Climate legislation that you need to know about

Regulations and standards are playing an enormous role in stepping up the pace of carbon accounting in the UK. But they can be complex, and it’s not always clear which businesses need to comply with what, and by when.

We’ve pulled together a handy guide to help cut through that complexity, and give you a heads up on what else is coming down the line.

 

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1. Streamlined Energy and Carbon Reporting requirements (SECR)

Who’s it for?

All listedUK companies and those that meet at least two of the following criteria: over250 employees, £36m in turnover or £18 million balance sheet. The information must form part of the Directors Report in your annual accounts and so the deadline is 9 months from financial year end.

What’s required?

·     UK energy use in kWh – electricity, gas, and transport fuels

·     Associated GHG emissions from UK energy use

·     Previous year’s figures for energy use and GHG emissions

·     At least one intensity ratio (e.g tons CO2e /employee)

·     Energy efficiency actions

·     Methodology used

You don’t need to report on:

·     Other Scope 3 emissions

·     Climate-related risks and opportunities

·     Transition plans

Net Zero Now can help you with:

·     Calculating and producing a SECR compliant report in a format that can be easily imported into your Directors Report.

2. TaskForce on Climate-related Financial Disclosures (TCFD)

Who’s it for?

All listed UK companies and large companies with over 500 employees and £500 million in turnover must comply with TCFD recommendations for financial years ending after 5^th April 2023.

What is it?

The TCFD reporting framework was created by theG20’s Financial Stability Board with the aim of improving and increasing reporting of climate-related financial information. The disclosure framework is based on 4 pillars (Governance, Strategy, Risk, Metrics) within which there are11 key focus areas.  

TCFD disclosure focuses on financial materiality, information relating to how climate-related risks and opportunities are likely to impact an organisation’s current and future financial position as reflected in its income statement, cash flow statement and balance sheet. This is separate and distinct from impact materiality, which addresses the impact of an organisation’s activities on the wider environmental, social and economic system from a climate perspective (see CSRD below)

Double materiality is when a  business looks at both of these aspects.  

What’s required? 

·     Scope 1 and 2 emissions reporting

·     Scope 3 emissions if they make up over 40% of total emissions

·     Description of the risk management process related to climate impact

·     Description of the identified risks over the short, medium and long term and impact on financial planning

·     Description of how climate risk is managed through the organisation up to board level

Net Zero Now can help you with:

·     A framework for calculating and reporting emissions

·     Identification of opportunities to reduce emissions

·     Advice on specific climate risks or opportunities

How is information reported?

·     Designed to be included in mainstream financial filings and to provide decision-useful, forward-looking information.

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3. Procurement Policy Note (PPN) 06/21

Who’s it for?

Any business that is bidding for public procurement contracts valued at £5million or above is required to demonstrate that they are taking action to achieve net zero by 2050 in line with the UK Government’s target and have in place a Carbon Reduction Plan.

What’s required?

·     Measuring and reporting Scope 1 and 2 emissions

·     Measuring and reporting of five Scope 3 emissions related to:

• Business travel
• Employee commuting
• Waste generated in operations
• Upstream transportation and distribution
• Downstream transportation and distribution

·     Setting targets to reduce emissions

·     Demonstrating progress against targets

·     Committing to Net Zero by 2050

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 Net Zero Now can help you with:‍

·   Calculating and producing a PPN 06/21 compliant Carbon Reduction Plan in a format that can be easily exported for inclusion in tender submissions and on suppliers      website.  

How is information reported?

·    The Carbon Reduction Plan (CRP) should contain the required information and be published on the supplier's website.

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4. Minimum Energy Efficiency Standards (MEES)

Who’s it for?

Any business renting property, either as a lessee or lessor, should be aware of the MEES regulations.

What’s required?

The legislation requires that, from 1 April 2023, any rented commercial property must have an EPC certificate of E or above.  EPC certificates are graded by assessors based on analysis of the building fabric and performance as well as the actions of the occupants to operate in an energy efficient way.

Under current government proposals, this will be upgraded in 2027 to a requirement for the rating to be C or higher for any new lettings, and a B in 2030.

Net Zero Now can help you with:

Our tailored carbon reduction plans can help identify opportunities to improve the energy efficiency of the building and enhance its EPC rating.

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5. IFRSS1 and IFRS S2

What is it?

The ISSB is an international body that is developing sustainability reporting standards under the umbrella of the IFRS. The ISSB's S1 and S2 standards were published in June 2023. The UK Government has indicated its intention for UK companies to adopt the ISSB’s Sustainable Disclosure Standards and a Technical Advisory Committee is currently exploring an appropriate endorsement mechanism.

Who’s it for?

A decision is expected by July 2024 and it is anticipated that all UK companies would be in scope, albeit with transition reliefs around comparative information and scope 3 disclosure. This means that the first reports under these standards could be published in 2025.
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What’s required?

The ISSB S2 criteria aligns with and builds on the TCFD framework and effectively the same:

·     Scope 1 and 2 emissions reporting

·     Scope 3 emissions if they make up over 40% of total emissions

·     Description of the risk management process related to climate impact

·     Description of the identified risks over the short, medium and long term and impact on financial planning

·     Description of how climate risk is managed through the organisation up to board level

Net Zero Now can help you with:

·     A framework for calculating and reporting emissions

·     Identification of opportunities to reduce emissions

·     Advice on specific climate risks or opportunities

How is information reported?

·     Designed to be included in annual financial account, not a stand-alone report, as part of the Strategic report.

Net Zero Now can help you with:

Our carbon accounting and climate action platform, together with our team of experts, can help you create a first carbon footprint, set targets and develop an action plan.  

Note that this is UK focused legislation. For organisations with operations in the EU the Corporate Sustainability Reporting Directive (CSRD), will require large companies to report on their environmental, social, and governance (ESG) performance from next year. CSRD will require companies to disclose their greenhouse gas emissions, and it will encourage companies to set targets to reduce their emissions.

If you’d like some further help to understand what you’re required to do, or would like to do voluntarily, to measure and report on your carbon emissions, please drop us an email on info@netzeronow.org and one our friendly experts will get back to you.

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