Spain Strengthens the Carbon Footprint Registry

Marta Arroyo Vázquez Abogada [email protected] +34 91 319 96 86

Alberto Gómez de Guzmán Abogado [email protected] +34 91 319 96 86

Introduction

Spain has taken important steps towards more climate protection and sustainable business practices. With the introduction of the new carbon footprint registry, the Spanish Central Government outlines a clear path for public authorities and large companies. This register increases transparency and promotes the adoption of specific measures to reduce greenhouse gas emissions.

For foreign companies operating in Spain, this is not only a new regulatory obligation, but also an opportunity to make an active contribution to global sustainability and demonstrate their environmental responsibility.

What Is the Carbon Footprint Registry?

Originally, the carbon footprint registry was created in 2014 for entities to voluntarily record their greenhouse gas emissions. Now, the recently passed royal decree, extends the original version to include mandatory requirements for some entities: both public government bodies and large companies are now required to calculate and publish their carbon footprint on an annual basis and develop reduction plans.

The Objective of the Registry

The main objective is to monitor annual greenhouse gas emissions, create transparency and promote reduction measures. In the long term, Spain intends to use this instrument to achieve its climate goals and contribute to the global reduction of carbon emissions.

Who Is Affected?

The new royal decree mainly applies to two types of entities:

1. Public Entities

These include ministries as well as bodies of the State Administration, autonomous communities and Spanish Social Security. These public entities must calculate and publish their carbon footprint on an annual basis.

2. Large Companies

On the other hand, the new norm applies to companies that meet one of the following conditions:

• More than 500 employees on average over the year.
• Status of “large company” in accordance with the legal definition.
• Companies that are required to prepare consolidated financial statements or are classified as “of public interest”.

What Are the Risks of Not Registering Your Carbon Footprint?

Failure to comply with these new reporting requirements poses significant risks for companies. In addition to legal and financial penalties, they might lose the trust of their stakeholders, such as investors, customers and business partners. Furthermore, there is a risk of reputational damage, which could negatively impact a company’s competitiveness and corporate image. For this reason, companies are recommended to take measures without delay to meet the new requirements and avoid possible consequences.

How Is the Carbon Footprint Calculated?

The calculation is based on internationally recognised standards such as the GHG Protocol. When calculating the carbon footprint, companies must take the complete life cycle of their corporate activities into consideration:

1. Direct emissions (Scope 1)

Any direct emissions from sources owned by the company (e.g. fuel consumption of vehicles or machinery).

2. Indirect emissions related to energy consumption (Scope 2)

Any CO2 emissions which derive from the consumption of electricity or energy.

3. Other indirect emissions (Scope 3)

These include any other indirect emission, caused in the supply chain, business travel and transport that are not directly controlled by the company but are closely linked to its activities.

Consequences and Advantages for Companies

Obligations

Companies that fail to comply with the legal obligations risk sanctions and damage to their image. The Spanish Central Government plans to carry out regular checks to ensure compliance with the new regulations.

Advantages

However, complying with the legal obligations not only has the advantage of being compliant with the law, but also offers foreign companies in Spain other benefits:

• Strengthening reputation

By playing an active role in reducing CO2 emissions, companies can improve their credibility and reputation as environmentally friendly organisations.

• Reducing costs

More efficient processes and sustainable energy use reduce operating costs in the long term.

• Gaining a competitive advantage

Customers and other stakeholders are increasingly paying attention to sustainability. Proactive engagement can lead to better business relationships.

Steps to Meet the Requirements

If your company is an entity to which the new regulation applies, you should take the following measures:

1. Conduct an audit

First, evaluate your current CO2 emissions.

2. Consult experts

Consult external consultants or sustainability experts to apply the correct evaluation methods and develop strategic reduction plans.

3. Plan measures

Create specific action plans to reduce your CO2 emissions, for example by switching to renewable energies or optimising production processes.

4. Be transparent

Ensure that your results and plans are communicated clearly and comprehensively in order to gain the trust of your stakeholders.

5. Adapt continuously

Sustainability is a dynamic process. Regularly adapt your strategies to new technological developments and regulatory changes.

Commitment to a More Sustainable Future

The carbon footprint registry is a reflection of the global movement in which companies and Public Administration jointly take responsibility. The normative change does not represent only new regulatory requirements, but it should also be seen as an opportunity to actively shape change and benefit from the advantages of sustainable business management.

Don’t let this opportunity slip through your fingers. Support the transition to a world prepared for what the future holds and enjoy the benefits that sustainable innovation offers your company.

Do you need advice on how to comply with these new regulations in Spain? Contact our English-speaking lawyer Marta Arroyo, who specialises in compliance ([email protected]).

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