The new strategic report and the disclosure of greenhouse gas emissions


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20 second summary

If you are a quoted company with a financial year ending on or after 30 September 2013, the strategic report (replacing the business review) will need to contain additional information concerning:

  • the company’s strategy;
  • its business model; and
  • the number of men and women on the board, within management and in the organisation as a whole.

The directors’ report will also need to contain disclosures concerning greenhouse gas emissions.

Contents of the strategic report

On 12 June, the Government published the latest draft regulations which will amend the existing obligations in the Companies Act 2006 (Act) concerning the content requirements of the business review (to be renamed the strategic report). The new provisions will apply to large and medium sized companies with financial years ending on or after 30 September 2013.

In all but name the strategic report will replace the business review but additional disclosure requirements will apply to quoted companies (as referred to above). 

As is currently the case for the directors’ report and the directors’ remuneration report, the directors will be liable for any false or misleading statements in the strategic report and they will separately be required to approve and sign the strategic report.

Contents of the directors’ report – greenhouse gas emissions 

Of material significance will be the new reporting requirements, for quoted companies, on the annual quantity of emissions in tonnes of carbon dioxide equivalent resulting directly from any of the following activities undertaken by the company:

  • the combustion of fuel; and
  • the operation of any facility,

together with the annual quantity of emissions in tonnes of carbon dioxide equivalent resulting from the purchase of electricity, heat, steam or cooling by the company.  These provisions apply only to the extent that it is practicable for the company to obtain this information and, if it is not, the report must state which information is not included and why.

The report must clearly state which methodology has been used for calculating emissions – and must also include an “intensity ratio”.  For further information on intensity ratios and deciding upon a calculation methodology, please see our earlier ebrief on this subject.  DEFRA has also published guidelines to help companies comply with these requirements.

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