REGULATORY COMPLIANCE

In 2023, the UK Government announced plans to introduce a carbon border tax from 2027, known as the UK Carbon Border Adjustment Mechanism (UK CBAM). This policy aims to prevent carbon leakage (the practice of shifting emissions-intensive production to countries with weaker climate policies) by ensuring that imported goods are subject to a comparable carbon price as those produced domestically under the UK Emissions Trading Scheme (UK ETS). Ultimately, the goal is to drive global reductions in industrial emissions and support the transition to a low-carbon economy. What is the UK CBAM? The UK CBAM will apply to imported goods in emissions-intensive industries. Starting in 2027, businesses importing iron, steel, aluminium, ceramics, cement, fertilisers, glass and hydrogen into the UK will be required to: Mandatory Disclosures: Submit reports detailing the carbon emissions embedded in their products (embodied carbon). The UK CBAM will require reporting to detail the Scope 1 (direct emissions from production), Scope 2 (indirect emissions from purchased electricity), and select precursor product emissions embodied in imported products. Levy Payments: Pay a levy based on the carbon pricing of the exporting country. If the exporting country has little to no carbon pricing, UK importers will be subject to a higher tax rate. This initiative encourages businesses to source materials from suppliers with strong carbon policies, incentivising sustainable production methods. How Will it Work? The UK CBAM will require importers to report and pay for the emissions embedded in their products at the UK ETS carbon price. If a foreign producer has already paid a carbon price in the country of manufacture, this may be deducted from the payment charge under UK CBAM to avoid double taxation. The UK Government has proposed to have four accounting periods per year to align with the standard practices used by other taxes. How Does the UK CBAM Differ from the EU CBAM? While both mechanisms share the same overarching objectives, there are key differences: Scope of Products : The EU CBAM applies to cement, iron, steel, aluminium, fertilisers, electricity and hydrogen, whereas the UK CBAM excludes electricity imports but also applies to additional products, such as ceramics and glass Implementation Timeline : The EU CBAM has already begun its transitional phase (October 1, 2023), requiring emissions reporting, with full financial enforcement starting in 2026. The UK CBAM, however, will take effect in 2027. What Can Businesses Do to Prepare? To limit exposure and ensure compliance with UK CBAM, businesses should take the following steps: Assess Supply Chains: Assess your exposure to UK CBAM by reviewing your suppliers to understand where imported products and materials are being manufactured and their carbon intensity. Identify other suppliers with lower-carbon intensities. Engage Key Suppliers: Work with your suppliers to encourage the adoption of low-carbon technologies and practices that will reduce the carbon intensity of manufactured materials. Consider switching suppliers and sourcing materials from UK-based companies that already comply with UK ETS, to reduce exposure. Comprehensive Emissions Reporting: Ensure you have sufficient emissions accounting and reporting practices in place, to minimise disruption caused by mandatory reporting. We recommend businesses understand their Scope 1, 2 & 3 emissions to identify high-impact activities and inefficiencies within their operations and their supply-chain. How We Can Help edenseven is a sustainability consultancy with a proven track record in designing and delivering data-driven sustainability strategies. Our cloud-based carbon accounting and management platform, cero.earth , simplifies compliance and reporting for businesses of all sizes. Why Choose cero.earth? Regulatory Compliance: Aligns with the Greenhouse Gas Protocol (Scope 1, 2 & 3) to ensure accurate and compliant carbon reporting. Expert Support: Backed by a team of analysts who guide you through the process, making compliance straightforward. Seamless Data Integration: Easily upload and export data in required formats with our integrated report building tools, for effortless reporting and disclosure. Enhanced Credibility: Track and disclose detailed emissions data to investors and stakeholders with confidence, ensuring enhanced credibility. Reduce Costs: cero.earth identifies high emissions sources and inefficiencies within your operations and supply chain, enabling you to make informed decisions about where to implement impactful change, saving you cost with CBAM and ongoing operations. Net Zero Project Tracking: Design, implement and track your carbon-reduction projects and leverage our Net Zero Carbon (NZC) dashboard to visualize your pathway to Net Zero and set strategic carbon reduction targets. Flexible Packages: cero.earth offers tailored packages to suit all businesses. For businesses seeking a hands-off experience, our Strategic package allows us to handle the entire carbon accounting and compliance process on your behalf, ensuring a seamless and fully managed approach, allowing you to focus on what you do best. Prepare Your Business for the Future With the UK CBAM on the horizon, businesses must take proactive steps to manage their carbon impact and ensure compliance. cero.earth by edenseven, provides the tools and expertise needed to navigate these changes with ease. Start your journey towards sustainable and compliant operations today. Get in touch today to learn more about how we can support your transition and comply with the latest sustainability regulations.

