ESG (environment, social and governance) legislation is increasingly common these days but the burden of this is heavily weighted to the largest of companies. Micro and small companies are safe from any requirements but this changes as a UK company nears 250 employees or £36m turnover, when they need to prepare for five key pieces of ESG legislation.
Energy Saving Opportunity Scheme (ESOS)
In scope companies are individually, or part of a Group that has:
250+ employees, or
£44m+ turnover and £38m+ balance sheet.
Key requirements:
On a four yearly-cycle businesses must measure their energy use and engage certified Lead Assessors to identify energy reduction opportunities.
An ESOS Action Plan must be published externally, and annual progress reports thereafter.
Phase 3 ended in June 2024. Phase 4 commences on 6th December 2023.
More information: Energy Saving Opportunity Scheme.
Gender Pay Gap Reporting
In scope companies:
250+ employees .
Key requirements:
Report to be published on the Gender Pay Gap database and in a prominent place on the company’s website.
Report to include six defined metrics that demonstrate the difference between average earnings by gender on a specific snapshot date.
More information: UK Gov Gender Pay Gap guidance.
Modern Slavery Act
In scope companies:
Have UK operations (even is registered outside the UK) and turnover >36m.
Key requirements:
Publish a Modern Slavery Statement on the company website.
Statement content is not mandatory but legislation identifies that companies should report modern slavery related policies, due diligence processes, location of risks, KPIs and training.
More information: Modern Slavery Act section 54.
Streamlined Energy & Carbon Reporting (SECR)
In scope companies:
Main-market listed companies, or
Large un-quoted companies (i.e. £36m turnover; £18m balance sheet; 250 employees), or
Large LLP.
Key requirements:
Director’s report UK energy and emission disclosure of scope 1 and 2 (optional scope 3).
Global energy & emission disclosure for quoted companies.
Intensity ratio.
Group reporting for subsidiaries is acceptable.
More information: UK Gov Environment Reporting Guidelines.
Section 172 Statement
In scope companies:
Large companies (i.e., £36m turnover; £18m balance sheet; 250 employees), with reduced requirements for companies with 250+ employees only.
Key requirements:
Report to be published in Strategic Report and on website.
Report to include description of how Directors of the company consider long-term, stakeholders, reputation and acting fairly in key decision making.
More information: The Companies (Miscellaneous Reporting) Regulations 2018; Companies Act 2006 section 172.
The above legislation affects companies of all industries and for many companies will be the only ESG legislation that they need to know about (e.g. professional services, IT companies etc.). However, be aware that there may be additional legislation relevant specifically to your industry, for example Extended Producer Responsibilities (EPR) for companies which use more than 25 tonnes of packaging each year.
For support with your ESG compliance, contact Rawstone Consulting here.
Authored by Caroline Johnstone.
Comentarios