Carbon reporting reviewed

A recent change to the Companies Act means directors are required to report on environmental matters, employees and social issues.

The Companies Act (2006) changes mean all organisations in the UK, regardless of size, are required to produce a business review consisting of a narrative component as well as a financial one on their carbon reduction policies and measurements. However, the technicalities of reporting on environmental issues have long been an enigma for finance directors and uncertainties around it remain.

The Department for Environment, Food and Rural Affairs, in conjunction with DECC, published a report offering guidance on how to report, measure and reduce greenhouse gas emissions (GHG). The report has been published to outline how companies can measure, manage and communicate their environmental performance in a business review, while improving processes and reducing costs through efficiency measurements.

The main recommendations ask that directors:

• Identify where the responsibility for GHG reporting lies, under operational or financial control. The report recommends financial control, as it is the most easily aligned to financial accounting

• Measure and calculate total emissions on a global basis and for all six GHGs covered by the Kyoto Protocol – carbon dioxide, methane, hydrofluorocarbons, nitrous oxide, perfluorocarbons and sulphur hexafluoride

• Report total GHG emissions as a gross figure in tonnes of CO2, which is set out in the guide on how that can be calculated using Defra’s measurement

• Report on emission reductions bought or sold, then report a net figure in tonnes of CO2, in addition to the gross figure

• Provide supporting explanations

• Choose and report on a base year which should be the earliest year that verifiable emissions data is available, and

• Set a reduction target and choose the approach to use.
  

Useful links
http://tinyurl.com/GHGreporting