Opportunities to arise as mandatory GHG reporting comes into force

Changes to the Companies Act which come into force today will mean that businesses now have a legal requirement to integrate reporting of greenhouse gas emissions (GHG) with their financial reporting.


Companies will also be required to consider environmental risks and opportunities in new Directors’ Strategic Reports, ensuring that environmental issues are factored into long-term business decision making.

The majority of businesses have welcomed the reporting regulations, viewing it as an opportunity to focus on efficiency, drive down costs and reduce their environmental impact.

Commenting on the changes, the Institute of Environmental Management and Assessment (IEMA) executive director, policy, Martin Baxter said: “The changes to the Companies Act are significant, they put environment for the first time at the top table of company thinking, moving it from a bolt on activity to being central to business strategy.

“This will enable UK plc to build for the long-term, ensure companies are able to economically thrive in the low carbon economy, and establish their future viability during a time of economic uncertainty and growing environmental challenges,” added Baxter.

The Government announced in June that companies listed on the main market of the London Stock Exchange must report their organisation’s GHG emissions.

In order to report the GHG emissions associated with an organisation’s activities, users must convert ‘activity data’ such as distance travelled, litres of fuel used or tonnes of waste disposed into carbon emissions.

According to the Government, GHGs can be measured by recording emissions at source by continuous emissions monitoring or by estimating the amount emitted by multiplying activity data by relevant emissions conversion factors.

The regulations have been met with approval since the announcement and a survey, carried out by IEMA, found that GHG reporting can deliver significant benefits with around 70% of companies saying that GHG reporting will deliver cost savings, and 77% saying it will lead to environmental benefits.

“These regulations will enable companies to manage longer-term environmental challenges such as climate change and ensure the drive towards a resource efficient and low carbon economy,” said Baxter.

Leigh Stringer

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