How to prepare for the new greenhouse gas reporting regulations

The publication of regulations on greenhouse gas reporting is an opportunity for all businesses to focus on efficiency, drive down costs and reduce their environmental impact.

Representing over 15,000 environmental professionals working in business, IEMA – one of the leading organisations contributing to the Government’s consultation on the proposed regulations – provided this statement with evidence that demonstrated the business benefits and support for mandatory GHG emissions reporting.

According to Martin Baxter, Executive Director of policy at IEMA: “These regulations will enable companies to manage longer-term environmental challenges, such as climate change, and ensure the drive towards a resource efficient and low carbon economy.” 

Non-listed SMEs and large corporations will initially be outside of the scope of the regulations.

Here is what you need to know about which companies will be required to report and how the reporting will be expected to work. 

Who will need to report? 

All quoted companies that are UK incorporated and whose equity share capital is officially listed on the main market of the London Stock Exchange. This includes those that are officially listed in a European Economic Area or admitted to dealing on the New York Stock Exchange or NASDAQ. Around 1,100 companies will be required to report their GHG emissions from 2013, both within the UK and internationally.

What will they need to report on? 

Companies will be required to report on their scope one and two greenhouse gas emissions, including the six primary Kyoto gases and converted to a CO2 equivalent:

  • Scope one (direct) emissions: From activities owned or controlled by organisations that release emissions straight into the atmosphere. Examples include: emissions from combustion in owned or controlled boilers, furnaces, vehicles and chemical production in owned or controlled process equipment; and

  • Scope two (indirect) emissions: For example, emissions being released into the atmosphere associated with an organisation’s consumption of purchased electricity, heat or steam.
For those companies seeking to maximise their efficiency savings, going beyond their scope one and two emission to scope three emissions in their supply chain, could generate additional financial and environmental benefits. Some leading companies have already begun to drive through these changes to not only deliver environmental and financial benefit, but competitive advantage as well.

Companies will also be required to report on UK and international emissions.

Who will be responsible for reporting in companies? 

Environment and sustainability professionals will report on GHG emissions within their companies. They will also need to liaise with their finance director or company secretary to establish whether their company falls within the scope of the regulations.

Companies that are covered by the regulations need to ensure they have a robust data management and reporting framework that covers: 

  • The GHGs that will need to be reported; and 
  • The full scope of their organisation based on the emissions they are responsible for.

When will companies need to start reporting by? 

The reporting regulations will be laid before parliament from April 2013. Companies will be required to report on their GHG emission based upon their company reporting year – this can vary from company to company. The requirement comes into place for companies who are reporting years ending on or after 30th September, 2013. So, if your company is reporting on a financial year, your first year will be 1st April 2013 to 30th March 2014. If your report is on a calendar year, your first reporting year is 1st January 2013 to 31st December 2013.

Will audit/verification be required? 

There will not be a specific requirement in the regulations for emissions data to be independently verified or assured. There will, however, be some requirements on the statutory auditor of the financial statement, such as considering if the information is consistent with the financial statement. 

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