19 May 2010
Posted in Go Green - Mandatory Reporting

Mandatory environmental reporting

Many companies are legally obliged to report on environmental issues affecting, or affected by, their business. They could be required to report in general terms on their overall impact on the environment as a whole, or they could be subject to specific requirements to report on discrete environmental matters, such as their greenhouse gas (GHG) emissions, or water discharges. They could be required to report to a regulator, to their shareholders, or to the general public.

The reporting obligation might arise from general corporate law requirements:

·         Under the Companies Act 2006 (CA 2006).

·         Under the Climate Change Act 2008 (CCA 2008).

·         Relating to financial accounting.

·         Under the Combined Code and the Turnbull Guidance on internal control (although these are not strictly mandatory requirements).

·         Under legislation governing pension funds.

·         Under US Securities and Exchange Commission (SEC) disclosure requirements.

In these cases, obligations to report on environmental issues were largely introduced to encourage decision makers within companies to integrate environmental considerations into their day-to-day business decisions and processes. Legislators were often seeking to drive voluntary environmental management through mandatory environmental reporting.

Companies may also be obliged to report because their business is regulated by a specific environmental regime:

·         CRC Energy Efficiency Scheme (CRC).

·         EU Emissions Trading Scheme (EU ETS).

·         Environmental permits.

In these cases, the purpose of the reporting obligations is primarily to demonstrate compliance with the particular environmental regime, and for the relevant regulator to be able to monitor and enforce compliance effectively.