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