Currently it is not a legal requirement for all small and medium-sized businesses in the UK to report on their carbon emissions and environmental impacts.
However, there are already some key disclosure requirements which are applicable to some SMEs – as well as larger organisations – which businesses should be aware of to ensure they stay legally compliant.
Here we explore three of these carbon reporting requirements – if you haven’t been asked about them yet, you probably will be soon!
- SECR – Streamlined Energy and Carbon Reporting
One key piece of legislation is the Streamlined Energy and Carbon Reporting (SECR) framework which requires qualifying companies to disclose their energy use and carbon emissions, and any actions that are being taken to reduce these.
SECR is a legal requirement for all UK companies with over £36 million annual turnover, £18 million balance sheet total, or 250 plus employees.
Reporting for these businesses is required on an annual basis.
Reporting requirements include Scope 1, Scope 2 and Scope 3 emissions, an emissions intensity measurement, energy use and an explanation of any measures that have been implemented.
Further guidance from the UK government on this requirement is available here.
- Carbon Reduction Plans – Public Procurement Notice (PPN) 06/21
PPN 06/21 is a UK Government notice requiring suppliers to demonstrate their commitment to carbon reduction, particularly for contracts above certain thresholds, regardless of the size of the supplier business.
Any business applying for a contract of over £5 million with the UK Government or with the NHS will need to have a compliant Carbon Reduction Plan in place. Since April 2024 this is a requirement for all new NHS procurements, regardless of the size of the supplier business or the size of the contract. Many local authorities are also now requiring these from businesses seeking to deliver their contracts.
The Carbon Reduction Plans require a baseline carbon footprint, as well as on-going year on year comparisons and a net zero commitment. Any actions already taken to reduce emissions and/or planned also need to be included in the document which should be made publicly available on the company website. Carbon Reduction Plans need to be updated at least annually.
Further guidance from the UK government is available here.
- UK Sustainability Disclosure Standards (SDS)
The UK government is set to introduce a new set of rules in 2024, known as the UK Sustainability Disclosure Standards (SDS) (and provided an update on this in May 2024) which outlined their objectives to implement standards to make it easier and more transparent for companies to report on their environmental impact and sustainability efforts. The aim is to provide investors and consumers with clearer and more reliable information.
These standards will cover requirements for companies to clearly report their sustainability efforts, as well as providing guidelines on how businesses can use terms related to sustainability in their product names and advertising, and how/when investments can be labelled as sustainable.
Further guidance from the UK government is available here.
What Next?
While not all businesses are subject to mandatory reporting, the trend towards greater environmental accountability is growing, and voluntary reporting is encouraged for all businesses so that they will be ahead of the curve, should this become compulsory.
If you are looking for help with calculating your emissions please get in touch and a member of our team will get back to you.