The Impact of Minimum Energy Efficiency Standards (MEES) on Commercial Properties As of 2023, commercial properties in England and Wales are required to meet a minimum EPC (Energy Performance Certificate) rating of 'E.' By 2027, this will rise to 'C,' and by 2030, it will further increase to a 'B.' Currently, around 80% of UK commercial properties fall below the 'B' rating, leaving landlords and businesses vulnerable to significant risks. Non-compliance could result in fines of up to £150,000 per non-compliant letting, as well as reputational damage that could affect your brand's standing. Why Retrofitting Is Crucial Approximately 80% of the buildings that will exist in the UK by 2050 have already been built. This means that in order to meet the country’s Net Zero target by 2050, the existing building stock needs to undergo rapid retrofitting. Effective retrofitting measures include improved insulation, efficient HVAC systems, heat pump installations, intelligent building management systems (BMS), energy-efficient LEDs, water and waste reduction strategies, and the integration of renewable energy solutions. Retrofitting not only boosts energy efficiency but also ensures compliance with rising environmental standards. The Rise of Green Leases Green leases are becoming increasingly prevalent in commercial property agreements. These leases often include sustainability clauses that outline both landlord and tenant responsibilities for reducing environmental impact. Common requirements may include sharing utility data, improving EPC ratings, adopting sustainable waste and water management practices, and using eco-friendly materials during retrofitting and repairs. Importantly, some green lease clauses are legally binding, and non-compliance could lead to the termination of tenancy agreements. Biodiversity Net Gain (BNG) Requirements From February 2024, the Environment Act 2021 mandates that new developments in England must demonstrate a 10% increase in biodiversity compared to the pre-development baseline. To meet these requirements, developers must follow DEFRA’s biodiversity metric for assessing biodiversity gains. This change further reinforces the need for sustainability in the built environment and emphasises the role businesses play in preserving ecosystems. Rising Demand and Increasing Rent Prices As demand for energy-efficient commercial properties rises, rental prices are likely to follow suit. Tenants may face higher rent costs, but the trade-off comes in the form of reduced utility bills due to better energy efficiency. This shift makes high-efficiency properties not only a more sustainable choice but also a financially sensible one in the long term. How edenseven Can Help At edenseven , we specialise in helping businesses navigate the complexities of sustainability with data-driven strategies. With a proven track record in delivering successful sustainability initiatives, our experts are equipped to support you across a wide range of areas—from biodiversity and nature-based solutions to electric vehicle fleet integration, power purchase agreements (PPAs), low-carbon technologies, building optimisation, and comprehensive business transformation.  Our team is ready to guide you through the steps required to enhance your sustainability efforts, ensuring that you take meaningful action to cut emissions, comply with regulations, ensure credibility with stakeholders, and reduce costs. Interested in learning more? Get in touch today and let’s discuss how we can support your sustainability journey.

The Problem: Growing Energy Use and Emissions in Buildings Buildings account for roughly 17% of the UK's carbon emissions and 59% of its electricity consumption . Alarmingly, both carbon emissions and energy consumption in buildings are on the rise, driven by increased demand for heating, ventilation, and air conditioning (HVAC) systems, as well as the continued growth of construction. To make matters worse, around 80% of the buildings that will exist in 2050 have already been constructed. Achieving Net Zero by 2050 will therefore require a rapid and large-scale retrofit of the existing building stock with energy-efficient technologies. The Climate Change Committee has warned that “rates of improvement in energy efficiency continue to be well below the necessary level.” What If I Lease My Buildings? You may be wondering how this issue affects you if you lease your buildings rather than own them. The reality is that leasing inefficient buildings still affects your energy costs and contributes to your carbon footprint. Whether you own or lease your buildings, failing to tackle inefficiency means your business could be losing money, facing reputational damage, and at risk of failing to comply with future climate regulations. The Solutions: Energy Efficiency and Sustainable Practices The good news is there are numerous ways to improve the energy efficiency of your buildings and reduce your carbon emissions. Key solutions include: Insulation and Energy-Efficient Lighting : Upgrading insulation and replacing traditional lighting with LED solutions can significantly lower energy use. Smart Building Management Systems (BMS) : These systems optimise building operations, reducing energy waste and improving overall efficiency. Efficient HVAC Systems : Upgrading to modern, energy-efficient HVAC systems will reduce both energy use and emissions. Air and Ground Source Heat Pumps : These renewable heating systems can be highly effective in reducing energy consumption. Onsite Renewable Energy : Installing solar PV or wind energy systems on-site can not only reduce your carbon footprint but also protect your business from volatile energy prices. Power Purchase Agreements (PPAs) : If onsite renewable energy installation isn’t feasible, PPAs offer a way to source renewable energy without the need for on-site infrastructure. The optimal solution for your business will depend on a detailed assessment to identify the areas with the highest potential for improvement. To learn how edenseven can help you reduce emissions, enhance energy efficiency, and align your business with Net Zero goals, get in touch today.

