Carbon and energy reporting

The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 (‘the regulations’) apply to quoted companies, large unquoted companies, large LLPs and large groups. The regulations define a company, LLP or group as large if it meets two out of three of the following criteria:

• Turnover more than £36 million
• Balance sheet total more than £18 million
• Number of employees more than 250

The regulations also set out the rules for when an entity qualifies as large in its first and subsequent financial years.

Group and subsidiary exemptions

For an entity that is preparing a group directors’ report (or group carbon and energy report for an LLP) the group report should include the carbon and energy information of the parent entity and of any subsidiaries that are also within the scope of the requirements.

A subsidiary undertaking is not obliged to report its own energy and carbon information if it meets the following criteria:

• it is a subsidiary undertaking at the end of the financial year;
• it is included in the UK group report of a parent entity;
• that UK group report is prepared for a financial year of the parent that ends at the same time as, or before, the end of the subsidiary's financial year; and
• the UK group report complies with the relevant requirements of the parent to report energy and carbon information.

Other exemptions

Other exemptions from providing carbon and energy information apply when:

• An entity has consumed 40,000kWh of energy or less (for large unquoted companies and LLPs this refers to energy consumed in the UK only) during the period to which the report relates. 
• In the opinion of directors, disclosure of the information would be seriously prejudicial to the interests of the entity.

If taking up either exemption the report must state that the information has not been disclosed for that reason.

Information is only required to the extent that it is practical for the company to obtain some or all of the information. When it is not practical to obtain information the report must state what information has not been included and why.

Large unquoted companies and large LLPs

Large unquoted companies and large LLPs are required to provide information on:

• Annual quantity of UK emissions (including offshore) in tonnes of carbon dioxide equivalent resulting from activities for which the company is responsible involving combustion of gas or the consumption of fuel for the purpose of transport*
• Annual quantity of emissions in tonnes of carbon dioxide equivalent (including offshore) resulting from the purchase of electricity by the company for its own use, including for the purposes of transport*
• A figure in kWh which is the aggregate of the annual quantity of energy consumed in the UK (including offshore) from activities for which the company is responsible involving the combustion of gas or the consumption of fuel for the purposes of transport; and the annual quantity of energy consumed in the UK (including offshore) resulting from the purchase of electricity by the company for its own use, including for the purposes of transport*
• The methodologies used to calculate the information provided on emissions and energy consumption
• At least one ratio which expresses the company’s annual emissions in relation to a quantifiable factor associated with the company’s activities (also referred to as an intensity ratio)*.
• Description of the principal measures taken (if any) to increase the company’s energy efficiency

* Information also required for the prior year, except for the first year for which the directors’ report includes this information

For large unquoted companies this information should be reported in the directors’ report. For large LLPs this information should be included within a 'carbon and energy report' which forms part of the annual report.

For LLPs, the regulations require that the carbon and energy report includes:

• the names of the persons who, at any time during the financial year, were members of the LLP; and
• the name of the designated member signing the report.

The Government’s Environmental Reporting Guidelines state that LLPs may wish to consider whether they can comply with the requirement to include the names of all persons who were members of the LLP during the financial year, by referring to the online list published by Companies House, if one is available.

Quoted companies

• Annual quantity of emissions in tonnes of carbon dioxide equivalent resulting from activities for which the company is responsible including the combustion of fuel and the operation of any facility*⁺
• Annual quantity of emissions in tonnes of carbon dioxide equivalent resulting from the purchase of electricity, heat, steam or cooling by the company for its own use*+
• A figure in kWh which is the aggregate of the annual quantity of energy consumed for activities for which the company is responsible including the combustion of fuel and the operation of any facility; and the annual quantity of energy consumed resulting from the purchase of electricity, heat, steam or cooling by the company for its own use*+
• The methodologies used to calculate the information provided on emissions and energy consumption
• At least one ratio which expresses the company’s annual emissions in relation to a quantifiable factor associated with the company’s activities (also referred to as an intensity ratio)*
• Description of the principal measures taken (if any) to increase the company’s energy efficiency

^{* Information also required for the prior year, except for the first year for which the directors’ report includes this information.}

^{+ The report must state the proportion which relates to emissions in the United Kingdom and offshore area.}

For more information and guidance on non-financial reporting, including the directors’ report and carbon and energy reporting, visit:

• Non-financial reporting hub
• Directors’ reports
• Factsheet: Strategic Report and Directors' Report
• Webinar: Energy and carbon reporting - the essentials

For further information about Streamlined Energy and Carbon Reporting, visit:

• Government’s Environmental Reporting Guidelines: including Streamlined Energy and Carbon Reporting requirements
• FRC’s Thematic Review: Streamlined Energy and Carbon Reporting (September 2021)