The UK Government has published the draft Regulation for mandatory greenhouse gas (GHG) reporting in Directors’ Reports today (25 July 2012). The draft Regulation and accompanying consultation document are available at defra.gov.uk/consult/2012/07/25/ghg-reporting-draft-regs.
The Regulation will apply to approximately 1,100 UK quoted companies, with the possibility that it will be extended to cover all large companies in the future.
The draft Regulation is impressively succinct and precise, at only 3 pages long. If only all regulations (such as the Carbon Reduction Commitment) were as straightforward and to-the-point!
The most important features of the draft Regulation are:
- Global emissions, not just those in the UK. All emissions sources owned, operated or controlled by the reporting company are included, not just those in the UK. This means reporting companies will have to have efficient data collection systems for gathering information from global operations, as well as a set of global emission factors.
- All greenhouse gases, not just CO2. The requirement is for all Kyoto greenhouse gases. Greenhouse gas is defined in section 92 of the Climate Change Act 2008 (c. 27) as carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCS), perfluorocarbons (PFCS) and sulphur hexafluoride (SF6).
- Scopes 1 and 2 only. The reporting requirements are only for direct emissions (also known as scope 1), and indirect emissions from purchased electricity, heating, and cooling (also known as scope 2). This makes reporting relatively simple, and avoids the issue of different companies using different boundaries for their other indirect emissions (scope 3).
- In force soon. The start date for the Regulation is being consulted on, but at the latest Directors’ Reports published in 2014 will have to include greenhouse gas information. This means that companies need to think about collecting data and their method for calculating emissions now.