The Ofgem RIIO Annual Environmental Report
Great Britain's gas and electricity network licensees must publish an Annual Environmental Report under Special Condition 9.1 of their RIIO-3 licences — a mandatory licence duty, not a voluntary ESG report. It is a commentary plus a KPI table, covers Scope 1, 2 and 3 emissions, and the first one is due 31 October 2027.
Special Condition 9.1 — mandatory, not voluntary
The obligation to report is written into the licence, enforceable as a condition of the price control.
508 The AER is a mandatory licence obligation. Ofgem’s RIIO-3 Environmental Reporting Guidanceexists so licensees can comply with their obligation in Special Condition 9.1 of the electricity transmission (ET), gas distribution (GD) and gas transmission (GT) licences to prepare and publish an Annual Environmental Report. The duty is in the licence condition itself — a licence-compliance matter, not a soft ESG report.
A commentary and a KPI table
Two prescribed sections, reporting progress against the licensee's Environmental Action Plan.
509The AER reports progress against each licensee’s Environmental Action Plan — the strategy for mitigating its environmental impact, set out in its Business Plan — in two prescribed sections: a qualitative section (the AER Commentary) and a quantitative section (the AER KPI Table). Its structure and content are prescribed by Ofgem’s Guidance, not free-form.
Scope 1, 2 and 3 — the full Business Carbon Footprint
Indirect value-chain emissions are in scope, not just the network's own operations.
510 The AER must cover the full Business Carbon Footprint across Scope 1, Scope 2 and Scope 3 emissions. Ofgem draws its reporting principles from the GHG Protocol Corporate Standard, so indirect value-chain (Scope 3) emissions are reported alongside direct (Scope 1) and purchased-energy (Scope 2) emissions.
511 For construction, Ofgem requires that methodologies and reporting for embodied carbon be in alignment with industry standards — naming PAS 2080as the example — “where this is possible.” PAS 2080 is the named exemplar, not the sole prescribed methodology; the binding requirement is alignment with recognised standards.
Not just operational emissions
Networks report their full Business Carbon Footprint — direct emissions, purchased-energy emissions, and indirect value-chain (Scope 3) emissions — drawn from the GHG Protocol Corporate Standard, with embodied construction carbon aligned to industry standards such as PAS 2080 where possible.
Published by 31 October — first report due 31 October 2027
An annual publication on the licensee's own website, over the 2026–2031 price control.
512RIIO-3 runs from 1 April 2026 to 31 March 2031 (Final Determinations, December 2025). The AER for the regulatory year commencing 1 April 2026 must be published on licensees’ websites by 31 October 2027, and subsequent reports by 31 October each year. Each AER covers a regulatory year beginning 1 April and is published by the following 31 October.
- 1 APR 2026RIIO-3 begins; first regulatory year
- 31 OCT 2027First AER published
- 31 OCT (ANNUAL)Subsequent AERs due
- 31 MAR 2031RIIO-3 ends
What is the Ofgem Annual Environmental Report?
The Annual Environmental Report (AER) is a mandatory licence obligation — Special Condition 9.1 — on Great Britain's electricity transmission (ET), gas transmission (GT) and gas distribution (GD) network licensees under the RIIO-3 price control.
Ofgem's Environmental Reporting Guidance exists so licensees can comply with their obligation to prepare and publish an AER.
The duty to report is in the licence condition itself, enforceable as a condition of the price control — it is not a voluntary ESG disclosure, and breach is a licence-compliance matter.
When is the RIIO-3 Annual Environmental Report due?
The AER for the regulatory year commencing 1 April 2026 must be published on each licensee's own website by 31 October 2027, and subsequent reports must be published by 31 October each year.
RIIO-3 runs from 1 April 2026 to 31 March 2031.
Each AER covers a regulatory year beginning 1 April and is published by the following 31 October.
The deadline is 31 October, not 31 July.
Who does the RIIO-3 environmental report apply to?
The RIIO-3 Environmental Reporting Guidance binds electricity transmission, gas transmission and gas distribution licensees.
Electricity distribution network operators (DNOs) report under the separate RIIO-ED2 Environmental Reporting Guidance, which should not be assumed to share the same instrument or the same date.
Do not treat one instrument as covering all four sectors.
What must the Annual Environmental Report contain?
The AER reports progress against each licensee's Environmental Action Plan — the strategy for mitigating its environmental impact, set out in its Business Plan — in two prescribed sections: a qualitative section (the AER Commentary) and a quantitative section (the AER KPI Table).
Its structure and content are prescribed by Ofgem's Guidance; it is not free-form.
Does the AER include Scope 3 emissions?
Yes.
The AER must cover the full Business Carbon Footprint across Scope 1, Scope 2 and Scope 3 emissions.
Ofgem draws its reporting principles from the GHG Protocol Corporate Standard, so indirect value-chain (Scope 3) emissions are reported alongside direct (Scope 1) and purchased-energy (Scope 2) emissions — networks do not report only their own operational emissions.
How must networks report embodied carbon?
Ofgem requires that methodologies and reporting for embodied carbon on construction be in alignment with industry standards — expressly citing PAS 2080 as the example — 'where this is possible.' Ofgem does not mandate a single method: PAS 2080 is given as the named exemplar, and the binding requirement is alignment with recognised whole-life-carbon standards, not PAS 2080 specifically.
Related guides & references
UK Sustainability Reporting by Sector
The directory of industry-specific reporting regimes — screen, construction, aviation and maritime, energy networks
Future Homes Standard & Whole-Life Carbon
Where PAS 2080 is defined — the whole-life-carbon standard Ofgem names as its embodied-carbon example
Scope 1, 2 and 3 Emissions
The three-scope Business Carbon Footprint the AER must report in full
The GHG Protocol
The Corporate Standard Ofgem draws the AER's reporting principles from