Company Sustainability Disclosure (UK/International)

With COP26 underway a slew of announcements are being made on the topic of business disclosure of environmental impact.

UK

In October (ahead of COP26), the government responded to its consultation on mandatory climate-related financial disclosures by publicly quoted companies, large private companies and LLPs. The response is here. Hitherto, on 9 November 2020, the government had announced it would implement TCFD recommendations across the economy – this announcement is here.

Re the need for better alignment between SECR (UK) and TCFD (International – see below under International) requirements, HMG will consider how best to achieve that. Any changes to the SECR regime to facilitate that alignment will require a separate consultation process, and that process will run in due course, but will take into account the proposed introduction of the Sustainability Disclosures Requirements (SDR) Regime, as set out in Greening Finance: A Roadmap to Sustainable Investment published on 18th October 2021 (see below) and the requirements introduced in the June 2021 Procurement Policy Note that require mandatory Scope 3 disclosures in carbon reduction plans when bidding for major government contracts. HMG will look to implement any changes to the SECR regime by 2023. A Q&A guidance document will set out to in-scope companies and other stakeholders to what extent current SECR requirements meet TCFD recommendation 4b, regarding the disclosure of emissions. This document is not yet published.

On 18 October (ahead of COP26), the Chancellor published a roadmap setting out details of new Sustainability Disclosure Requirements applicable to businesses, pension schemes, investment products and asset managers and owners. This roadmap is here. The document focuses on the “informing” first phase (of the road map), which it states will be delivered through new economy-wide Sustainability Disclosure Requirements. Public consultation is to follow, and thereafter there will be rules.

On 3rd November (within COP26), the Chancellor announced the UK will be the first net-zero aligned financial centre. Initially this means asset managers, regulated asset owners and listed companies must publish transition plans. Standards for these transition plans are being developed. A q&a about this process is here (dated 2nd November)

International

On 3rd November (within COP26), the IFRS Foundation (the International Financial Reporting Standards Foundation, a non-for-profit incorporated in Delaware US) announced the establishment of an International Sustainability Standards Board (ISSB) to develop global baseline sustainability reporting standards. The IFRS Foundation confirmed consolidation of two sustainability reporting organisations, the Value Reporting Foundation and the Climate Disclosure Standards Board, to create a global standard-setter for sustainability disclosures for the capital markets.

The Foundation also published two prototype standards to enable the ISSB to build on existing frameworks, including the Task Force on Climate-Related Financial Disclosures (TCFD) (set up by the Financial Stability Board, an international body), when developing its standards. Standards will be subject to public consultation and can be considered for adoption by jurisdictions on a voluntary basis. Jurisdictions will have their own legal frameworks for adopting, applying or otherwise making use of international standards.

This announcement is welcomed by the UK and a number of other countries – the UK press release is here.

Environmental Reporting Guidelines (UK)

(31 January 2019) updated Environmental Reporting Guidelines are issued. These are here.

These Guidelines are issued for :

(1) companies and limited liability partnerships complying with the Companies Act (Strategic Report and Directors’ Report) Regulations 2013, and the Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018

(2) all organisations carrying out voluntary reporting, on Energy and GHG emissions reporting, and through the use of Key Performance Indicators (KPIs).

I will add this to all subscribers Cardinal Environment EHS Legislation Registers & Checklists systems.

Electronic Reporting of Toxics Release Inventory Data (US)

Information on the USEPA’s final rule that requires facilities to report all non-trade secret Toxics Release Inventory (TRI) data to the USEPA using its TRI-MEweb online reporting application is found here.

This rule (40 CFR 372) also requires facilities to submit electronically any revisions or withdrawals of previously-submitted TRI reporting forms. Facilities may revise or withdraw TRI forms going back to reporting year (RY) 1991, but not for years prior to this.

This rule applies to all facilities required to report to the TRI Program, and is effective January 21, 2014.

After January 21, 2014, facilities submitting non-trade-secret TRI reporting forms for the 2013 TRI reporting year (forms due on July 1, 2014) or prior reporting years must report electronically.