From 6 April, the UK Government will adopt a new Regulation under the Companies Act. This will require all companies on the main London Stock Exchange (LSE) to disclose their Greenhouse Gas (GHG) emissions. The legislation will require a statement of carbon dioxide equivalent performance alongside the main corporate accounts at the end of each financial year. This will allow for greater comparison and evaluation across all sectors. To minimise the related administrative burden, companies can use data collated from other schemes such as; the Climate Change Agreement, EU Emissions Trading Scheme and the Carbon Reduction Commitment when reporting.
For the property industry, classification of emissions can be complex when the Landlord energy bill payer may not have much influence over the Tenant’s energy use within an asset. As a result, the Carbon Footprint of a portfolio can justifiably be separated into Landlord and Tenant’s energy use, but to accurately measure this may require Landlord investment in metering. Putting this in place now could avoid potential devaluation (or desegregation) of a well managed business based on the uncontrollable actions of Tenants. Landlords will also need to consider other sources of emissions from transport, waste, and other operational activities.
From April onwards, mandatory reporting will increasingly enable investors to assess how companies manage their carbon/GHG liabilities. It follows that companies that do not have the correct procedures in place, or corporate-level buy-in, run the risk of losing out over time against those that are better prepared.
If you would like to discuss the potential implications of this new regulation further, please call Jane Wakiwaka on 0203 544 3992 or email firstname.lastname@example.org.