Natural Capital
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!
Contact Us Below For More Information