In October 2018 the UK Government approved The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, introducing new carbon and energy reporting requirements for quoted companies, large companies and large LLPs.
Under the new rules, quoted companies will now be required to report (within the directors’ report) on their global energy use in addition to the existing requirements for such companies to provide details of their greenhouse gas emissions. Furthermore, they will be required to disclose the proportion of emissions and energy consumed in the United Kingdom and offshore area, as well as describing any measures taken to enhance energy efficiency.
Large unquoted companies and large LLPs will be required to provide information on their UK energy use, the associated greenhouse gas emissions relating to gas, electricity, and transport, an intensity ratio, and any energy efficiency measures taken. Overseas emissions and energy consumption are excluded from these requirements. For companies this information will be included in the directors’ report, and for LLPs, in a ‘carbon and energy report’ which will form part of the annual report. LLPs will also be required to include a list of their members within the new carbon and energy report.
There are certain exemptions from providing this new information, including for example, subsidiaries included in the group report of a parent (subject to certain conditions) and entities which have consumed 40,000 kWh of energy or less in the UK during the period to which the report relates.
When do these requirements come into effect?
The regulations come into effect for financial periods beginning on or after 1 April 2019. Entities likely to be caught by the new rules may wish to familiarise themselves with the requirements sooner rather than later. They should consider what information needs to be captured and to ensure that the appropriate systems are in place.
Will guidance be available?
BEIS is expected to provide guidance next year to help entities implement the new regulations. The Financial Reporting Faculty will continue to monitor developments and may produce further commentary and guidance in due course.