Hannah Berg Advisory memo Decision Call · USD 220
Which disclosure regime applies to you, and the honest answer is not one
60 minute call, 7 July. Reviewed and signed off by Hannah Berg on 9 July.
You asked which sustainability reporting regime Meridian falls under. I am not going to tell you, because that is a legal determination that turns on your group structure and your turnover thresholds, and getting it wrong in either direction is expensive. What I can tell you is that three different things are driving requests at you, only one of them is regulatory, and the other two are already overdue.
Your regulatory position needs a qualified opinion and you should get one this quarter. Separately and more urgently, two of your largest customers have contractual sustainability data clauses that are already live, and you are not currently able to answer them. That is a commercial obligation today, independent of whatever the regulatory answer turns out to be.
The question
What was asked, and what was reviewed
As you put it: "Everyone is asking us for sustainability data. What are we actually obliged to do?"
| Reviewed | Source |
|---|---|
| Group structure and shareholding | Supplied |
| Turnover, balance sheet and headcount, 3 years | Supplied |
| Two customer contracts with data clauses | Supplied |
| Six customer questionnaires received this year | Supplied |
| Your current energy and emissions data | Supplied. Clause 3 |
| Your bank's covenant pack | Supplied |
| Whether any regime applies | Not determined. See clause 4 |
The drivers
Three different things, often confused
| Driver | What it is | Status | Who decides |
|---|---|---|---|
| Customer contracts | Two contracts require annual emissions data on request. One is signed and live | Overdue. Requested in March | You. It is a contractual obligation |
| Customer questionnaires | Six this year, not contractual, but they gate procurement | Answered partially, inconsistently | You. Commercial choice |
| Regulatory | Whether a disclosure regime applies to Meridian or to your parent | Unknown | A qualified adviser |
| Your bank | Covenant pack asks for an environmental statement | Provided, and thin | You |
These get discussed as one topic and they have different deadlines, different consequences and different people who decide them. The contractual one is live now and does not wait for the regulatory answer.
Regardless
What to prepare whatever the answer is
Every one of the four drivers asks for substantially the same underlying data. Building it once serves all of them and is not wasted whichever way the regulatory question resolves.
| Data | Do you have it? | Effort |
|---|---|---|
| Electricity and gas consumption, by site, 3 years | Yes, in invoices | 2 days to consolidate |
| Vehicle fuel | Partly | 1 week |
| Refrigerants and process gases | No | 2 weeks, needs the maintenance records |
| Purchased goods, by spend category | Yes, in the ledger | 1 week |
| Waste and water | Yes, contracts | 2 days |
| Business travel | Yes | 2 days |
| A named owner for all of it | No | A decision, not a task |
Most of this already exists as invoices and ledger entries. The work is consolidation and a consistent method, not measurement, and roughly five weeks of one person gets you to a defensible position on all three drivers.
Not mine
The question I am not answering, and why
- Ask your auditor first. They will often scope this quickly and they know the group structure
- If they will not opine, your corporate lawyer will, or will refer you
- Ask for it in writing, with the reasoning, not a view on a call
- Get it this quarter, because if a regime does apply, the first reporting period may already have started
- Nothing in clause 3 waits for this answer
Next
In order
- This week: reply to the March customer request with a date. A contractual obligation that is four months overdue is a commercial problem before it is a reporting one.
- This week: name an owner for sustainability data. One person, part of a role, written down.
- This month: commission the regulatory opinion from your auditor or lawyer.
- Next five weeks: consolidate the data in clause 3, on one consistent method, for three years.
- Then: answer all six questionnaires consistently from the same source, rather than each one from scratch.