon
footprints in annual company reports. Under the Companies Act 2006 (Strategic
Report and Directors’ Report) Regulations 2013, which comes into effect today
(1 October 2013), companies listed on the main market of the London Stock
Exchange are required to report their scope 1 and 2 greenhouse-gas (GHG)
emissions alongside their financial reports.
Firms must report total annual
emissions of all the six primary Kyoto gases in tonnes of CO2 equivalent, as
well as a carbon intensity ratio. The directors’ strategic report must also
cover risks and opportunities posed by the environment to the business.
IEMA, which has campaigned for the introduction
of mandatory GHG reporting since 2010, said the new legislation will help to
ensure sustainability is being incorporated into corporate thinking.
“The changes to the
Companies Act are significant, they put environment for the first time at the
top table of company thinking, moving it from a bolt-on activity to being
central to business strategy,” said Martin Baxter, IEMA’s executive director of
policy.
“This will enable UK Plc to
build for the long-term, ensure companies are able to thrive in the low-carbon
economy, and establish their future viability during a time of economic
uncertainty and growing environmental challenges.”
IEMA argues that the introduction
of mandatory GHG reporting is an opportunity for all businesses to focus on
their carbon footprints and to understand where they can cut emissions,
environmental impacts and costs.
“Although non-listed large
companies and SMEs will initially be outside the scope of the regulations, many
will increasingly be asked to provide data by larger client companies,” said
Baxter. “Preparing for GHG accounting will enable these companies to retain
clients and achieve competitive advantage.”
For those businesses
affected by the new reporting rules IEMA has published its five tips on how to
get the best value from GHG reporting:
1) Accurate GHG reporting
is vital
Mandatory GHG reporting
will enable companies to benefit from focusing on energy spending and identifying
efficiency opportunities. Getting the support of senior managers at board level
is vital as they sign off the reports. It’s important to ensure that data and
information is accurate; there is a risk to corporate reputation if you fail to
report, or if simple errors are included and corrections have to be issued the
next year. Delays in starting the process of data collation will increase the
risks of mistakes and, potentially, the scale of the task.
2) Invest in staff and
reporting systems
The staff that lead on GHG
reporting will need to be well trained and have a strong understanding of
environmental issues and data management, as well as experience in reporting.
They will need to work across departments and build teams through collaboration
particularly with the finance department.
3) Carefully scope what you
are “responsible for”
The regulations do not
specify an approach to follow (for example, a financial control or operational
control) and do not specify a single reporting methodology. Companies are
required to determine what they are “responsible for” in terms of scope 1 and 2
emissions. An early scoping process is therefore important, and stakeholder
expectations should be considered carefully. Boundaries on what your firm is
responsible for will need to be drawn, and the expectations of staff,
customers, investors and other interested parties, must be carefully
considered. Finally, be transparent about any assumptions that have been
made.
4) Make GHG reporting
relevant
Engage others in your
approach to reporting, including your supply chain, staff and customers. Ensure
reporting helps your organisation to address its most significant emissions and
costs, and collect relevant data which will enable effective performance
management. This should include relevant emission factors and targets. Think
about who the report is written for; there are legal requirements, but external
stakeholders will also be interested. Although there are no specific
requirements for auditing or verifying the GHG data contained in company
reports, verification can play an important role in improving the quality of
data and, for that reason, many companies choose to carry out some level of
assurance.
5) Be clear what you are
reporting and ensure good quality data
Good data management
systems will be vital in ensuring companies meet the requirements of the
regulations. Having access to robust data and being flexible between different
reporting requirements is key. Build a team that can design a system for
reporting GHG emissions and energy consumption that enables monitoring and
identifies areas that need to be managed. Don’t ignore gaps and if external
help is required then get it in – the earlier the better. GHG data is
inherently risky because, unlike financial data, there can be many variants and
conversion factors. So make sure you build in sufficient checks and balances.
Double and triple check.
CRS Environment Make a
difference
Source Environmentalist
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