It has been confirmed that amendments to The Companies Act of 2006 including compulsory carbon reporting, tabled by Jo Swinson, will be put into action in October of this year.
The reforms will ‘simplify and strengthen companies’ non-financial reporting’ according to a government statement. The additions to the bill include greater obligations in the areas of human rights, gender representation and GHG disclosure.
The changes will mean businesses of all sizes will now be compelled to compile a ‘Strategic Report’ will encompass the above factors to give a more holistic view of the company story, strategy and potential risks.
The new disclosure requirements for GHG emissions will encourage companies to think about how they can innovate and report in a transparent and consistent manner to improve in this area. The announcement is likely to prompt further competition within sectors with companies wanting to be seen as ‘ahead of the curve’ in the way they report on their environmental metrics.
Companies must report the annual quantity of emissions in tonnes of CO2 from activities for which the company is responsible including the combustion of fuel and the operation of any facility. The report must also show the amount of CO2 emissions created from the purchase of electricity, heat, steam or cooling as a minimum. The methodologies used to collect and analyse the data must also be stated, which will make the whole process of reporting more open and accountable.
Business Minister, and head speaker at an event entitled ‘Transparency for Growth’ held by the Department of Business, Innovation and Skills at the end of June said:
“In order for shareholders to fully hold a company to account they need to have the right information to hand. Annual reports are a key tool for shareholders to get a good understanding as to how a company is performing, but they need to be produced in an open and transparent way.” She continued: “By including additional information on human rights, gender representation and greenhouse gases, these changes can only strengthen that level of trust.”
The changes are long awaited by many open data lobby groups and green NGOs among others since the Coalition Agreement included a commitment to change the way businesses report with regulations on the topic of GHG reporting also promised.
The government’s overall initiative is to set out a plan for ‘strong, sustainable and balanced growth’. This is also the driving force behind the UK’s G8 presidency with a ‘Trade, Transparency and Tax’ theme to be launched officially at the leaders summit this coming Monday.