Medium and small enterprises represent
99.9% of the UK's local and national economy and have the most potential to deliver financial and environmental benefits
- in
all sectors including service sectors and manufacturing.
2006 UK
Companies Act
In 2013
an amendment in the 2006 UK
Companies Act requires all UK companies (except small companies) to include an
environmental report in their annual reports. Listed companies are also
required to publish disclosures on their greenhouse gas emissions in their
Directors’ Report.
This
requires disclosures on environmental matters, with key performance indicators
Natural Capital Committee
The UK Government made a commitment in 2011, that this should be “the first
generation to leave the natural environment of England in a better state than
we found it" (Nb1)
Achieving this means looking after our environment – our natural capital –
and making the most of opportunities to protect and improve it.
In 2012, the Natural Capital Committee (NCC)
was set up to report to the UK Government and advise as an independent
body, on how to
ensure ‘natural wealth’ is valued and managed efficiently and sustainably.
The Natural Capital Committee has
produced several reports to the government on the 'State of Natural Capital'.
It's also called on the Office
for National Statistics to integrate the state of the country's natural assets,
also known as "natural capital" into mainstream accounting.
The Companies (Miscellaneous Reporting)
Regulations 2018
Large companies are required to include a statement in their
strategic report describing how the directors have had regard to the matters in
section 172(1)(a) to (f) of the Companies Act 2006.
Duty to promote the success of the company
Companies with more than 250 UK employees are required to include a statement
as part of their directors’ report summarising:-
172(1) of the Companies Act
(1) A
director of a company must act in the way he considers, in good faith, would
be most likely to promote the success of the company for the benefit of its
members as a whole, and in doing so have regard to:-
(a) the likely consequences of any decision in the long term
(b) the interests of the company's employees
(c) the need to foster the company's business relationships with
suppliers, customers and others
(d) the impact of the company's operations on the community and the
environment
(e) the desirability of the company maintaining a reputation for high
standards of business conduct, and
(f) the need to act fairly as between members of the company.
Very large private and public unlisted companies are required to include a
statement as part of their directors’ report stating which corporate governance
code, if any, has been applied and how.
This applies to all companies that satisfy either or both of the following
conditions:
• more than 2,000 employees;
• a turnover of more than £200 million, and a balance sheet of more than £2
billion.
Frequently Asked Questions
Q1. Does the Government have a preferred corporate governance code for large
private companies?
The Government hopes that the corporate governance principles
for large private companies developed by James Wates and a
coalition group will be widely adopted.
Nothing in the Wates Principles overrides or is intended as an interpretation
of directors’ duties as set out in the Companies Act 2006. The duties of
directors are set out in sections 170-177. These include, in section 172, the
duty of a director to promote the success of the company for the benefit of its
members as a whole. This duty applies to all directors, regardless of whether
the company is public or private, a parent or a subsidiary, large or small.
Q1. What are the consequences of non-compliance for a company within scope?
The regulations add to the matters that companies already need to report
on in their strategic report, directors’ report and directors’ remuneration
report. As for these existing requirements, if the directors of a company
knowingly do not comply with any of the required provisions, or are reckless as
to their compliance, they will be committing an offence.
Q2. When will companies have to start complying with the new reporting
obligations?
The new requirements apply to company reporting on financial years
starting on or after 1 January 2019.
This means that, with one exception, reporting on the new requirements
will begin in 2020, covering activities undertaken and information collected in
2019.
The exception is the requirement for companies to illustrate the impact of
share price increases on executive pay outcomes which will apply to any new
remuneration policies brought forward by companies from 1 January 2019. This
timetable aligns with the Financial Reporting Council’s plans for bringing the
recently revised UK Corporate Governance Code3 into effect.
Q3. Why do the regulations add new employee, customer and supplier reporting
requirements to the directors’ report when these could be covered in the
strategic report section 172(1) statement?
The new directors’ report requirements ensure that company reports include
information about these important aspects of the section 172(1) duty even where
the directors do not judge the information to be of sufficient strategic
importance to be included in the strategic report that year. They also give
companies the opportunity to provide more information, for example, about how
they are meeting the new UK Corporate Governance Code stakeholder and employee
engagement provision
Q4. Where should the statement be published?
The statement must be included in the directors’ report (or alternatively
in the strategic report using the flexibility in section 414C(11) of the
Companies Act 2006) and published on a website maintained by or on behalf of the
company.
At Country
Landscapes we can help you meet your environmental responsibilities and ensure
your business gains key benefits by dove-tailing your environmental
responsibilities e.g under your Environmental Management System e.g. ISO14001, so that it works for you from the ground upwards!
6 Business BENEFITS of utilising your Natural Capital
