What Sustainability Regulations Does My Startup Need to Meet in England?

As a startup business in England, you should be aware that the UK government is increasingly regulating the environmental impact of businesses. These regulations, which you may hear referred to as sustainability regulations, range from restrictions on the disposal of hazardous waste to incentivising sustainable investments. This article will outline some of the main sustainability-related regulations you should consider as a small business owner in England.

What Are Sustainability Regulations?

Sustainability regulations refer to laws that govern how a business’ conduct impacts the environment. Specifically, these laws may obligate your business to implement more environmentally sustainable measures, limit any damage to the environment, and ensure it is using its energy efficiently.

Where possible, you will likely find it valuable to ensure your business meets certain sustainability standards. In some instances, if you fail to meet certain sustainability standards, the government may fine your business. More generally, in addition to minimising the negative impact, your business has on the environment, complying with sustainability regulations can enhance your brand’s reputation and influence its marketing strategy. 

Similarly, by staying on top of sustainability regulations, your business will be better able to meet future regulations, which may be more onerous unless you take steps to future-proof your business’ compliance today.

Sustainability Regulations and Energy Efficiency

The UK employs several tax relief schemes to encourage energy efficiency. For instance, the Climate Change Levy (CCL) charges a tax on energy used for non-residential purposes, including businesses. Some exceptions do exist for small and medium-sized businesses, but if your operations are energy intensive, the levy may apply regardless of your business’ size. Examples of energy-intensive operations include maintaining physical data centres or using heavy machinery.

Provided your operations are energy intensive, you may be able to pay a reduced rate on the levy if you enter into a Climate Change Agreement or pay Carbon Price Support rates. A Climate Change Agreement (CCA) is an agreement between an industry and the UK Environment Agency, effectively giving you a discount on the CCL. 

Carbon Price Support rates, on the other hand, apply to businesses that own either:

• electricity generating stations; or
• combined heat and power stations. 

The purpose of the Carbon Price Support rate is also to incentivise businesses to be conscious of their environmental impact and reduce their carbon emissions.

Sustainability Regulations and Waste Management

Another key point to keep in mind is waste management. As a business, you will likely produce some waste, for example, from packaging used for products given to you by your suppliers. 

Any waste you produce as part of your commercial operations is counted as ‘business waste’. You have some responsibilities when it comes to managing business waste, including:

• keeping waste to a minimum;
• sorting and storing waste safely;
• completing a waste transfer note when waste leaves your premises; and
• not allowing your waste disposer to dispose of your waste illegally.

Sustainability Agreements with Other Companies

The government has recently announced reforms related to the impact of competition laws on sustainability agreements. A sustainability agreement is a cooperation agreement between businesses to achieve sustainability goals. Sometimes, these agreements can raise competition law concerns as they can involve companies in the same industry or market working together. 

Competition law prevents businesses from hurting consumers by engaging in anti-competitive practices. This area of English law is overseen by the Competitions Markets Authority (CMA), which is the regulatory body in the UK for competition law concerns. 

The CMA also publishes guidelines to help businesses meet sustainability goals without breaching competition law. This includes activities such as working together to make more energy-efficient products or reduce waste. As a result, if certain practices have a positive environmental impact but might ordinarily be anti-competitive behaviour, the CMA may decide not to take any adverse action.

EU Regulations

Your business will also want to be conscious of certain trends across the European Union. This is relevant even if your business does not operate in the European Union, as it may be indicative of what sustainability regulation and good practice may look like in the near future. Additionally, the UK has preserved certain EU legislation, some of which specifically apply to sustainability regulations. 

Some recent EU developments include: 

• the EU Taxonomy; 
• the Corporate Sustainability Reporting Directive; 
• guidelines by the Task Force on Climate Related Financial Disclosures; and 
• the Sustainable Finance Disclosure Regulation. 

The EU Taxonomy is particularly important, as it outlines the main environmental objectives the EU Commission will use when assessing whether a company’s economic activity is classified as environmentally sustainable. The objectives are:

• climate change mitigation; 
• adaption; 
• sustainable use of resources; and 
• protection of biodiversity.

Similarly, the Corporate Sustainability Reporting Directive aims to elevate sustainability reporting to the same status as financial reporting. If this trend continues, it will be highly valuable for your company to have made an early move towards having a sustainable practice.

Key Takeaways

As a startup business, it is important to be conscious of the changing landscape in relation to sustainability regulation. Domestic regulation and guidance touch on points such as energy efficiency and taxes, waste management, and sustainability agreements. If your business does not abide by relevant sustainability laws, it may face a fine. More generally, it is a good idea to stay ahead of the curve when it comes to sustainability goals, as the UK government is likely to enhance sustainability regulations in the coming years.

If you need help ensuring your business meets any relevant sustainability regulations, our experienced regulatory and compliance lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions