In April 2022, it became mandatory for many UK businesses with over 500 employees to begin including climate considerations in their annual reporting.
These companies will be required to align with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD), which were introduced in 2015 by an international body then led by former Governor of the Bank of England Mark Carney. In brief, the TCFD requires businesses to report on the physical and transition risks to climate change along with their greenhouse gas emissions and reduction targets.
The UK government expects that around 1,300 organisations are currently covered by the current mandate, with failure to comply resulting in fines of between £2,500 and £50,000. However, it is important for all businesses to begin thinking about the climate, particularly as climate disclosures are expected to become mandatory for most businesses by 2025. The UK Government is then likely to encourage companies to reduce emissions where possible (and offset the remaining emissions) as part of its strategy to reach net-zero by 2050.
How to get started in sustainability reporting
It is easy to become overwhelmed by the concept of disclosing greenhouse gas emissions, let alone climate risks and the other recommendations outlined by the TCFD.
The first step in our collective journey must be the establishment of thorough, reliable and centralised processes to measure greenhouse gas emissions. Greenhouse gas emissions are typically broken down into three categories:
- Scope 1 (direct emissions largely from gas burners and company cars),
- Scope 2 (indirect emissions from electricity)
- Scope 3 (all other emissions a company is indirectly responsible for in its value chain).
Scope 1 and 2 emissions are relatively easy to measure and can be estimated through energy bills and annual fuel use for company cars (or electricity consumption for electric vehicles). However, Scope 3 emissions are much harder to measure and need the engagement of all suppliers in a company’s value chain. For this reason, data on these emissions are not yet required by the UK Government.
Getting ahead of the game may not only be a good idea from a regulatory point standpoint, but also from a long-term strategic point of view. After we have gained insight into our greenhouse gas emissions, the next steps are to report and reduce them. Like the requirements for the car industry to stop selling new petrol and diesel cars by 2030, it is possible that the UK government may establish other requirements for companies to reduce their carbon footprint.
Reducing our greenhouse gas emissions is not only necessary for the UK to reach net zero by 2050, but it also represents sensible and forward-looking business decision making. Electricity from renewable and other low carbon sources (such as nuclear) is likely to become much cheaper over the next decade while the cost of electric vehicles is also expected to decrease.
The Gerald Edelman Sustainability Committee
With the help of external consultants, Green Element, the Gerald Edelman Sustainability Committee have already begun the process of measuring our greenhouse gas emissions and establishing our net-zero strategy.
To help us to gain a full picture of our impact on our planet, Green Element is preparing a full scope report of our emissions as well as helping us to set intermediate targets and support in achieving our goals – a strategy that many businesses are now taking in order to set strategic and actionable points to become more sustainable.Back to top