In this ever-evolving era of heightened environmental consciousness, reporting requirements have evolved into a powerful tool for transparency and accountability. Gone are the days when sustainability reports were merely an afterthought; they now occupy center stage in the corporate arena, reflecting a deep commitment to sustainable practices and responsible business.
The United Kingdom, has introduced stringent carbon reporting requirements to measure and manage greenhouse gas emissions to provide transparency in reporting, reduce carbon footprints and transition towards a more sustainable future.
The primary carbon reporting requirements in the UK are as follows:
Mandatory Greenhouse Gas Reporting (MGHG):
Quoted companies (those listed on the London Stock Exchange) are included automatically. Large unquoted companies and limited liability partnerships are required to participate if they meet certain criteria. The criteria are met if, on the last day of the financial year, the organization meets at least two of the following conditions:
- It has 250 or more employees.
- It has an annual turnover of £36 million or more.
- It has a balance sheet total of £18 million or more
Compliance criteria:
Organizations meeting the above thresholds are obligated to report their greenhouse gas emissions in their annual reports. Reports must be prepared in accordance with the Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013.
Streamlined Energy and Carbon Reporting (SECR):
SECR applies to large UK-incorporated companies (including public and private) and large Limited Liability Partnerships (LLPs). These organizations are required to comply with SECR if they meet at least two of the following conditions:
- They have 250 or more employees.
- They have an annual turnover of £36 million or more.
- They have a balance sheet total of £18 million or more.
Compliance Criteria:
Organizations that meet the qualifying criteria must report the following in their annual reports:
- Scope 1 and Scope 2 greenhouse gas emissions (direct and indirect emissions from energy use)
- Energy consumption from electricity, gas, and transport.
- Related intensity ratios or metrics (e.g., emissions per unit of revenue). There is no requirement to report Scope 3 emissions (indirect emissions from sources not owned or controlled by the reporting organization), but voluntary reporting is encouraged
Task Force on Climate-Related Financial Disclosures (TCFD):
Require all large UK companies with over 500 employees and £500 million in turnover (including general insurance companies)
Requires all large UK companies with over 500 employees and £500 million in turnover (including general insurance companies)
Compliance Criteria:
Companies are encouraged to report on how they assess and manage climate-related risks and opportunities, including the integration of climate-related considerations into their
- Governance
- Describe the boards oversight of climate- related risks and opportunities
- Describe managements role in assessing and managing climate related risks and opportunities
- Strategy
- Describe the climate related risks and opportunities the organisation has identified over short, medium and long term
- The impact of climate related risks and opportunities the organisations business strategy and financial planning
- The resilience of the organisations strategy takeing into consideration different climate related scenarios including 2 degress or lower.
- Risk management
- Describe the organization’s processes for identifying and assessing climate-related risks./li>
- Describe the organization’s processes for managing climate-related risks.
- Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk management
- Metrics and targets
- Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process
- Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) emissions and the related risks
- Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets
Energy Savings Opportunity Scheme (ESOS):
ESOS applies to large enterprises, including any UK company that meets at least one of the following criteria:
- They have 250 or more employees.
- Its annual turnover exceeds €50 million (£43,856,000), and its annual balance sheet total exceeds €43 million (£37,916,000).
Compliance Criteria:
Organizations that meet the qualifying criteria must report the following in their annual reports:
- Must carry out an energy audit every four years.
- Assess energy consumption and identify cost-effective energy-saving opportunities.
- The Environment Agency must be notified of compliance with ESOS and is implementing the necessary energy-saving measures
Understanding the reporting thresholds and compliance criteria for each of the UK's carbon reporting requirements is essential for organizations to ensure they meet their obligations. By complying with these reporting frameworks, businesses contribute significantly to national and global efforts to combat climate change, enhance energy efficiency, and foster a more sustainable future. With these guidelines in mind, companies can take proactive steps to reduce their carbon emissions, optimize energy usage, and build a reputation as responsible corporate citizens in the fight against climate change.