Who is affected?
This applies to all UK companies (including charitable companies), LLPs and groups that are “large” because they have met two out of three of the following Companies Act 2006 size criteria for two years in a row:
£36m or more
£18m or more
Average number of employees
250 or more
What is the effective date?
This applies to the financial statements for accounting periods that commenced on or after 1 April 2019.
What are the new requirements for large companies?
Large UK companies and LLPs are required to report publicly on their UK energy use and carbon emissions within their Directors’ Report (for companies), Trustees’ Report (for charitable companies) or in a separate ‘Energy and Carbon Report’ (for LLPs). This is divided into three scopes:
- Scope 1 – Direct Greenhouse Gas (GHG) emissions
- Scope 2 – Energy indirect emissions
- Scope 3 – Other indirect emissions
To provide context on the above, the following also needs to be included in the report:
- At least one intensity ratio - comparing emissions data with an appropriate business metric or financial indicator such as sales revenue or square metres of floor space.
- Previous year’s figures for energy use and GHG emissions (except in the first year).
- Information about energy efficiency action taken in the financial year – including any significant changes in emissions since the previous year.
- Methodologies used in calculation of disclosures, including the percentage of any estimated activity; any conversion/emission factors used and detail of any exemptions taken.
How does this apply to groups?
A group has the option to exclude any energy and carbon information relating to any subsidiaries which would not be required to report individually according to the thresholds.
A subsidiary is not required to report this information if they are included in a parent’s group report (as long as the group and the subsidiary have the same reporting period).
Company or group reporting is required regardless of whether an overseas parent company or group has published a similar report.
Are there any other exemptions available for large companies?
If a company or LLP calculates that it has consumed less than 40MWh in the reporting period, the entity is considered to be a low energy user and disclosure is not required. Instead, a statement must be made in the annual report that the entity is a low energy user.
Who will write these disclosures?
The company’s directors (or LLP’s members) are responsible for the disclosures. Your Buzzacott team can provide guidance to help you apply the requirements.