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As part of our commitment to continually improve our service and to help our clients meet their legal obligations, we continue to update the Legal Registers on our website and provide free quarterly legal compliance updates to anyone who subscribes. The purpose of these updates is to ensure you stay up to date with any changes in your legal compliance obligations, our updates can also be kept and can be used as evidence that your business is staying up to date with any changes in the legislation, this can be very helpful at audit time.
The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 require large UK companies and limited liability partnerships (LLPs) to report on their energy use and greenhouse gas emissions in their annual directors' report. The purpose of the regulations is to encourage businesses to measure and manage their carbon emissions and energy consumption, and to provide transparency to investors and other stakeholders.
The requirements of the regulations include reporting on energy consumption, greenhouse gas emissions, and related information for the company's operations and supply chain. Companies and LLPs are also required to describe the measures they have taken to increase energy efficiency and reduce greenhouse gas emissions, and any future plans they have in this area.
The regulations apply to companies and LLPs that meet two or more of the following criteria:
- Annual turnover of £36 million or more
- Balance sheet total of £18 million or more
- More than 250 employees
The regulations also include exemptions for companies that are already reporting under other energy and carbon reporting schemes, or that can provide a good reason for not reporting.
Under The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, large UK companies and LLPs are required to report on their energy use and greenhouse gas emissions in their annual directors' report. The evidence requirements for compliance with these regulations include:
1. Energy consumption: Companies and LLPs must report on their total energy consumption for the year, broken down by fuel type and energy source. This includes energy used in their operations and supply chain.
2. Greenhouse gas emissions: Companies and LLPs must report on their greenhouse gas emissions for the year, broken down by scope 1, scope 2, and scope 3 emissions. Scope 1 emissions are direct emissions from company operations, scope 2 emissions are indirect emissions from purchased electricity, and scope 3 emissions are indirect emissions from the company's value chain.
3. Related information: Companies and LLPs must provide related information such as intensity ratios, methodology used to calculate emissions, and any relevant climate-related risks or opportunities.
4. Measures taken: Companies and LLPs must describe the measures they have taken to increase energy efficiency and reduce greenhouse gas emissions, including any investments in renewable energy or energy-saving technology.
5. Future plans: Companies and LLPs must outline any future plans they have to reduce energy consumption and greenhouse gas emissions.
The evidence requirements are aimed at providing transparency and accountability to stakeholders, encouraging companies and LLPs to measure and manage their carbon emissions and energy consumption, and ultimately reducing their carbon footprint.
There are some exemptions to The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, including:
1. Companies that consume less than 40,000 kWh of energy per year are exempt from the reporting requirements.
2. Companies that are listed on a regulated market in the UK, or in another EEA state with equivalent requirements, are exempt as they are already subject to mandatory carbon reporting.
3. Subsidiaries that are covered by a parent company's report are exempt as long as certain conditions are met, such as the parent company providing assurance on the subsidiary's report.
4. LLPs that are not required to prepare a directors' report are exempt from the reporting requirements.
5. Companies that can provide a good reason for not reporting, such as a risk of significant harm to the business or disproportionate cost, may be exempt. However, the reason for not reporting must be approved by the company's board of directors and disclosed in the annual report.
It's important to note that companies claiming exemption must still comply with the requirements of the regulations to notify Companies House of their exemption status.
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Including our quarterly legal compliance updates that are a great resource for evidence for your ISO audits.