DEFRA: Greenhouse gas (GHG) emissions – draft regulations for quoted companies

Comments from ACCA to the Department for Environment, Food and Rural Affairs (Defra), 10 October 2012.

Commencement date

ACCA believes that the regulations should be delayed to coincide with the draft regulations to change the narrative reporting framework that is due to be issued by BIS, which is likely to come into effect for periods after 1 October 2013. A delay will also allow any implications of the European Commission work on narrative reporting to be considered. This would ensure that any implications for greenhouse gas emission disclosures resulting from the BIS and EC initiatives can be factored into the Defra regulations.

A delay would also have the benefit of allowing affected companies more time to prepare for the implementation of the regulations.


ACCA is disappointed to see that the draft regulations only apply to quoted companies, as too few companies with significant carbon footprints will be required to report. We are encouraged to see that there is scope to extend the reporting requirement to affect all large companies in 2016, and urge Government to extend the regulations at that time.

The public sector also needs to be considered and bodies in that sector should certainly be expected to report on their emissions.

Regulation 3: Disclosure of greenhouse gas emissions in a directors’ report

ACCA notes that the guidelines apply to a company’s scope 1 and scope 2 emissions, and not its scope 3. ACCA believes that scope 3 emissions should be measured and accounted for – with business travel being managed at a minimum. For many companies, scope 3 emissions can be the major source of emissions. By omitting these emissions the data would remain incomplete.

ACCA notes that the regulations do not make any reference to UK vs. overseas emissions. ACCA believes that a company should report on its UK-based and overseas emissions. Whilst this is implied by the regulations, it should be stated explicitly in clause 3.

The regulation needs to specify which gases or group of gases it applies to.

ACCA strongly encourages Defra to require the verification of GHG emissions data, to help ensure its reliability and accuracy. Such a request could be placed in the accompanying guidance if it were not possible to include it in the new regulation itself.

Regulation 4: Methodology used to calculate emissions 

It is important that the methodology used by companies is consistent. ACCA is disappointed that the regulations have not specified which methodology companies should apply. Defra should consider supporting one or just a few GHG calculation methodologies to ensure consistent and comparable reporting, which would greatly assist all stakeholders including investors. Frameworks such as CDSB’s Climate Change Reporting Framework provide excellent guidance for companies, who should be encouraged to use it.

Regulation 6: Intensity ratio

ACCA welcomes the fact that carbon intensity has been included within the draft regulations, but maintains that absolute emissions data should be the primary focus.

Regulation 7: First reporting year

ACCA welcomes the fact that companies would need to disclose their first reporting or base year. This will allow targets to be set and progress to be monitored.

Clause 7(2) specifies that the relevant information disclosed in the first reporting year should be repeated in every subsequent directors’ report. This could result in immaterial or superfluous data being included in future reports.

The regulations should additionally specify that comparative data should be included to provide a reasonable history of the company’s performance (e.g. 3 – 5 years’ worth of data).

Last updated 29 Oct 2012