26th March 2006 - New environmental reporting requirements loom for large UK companies

26 March 2006 , London:

Directors of large private and listed companies are required to report significant environmental matters in a new mandatory 'Business Review' within their Annual Company Reports from the 1st April onwards, as set out by the EU Accounts Modernisation Directive (EU AMD). Large companies must, according to the Department for Trade and Industry, "disclose information that is material to understanding the development, performance and position of the company, and the principal risks and uncertainties facing it. This will include information on environmental matters and employees, on the company's policies in these areas and the implementation of those policies."

According to the EU AMD requirements, any company with a turnover of more than £22.8m, a balance sheet total higher than £11.4m or over 250 employees is classified as a large company. Despite this looming deadline, a recent survey of directors by Trucost, an environmental research organisation, found that only 9% were aware of their obligations.

To help companies manage and communicate the links between environmental and financial performance, key performance indicators (KPIs) are used a tool of measurement. Trucost and the Department for Environment Food and Rural Affairs (Defra) have published a set of guidelines to help companies should they need to cover environmental impacts in their 'Business Review'. The guidelines, Environmental KPIs - Reporting Guidelines for UK Business, were produced to help report on environmental performance in a way that meets the needs of their shareholders and other stakeholders.

"The KPIs make use of information already collected by companies, are business specific and very simple to report. In fact eighty per cent of UK businesses have just five or fewer significant environmental KPIs against which the Guidelines recommend they should report. For most companies, greenhouse gas emissions is the significant KPI, others include water and resource use. Companies can check if they are complying with the Defra guidelines by using the Trucost's Compliance & Assurance service which uses the same model as the Government to determine relevant KPIs and offers independent third party assurance that reporting standards are being met.

"Simon Thomas, chief executive of Trucost, comments: "Defra and Trucost have designed KPIs which are simple to follow and, very importantly, are quantitative. They can help companies to measure, manage and communicate environmental performance. Targets can be set to improve performance against the indicator and, because reporting against each KPI is standardised, disclosures should become much more comparable. However there is a worrying lack of awareness around the issue and many companies could be in breach of the EU AMD without knowing it."

Ends

Simon Thomas, chief executive of Trucost, is available for interview – please call Nick Denton/Fionnuala Synnott at Hogarth on 020 7357 9477 or Ashleigh Lezard on 020 7321 3731

About Trucost (www.trucost.com)

Trucost Plc is an environmental research organisation that was founded in 2000 to help companies and investors understand the environmental impacts of business activities in financial terms.

Trucost Plc offers expert advice and research to major corporations, both public and private, institutional investors and to the UK Government and associated agencies.

Over the past six years Trucost has built up a database of the environmental impacts and disclosures of over 3000 companies, with the climate change database being the world’s largest repository of climate change disclosures. Trucost has developed considerable experience and expertise in the area of environmental performance, analysis and reporting, working with leading multinational companies in a range of business sectors including Avis, Christian Salvesen, Prudential, LogicaCMG, Legal & General and Land Securities Plc

Institutional investors use Trucost’s research to support due diligence and active engagement activities by incorporating environmental performance measurement into their investment decisions. Clients include Hermes, Standard Life, Fidelity, Henderson Global Investors and Merrill Lynch. Institutional investors also use the information to assess the environmental footprint of their portfolios, highlighting poor performers and therefore better understand where environmental risk lies in their portfolios.

David Pitt-Watson, Chief Executive, Hermes Focus Asset Management: "Trucost's ability to dig out the data about the environmental consequences of production is absolutely second to none anywhere in the globe."