Last week, the EU and the UK took steps forward in implementing wider standards for climate reporting. The EU and the UK have both made significant changes to their regulations mandating businesses’ reports on their climate impact.
While the EU and UK already require large companies to report energy and emissions data, their regulations are expanding and indicate stronger commitments to end greenwashing.
Here is all you need to know about the EU and the UK’s new regulations.
What are the new UK rules?
The UK has decided to use the regulations by the International Sustainability Standards Board for its own Sustainability Disclosure Standards. The move is set to streamline decision-making among investors looking to understand companies’ environmental pledges.
The UK had previously used standards from the Task Force on Climate-related Financial Disclosures (TCFD), to inform its current regulations. However, it has changed to fit the ISSB standards after expressing its support for the non-governmental organisation at COP26 in 2021.
The UK government aims to make final endorsement decisions by July 2024.
“UK-endorsed standards will only divert from the global baseline if absolutely necessary for UK specific matters,” the ministry said in a statement.
The full details of the new UK rules can be found here.
What are the new EU rules?
The EU published finalised sustainability reporting rules, which will govern the Corporate Reporting Sustainability Directive (CSRD):
Reporting is set to begin for some companies as soon as the 2024 financial year.
The new rules will expand the number of companies required to provide sustainability reporting to over 50,000 from around 12,000 currently. They will also introduce more detailed reporting requirements on company impacts on the environment, human rights and social standards and sustainability-related risk.
The new rules, dubbed the European Sustainability Reporting Standards (ESRS), will allow companies to focus reporting on sustainability factors that they consider material to their businesses.
Read more about the ESRS here.
Are they mandatory?
New EU rules will be expanded to include large companies, non-EU companies with a turnover of €150 million and small and medium enterprises.
There is currently no formal legislative or mandatory reporting requirements under the new UK Sustainability Disclosure Standards. However, it is expected that the SECR and other obligatory reporting frameworks in the UK will be streamlined to fit these new standards.
What should your business do next?
Understanding new reporting frameworks can be daunting and time-consuming.
With legislation going into effect in 2023, 2024 and beyond, businesses which invest in sustainability disclosure will be better prepared.
At ClearVUE.Business, we help businesses meet these new reporting requirements through our comprehensive energy management and carbon accounting system.
To learn more, book a free demo today.