Legal compliance for carbon management – Everything you need to know!

13 July, 2022

Legal compliance for carbon compliance


There is a growing need to adopt a new set of Sustainable Development Goals that aim to “Transform the World”. Change comes with collective effort, mutual understanding and knowledge toward specific goals. 


Despite the UN and other international organisations making crucial decisions, the result is far from expected. It made me wonder what it is that we are falling short on? Is it the lack of interest or lack of awareness? 


That’s when I had a eureka moment, and it suddenly started to all make sense. Many people don’t know the complicated terms and references that are used when we talk about sustainability. The idea inspired me to create a new series called “The ABCs of Sustainability Development”. I hope that this series of blogs is well received and serves its purpose. This week I want to talk about ecological and social justice in business-to-business sustainability. The conversation about sustainability has been increasingly becoming part of the mainstream, leading to many changes in consumer attitudes and business practices, along with changes in mandated sustainability compliance practices. With the push for sustainable business practices coming even from the UN (which has outlined global partnership as the road to sustainable development in trade), let us take a closer look into what sustainability in business looks like and what purpose it serves. 




Recently the United Kingdom became one of the first G20 countries to make it mandatory for the nation’s largest businesses to actively report their climate-related risks and opportunities and align themselves with the UK’s Net Zero strategy. In line with recommendations from the Task Force on Climate-Related Financial Disclosures, it was decided that over 1,300 of the largest UK-registered companies and financial institutions will have to disclose company working systems and climate-related financial information on a mandatory basis. The TCFD was launched at the Paris COP21 in 2015 and has since published a clear and achievable set of recommendations on climate-related financial disclosures. It helps investors understand their financial climate risks.


Several updations in the legal structure, to increase compliance with climate change laws followed the COP26 summit. The push to endure climate reporting will not only facilitate better quality and quantity of the measures and a greener UK economy but are aimed to help investors and businesses better understand the price-related risks to climate change and what that means for their business.



Which schemes can be listed under carbon compliance in the UK?




SECR or Streamlined Energy Carbon Reporting


After the SECR came into force in April 2019, below listed companies have been required to publicly report on their greenhouse gas emission as well as annual energy use. An estimated number of 11,900 firms across the UK fall under this scheme.

The schemes apply to these companies:

  • Companies listed on a stock exchange (“quoted companies”)
  • Companies that aren’t listed on a stock exchange but meet the Companies Act definition of “large” 
  • Limited Liability Partnerships (LLPs) that meet the definition of “large”.

Large refers to companies with a turnover of over £36 million, a balance sheet total of £18 million or more or a strength of over 250 employees.


UK Emissions Trading Scheme



Having replaced UK’s participation in the EU ETS scheme last year on January 1, 2021, all energy-intensive industries and firms in the power generation and aviation sectors are to now comply with UK’s Emissions Trading Scheme. To carry out functions covered by the scheme under a business category, a cap is set on the number of certain greenhouse gases that can be emitted. Crosschecks and regulations of the same are maintained through permits issued by ETS regulations: greenhouse gas emissions permit, hospital or small emitter permit (installations) or emissions monitoring plan (aircraft operators).

Tap this link to find more information about participating in UK’s ETS.



ESOS or Energy Savings Opportunity Scheme:


While ESOS doesn’t require organisations to report on carbon/GHG emissions and focuses solely on audits of the energy used by buildings, industrial processes and transport costs and management, it does eligible businesses to calculate their total energy consumption which in turn adds to the emissions needed to curb climate change.


Voluntary schemes and frameworks to look into for carbon reporting and management:




CCAs or Climate Change Agreements


In order to reduce energy use and carbon dioxide emissions, a voluntary agreement made between the UK industry and the Environment Agency is deemed as CCAs.  Operators investing in the scheme receive discounts on CCLs (the tax added on electricity and fuel bills).


The two kinds of climate Change agreements: are umbrella and underlying. CCAs are available for major energy-intensive sectors from chemical, paper and supermarket industries to the agricultural business and large-scale farming.

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