AN environmental law firm has complained to a UK regulator about Cairn Energy alleging the oil and gas company has not done enough to highlight the risks that climate change present to the business.

ClientEarth told the Financial Reporting Council that Edinburgh-based Cairn Energy had failed to comply with the Companies Act by not identifying climate change as one of the principal risks and uncertainties facing the business in its latest annual report.

The law firm made a similar complaint about the Soco International oil and gas business.

Cairn Energy and Soco International both maintained they complied fully with relevant reporting requirements.

However, ClientEarth lawyer Alice Garton said: “Failing to adequately disclose climate risk is failing to mention one of the most important risks facing the company - and means the annual report is only telling the positive side of the story.

“This information is vital for investors – without it they simply cannot make a fully informed investment decision.”

ClientEarth said it had submitted detailed legal letters to the Financial Reporting Council requesting intervention to correct defective reporting by Cairn and Soco.

It noted the council is responsible for ensuring company reports comply with reporting requirements. These include the Companies Act provision that strategic reports of qualifying firms identify the main factors likely to affect their future development and a description of the principal risks and uncertainties facing the companies.

The law firm told the FRC that Cairn should have recognised climate change under both headings.

It noted: “As one of Europe's leading oil and gas exploration and development companies, Cairn's business is materially exposed to the risks associated with climate change.”

ClientEarth said risks posed by climate change included possible increases in costs and falls in the valuation of reserves if demand for oil and gas shrinks and reputational damage.

Cairn included climate change on a chart of corporate responsibility issues in its annual report and said it would be assessing the implications of the 2015 Paris agreement on the subject for the business more fully this year.

However, ClientEarth does not believe these references attach enough significance to the issue.

Cairn Energy, which is led by chief executive Simon Thomson, noted it is a member of the FTSE4Good index of companies with recognised corporate responsibility practices.

The company added: “Corporate Responsibility is key to our business and we take our commitments to responsible and transparent reporting very seriously and have been recognised for the quality of our work in this area. We continually identify corporate responsibility priorities and our 2015 Annual Report featured Climate Change in the comprehensive materiality matrix.”

The annual report noted the progress Cairn had made progress off West Africa and in the North Sea amid the crude price slump.

Soco said: “SOCO strongly refutes the allegations made by Client Earth that it has failed to comply with its legal obligations under section 414C of the Companies Act 2006, and remains confident that the 2015 Annual Report was prepared in accordance with its obligations under the Act.”

The company said climate change is a key consideration for the business.

Cairn Energy has faced criticism for investing in the contested Western Sahara region of Morocco.

Mr Thomson has said the company has acted in the area in line with UN guidance.