Early in 2019, several thousand more UK-based large companies will have to start reporting on their emissions of climate-changing greenhouse gases (GHGs). Majonne Frost, Bioregional’s Head of Sustainable Business, answers some key questions here
1. When do these new requirements come in?
The Government’s new regime for streamlined carbon and energy reporting starts from April 2019, affecting mandatory annual company reports filed at Companies House.
2.What types of businesses will this affect?
Large quoted (or public) companies incorporated in the UK have had to report on their emissions of carbon dioxide and other GHGs since 2013. Under the new reporting requirements, these companies will now also have to report on their energy consumption.
They are now to be joined by several thousand large unquoted companies and by more than 100 major limited liability partnerships (e.g. law firms and consultancies), who must also start reporting on their energy and carbon. The changes mean that the number of companies who have to report on their emissions publicly will more than double.
3.What size of business will this affect – what does large mean?
‘Large’ is defined by being any two of these three things:
- Employing at least 250 people
- Annual turnover more than £36m
- Annual balance sheet total greater than £18m
In total about 12,000 businesses will have to report under the new requirements.
4.Why is the Government making this change?
The Government’s aim is to make senior managers focus more on energy use and GHG emissions, not only within their own businesses but also among suppliers. Given that energy is responsible for only 3% of the average business’ total costs, it gets too little attention from business leaders. Yet commerce and industry account for about a quarter of total UK GHG emissions.
If big businesses are obliged to measure and report their energy use and emissions, this should incline them to be more energy-aware and energy-efficient. Which, in turn, should raise productivity while boosting the cleantech sector, the wider economy and jobs. It should also contribute to UK green leadership globally and increase the security of UK energy supplies.
5.What exactly must companies report?
They need to report on their UK energy use and their ‘Scope 1’ and ‘Scope 2’ GHG emissions. Scope 1 emissions are those directly controlled by the business, generally arising from its own buildings, plant and vehicles. This would include gas it burns on its own premises and fuel used in its own vehicle fleet. Scope 2 emissions are those caused by the electricity the company purchases from off-site generators for its own operations.
Companies must also set out their GHG emissions using an ‘intensity metric’ – a measure of how much GHG the company emits per £ of turnover or per employee or per square metre of retail floorspace etc. They must state what methodologies they use to make their calculations and the previous year’s figures.
6.What about Scope 3 emissions?
Under the new regime, companies will be encouraged to report their Scope 3 emissions but are not required to. Scope 3 is a broader category of emissions which are a consequence of the company’s activities. This includes emissions arising from business travel and staff commuting and it can also include emissions associated with a company’s supply chain.
7.Is this a threat or an opportunity for business?
At Bioregional we think this is a big opportunity for businesses to tell stakeholders what they are doing to combat climate change – and to think afresh about what more they can do while benefitting the bottom line.
If something really matters, you need to measure and acknowledge it. And in this year of weather and climate disasters, not many things matter more than our emissions of carbon dioxide and other GHGs.
We’ve written a short, business-friendly briefing about the new carbon and energy reporting requirements. Please do take a look – and get in touch to find out how we can help you turn the challenge of mandatory GHG and energy reporting into an opportunity.