What is it? The International Financial Reporting Standards (IFRS) announced two international sustainability standards in 2023, IFRS S1 & S2. IFRS S1 is for sustainability-related financial disclosures and IFRS S2 is for climate-related disclosures. The two standards are designed to be applied together. The standards fully incorporate the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). This means that organisations that comply with the requirements of IFRS S1 and S2 will also be meeting the requirements of TCFD. The standards are voluntary unless adopted into national legislation. The UK is strongly considering adopting the standards into the UK Sustainability Disclosure Standards (UK SDS), currently being developed and due to be announced in July 2024. Who does it apply to?

What is it? The Corporate Sustainability Reporting Directive (CSRD) is an EU directive announced in 2021 to improve corporate transparency, data accuracy, and comparability of their sustainability performance and their associated sustainability risks for investors and stakeholders. CSRD replaces the Non-Financial Reporting Directive (NFRD) and seeks to address its shortcomings by increasing the number of companies in-scope from around 12,000 to 50,000, requiring third party assurance, ensuring a machine-readable format, and requiring additional disclosures covering a broader range of sustainability topics. Additionally, CSRD was developed to align with other frameworks and standards, such as the EU Taxonomy and TCFD, creating harmonised reporting. Who does it apply to?

What is it? The Task- Force on Climate-Related Financial Disclosures (TCFD) was created in 2015 by the Financial Stability Board (FSB), to increase the number of company’s reporting climate information and improve the quality of disclosures. In 2023, TCFD was disbanded as it was deemed to have fulfilled its role. However, in-scope companies are still required to disclose TCFD information. The International Financial Reporting Standards (IFRS) has taken over the monitoring of disclosures. Companies that comply with IFRS sustainability standards, S1 and S2 will also meet TCFD recommendations because these recommendations have been incorporated into the standards. The UK is considering implementing the IFRS S1 and S2 requirements into the UK Sustainability Disclosure Standards (UK SDS), which are expected be announced in July 2024. Businesses should prepare to be compliant with IFRS standards in preparation for upcoming regulation. Who does TCFD apply to?

The End of TCFD – What’s Next? In October 2023, the Task Force on Climate-related Financial Disclosures (TCFD) was officially disbanded after successfully establishing a widely adopted climate reporting framework. With its mission complete, the responsibility for monitoring corporate TCFD disclosures has now transitioned to the International Financial Reporting Standards (IFRS) Foundation. What Does This Mean for UK Businesses? Despite TCFD’s dissolution, UK businesses that fall under its reporting scope must continue to comply with disclosure requirements. The IFRS Foundation has developed new sustainability standards that fully integrate TCFD recommendations—IFRS S1 and IFRS S2. These standards are designed to streamline sustainability-related financial disclosures (IFRS S1) and climate-related disclosures (IFRS S2). As a result, businesses adhering to IFRS S1 and S2 will automatically meet TCFD obligations. Are UK Businesses Required to Adopt IFRS S1 & S2? Currently, compliance with IFRS S1 and S2 remains voluntary, as these standards have yet to be incorporated into UK legislation. However, this is expected to change soon. The UK government has indicated a strong interest in adopting IFRS S1 and S2 into its UK Sustainability Disclosure Standards (UK SDS), currently being developed by the Department for Business and Trade. These standards are set for release in July 2024 and are likely to be legislated shortly thereafter. What Will Change for Businesses? Once the UK SDS is enacted, businesses will face more extensive disclosure requirements than under TCFD. In addition to climate-related reporting, sustainability disclosures may expand to include: Water usage and pollution Biodiversity and resource management Social and governance aspects, covering internal and external workforce conditions and business conduct How Businesses Can Prepare With sustainability regulations evolving, businesses must proactively enhance their data collection, analysis, and reporting capabilities. Key steps include: Identifying and assessing sustainability-related data across operations and supply chains Understanding the full environmental impact of business activities Developing a clear pathway toward Net Zero Simplify Compliance with cero.earth Navigating complex sustainability regulations can be overwhelming. cero.earth, our carbon accounting and management platform, provides a seamless solution for compliance. Our platform: Captures and analyzes carbon emissions data across Scopes 1, 2, and 3 Maps carbon scenarios and tracks performance Supports business-defined targets and action plans With our Managed solution, our expert team handles all data capture and reporting for you. For a fully hands-off approach, our Strategic option ensures complete compliance reporting—so you can focus on what matters most. Prepare for the future of sustainability reporting today. Get in touch today to learn more about how cero.earth can help your business stay ahead of regulatory changes.

As global climate regulations come into effect, businesses are facing a growing demand to disclose carbon emissions arising from their operations and their supply chain. However, navigating carbon reporting standards such as TCFD , CSRD , and IFRS can be daunting for businesses. Their complex disclosure requirements combined with differing applicability criteria and staggered timelines puts organisations at risk of reputational damage and fines for non-compliance. cero.earth from edenseven is cloud-based carbon accounting and management platform. Designed to support organisations of all sizes, cero.earth and expert analysts from edenseven will simplify reporting and disclosure, ensuring your business is compliant with all relevant climate regulations.