The Draft Greenhouse Gas Emissions (Directors' Reports)
Regulations 2013 (Draft Regulations) were published by Defra for
consultation on 25 July 2012. The regulations will be made under
powers in the Companies Act 2006 and will require quoted companies
in the UK to report on their greenhouse gas emissions. Defra will
carry out a review in 2015 to decide whether the duty should be
extended to all large companies in 2016.
The quoted companies affected are those defined by section 385(2)
of the CA 2006 i.e. those companies whose equity share capital has
been included in the Official List in accordance with the Financial
Services and Markets Act 2000 (which includes the London Stock
Exchange's Main Market) or is officially listed in an EEA
state, or is admitted to dealing on either the New York Stock
Exchange or Nasdaq
These companies will have duties to report on certain carbon
dioxide, methane, nitrous oxide, hydrofluorocarbons,
perfluorocarbons and sulphur hexafluoride emissions (Green House
Gas Emissions (GHG) . Affected companies will have to report on GHG
emissions from the following activities: combustion of fuel in any
premises, machinery or equipment operated, owned or controlled by
the company; use of any means of transport, machinery or equipment
operated, owned or controlled by the company; operation or control
of any manufacturing process undertaken by the company; and the
purchase of electricity, heat and steam or cooling by the company.
The regulations will require the companies covered to state what
methodology it has used to calculate its GHG emissions, in tonnes
of carbon dioxide equivalent and must specify an intensity
ratio.
The Government issued a consultation on the draft greenhouse gas
regulations which closed on 17 October 2012. Around a hundred
responses were received and, following analysis of those responses
and engagement with those respondents, the government has announced
that the draft regulation is being amended and is currently being
finalised. At present we await confirmation of the final draft of
the regulations and accompanying guidance for quoted companies, to
help them comply with the requirements of the regulation, is
currently being drafted. The regulation will be laid and the
guidance published in the next few months.
When the consultation commenced, the draft regulations sought to
impose the new duty in respect of annual reports published after 6
April 2013, although we understand this is likely to be put back to
1 October 2013 to align with the Department for Business,
Innovation and Skills' proposed changes to narrative reporting.
Responsibility for enforcing the GHG reporting requirement will
fall to the Conduct Committee of the Financial Reporting Council
which is responsible for monitoring whether companies' annual
reports and accounts comply with the Companies Act 2006
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
