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In an era where environmental, social, and governance (ESG) concerns are paramount, the UK has taken significant steps to ensure transparency and accountability in non-financial reporting. This article explores the main ESG and non-financial reporting regulations implemented across the UK, showcasing how these frameworks aim to foster sustainable business practices and informed decision-making.
Streamlined Energy and Carbon Reporting (SECR)
The Streamlined Energy and Carbon Reporting (SECR) is a UK regulation that mandates certain companies to report their energy usage and carbon emissions. This framework aims to promote energy efficiency and reduce environmental impact, providing economic benefits by cutting operational costs and boosting productivity.
Entities required to report under SECR include all quoted companies, large unquoted companies, and LLPs that meet specific financial and employment criteria. Companies that consume less than 40,000 kWh annually are exempt but must still declare their low energy use.
Quoted companies must detail their UK energy use, associated emissions, and energy efficiency actions, among other data. Large unquoted companies and LLPs have similar requirements, focusing on total global energy use and annual GHG emissions. These detailed disclosures support the UK's goal of reducing its carbon footprint through corporate transparency and accountability.
UK's Sustainability Disclosure Requirement (SDR)
The UK's Sustainability Disclosure Requirement (SDR) sets a comprehensive framework requiring companies and financial institutions to report their environmental and societal impacts. This initiative aligns with the UK's goal to lead in sustainable finance, mandating clear, consistent disclosures to enhance stakeholder decision-making.
The SDR integrates previously disparate sustainability reporting standards into a unified framework, fostering transparency and accountability. It covers governance, strategy, risk management, and metrics, expanding the focus from environmental impact to societal effects. This broader perspective helps companies assess and disclose their overall sustainability impact.
The SDR mandates participation from UK-listed companies and financial institutions. It adopts international standards while addressing local nuances. With a phased implementation plan, the framework is set to be fully operational by 2025, aiming to reduce greenwashing and promote genuine sustainable practices within the corporate sector.
UK Disclosure Framework for Net Zero Transition Plans
The UK Disclosure Framework for Net Zero Transition Plans was developed to ensure that companies back their net zero emissions commitments with transparent plans. This initiative, part of the UK's ambition to become the world’s first net zero-aligned financial centre, requires UK-listed companies and financial institutions to report their transition strategies. The framework, which incorporates guidelines from existing global standards, outlines four main areas: governance, strategy, risk management, and metrics and targets, providing a structured approach for companies to disclose their plans.
This framework is voluntary for some companies but establishes a clear expectation for detailed transition plans that include mitigation targets and comprehensive action steps. By specifying governance structures, long-term decarbonisation strategies, risk assessments, and measurable targets, it aims to standardise how companies approach and report their transition to net zero emissions.
The framework, which is open for public consultation until early 2023 and planned for implementation within the year, represents a significant step towards aligning corporate operations with global climate goals, encouraging transparency and accountability in the process.
As the UK continues to refine and expand its ESG and non-financial reporting frameworks, these regulations play a crucial role in shaping a sustainable and transparent corporate environment. By adhering to these standards, UK businesses align with global sustainability goals and enhance their credibility and long-term viability in a rapidly evolving market.
Contact Plan A’s team if you’re looking for support in implementing ambitious data-driven carbon management strategies within your organisation to improve your ESG reporting capacities.
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