Our society’s impact on the environment is under significant scrutiny and the movement to protect the planet is, quite rightly, gathering serious traction. An increasing number of organisations and industries are pledging to become carbon zero within the next 10 years and climate positive after that.
But what should you be doing now to protect both the environment and your businesses future?
There are various regulations and pieces of legislation in place intended to monitor and regulate a business’s environmental impact. However, there are instances where policies and mandates are more like guidelines, being easily explained away if compliance is poor.
With increasing security from investors and customers and the UK pledging to be plastic free by 2042, to have zero avoidable waste by 2050 and to ban the sales of petrol and diesel cars by 2030, there is a lot of work to be done.
Making sure you are staying on top of the most up to date guidance and legal requirements will help your business feel the benefit of an effective ESG strategy. Whilst environmental considerations are just one pillar of an ESG strategy, they are significant.
Major legal considerations
- The Companies Act 2006
Since 1 October 2013 the Companies Act 2006 has required all UK quoted companies to report their greenhouse gas emissions in their annual Directors’ Report. From 1 April 2019, quoted companies have also had to report on their global energy use and large businesses must disclose their annual UK energy use and greenhouse gas emissions.
The government encourages all companies, both listed and not, to report their carbon footprint. Although this remains a voluntary action it is a sensible action to be taking now to prepare for further legal requirements in this area.
- The Companies (Director report) and Limited Liability Partnerships Regulations 2018
This came into force in 2018 and requires all quoted and large unquoted companies and LLPs to report on their energy consumption and greenhouse gas emissions in their annual report and accounts.
- Climate change Act 2008
This act is a legal framework which is intended to cut greenhouse gas emissions. The goal was originally to cut emissions by 80 per cent from the 1990 baseline by 2050 - it is now to reach net zero by 2050.
The Act itself is a system of carbon budgeting which means the UK is legally bound to not exceed a certain amount of emissions over a five-year period; and this is where the climate change levy comes into play. The levy is a tax applied to businesses which depends on their energy use. It is paid against use of electricity, gas and solid fuels (like coal) and is applicable to the following sectors:
- Industrial
- Commercial
- Agricultural
- Public services
These are just a few of the legal considerations businesses need to be aware of, the full list is substantially longer. You and your business need to think strategically about these considerations, and make sure that they do not become just a tick box exercise.
