Understanding SECR: Streamlined Energy and Carbon Reporting

What is SECR?

SECR was introduced on 1st April 2019. The UK government made it mandatory for large businesses, including charitable companies, to annually report on their energy and carbon emissions as well as any efficiency measures, they’ve taken throughout the year.

The introduction of the Streamlined Energy and Carbon Reporting (SECR) coincides with the end of the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme. The new regulations will require an estimated 11,900 companies incorporated in the UK to disclose their energy and carbon emissions – a far greater number than were required to act under the CRC.

Energy and Clean Growth Minister Claire Perry said: “If you don’t measure it, you can’t manage it. New simplified rules will ensure more than 11,000 large businesses report on carbon emissions and cut down the amount of energy they use. The UK is already a world leader in cutting emissions, doing so faster than any other country in the G20. By accounting for carbon emissions, investors and shareholders will be able to see the opportunity and potential savings from cutting down on energy waste and increasing the efficiency of their businesses.”

Who needs to comply?

All quoted companies in the UK need to comply, as will unquoted companies that meet the Company’s Act 2006 definition of “large”. Large LLPs will also be required to prepare and file an Energy and Carbon report.

Large is determined if it meets two of the following:

250 employees

Annual turnover of more than £36m

Annual balance sheet of over £18m

There is an exemption for businesses who use 40MWh or less over the reporting period, however you’ll need to include a statement confirming your energy use. Public sector organisations are also exempt. It is worth noting that charities, not-for-profit companies or others undertaking public activities – such as companies owned by universities, academies or NHS Trusts – will need to check whether they meet the above qualifying criteria.

Private sector organisations which fall outside of the scope of the new regulations are encouraged to voluntarily report in a similar manner.

Why has SECR been implemented?

SECR aims to bring the benefits of carbon and energy reporting to more businesses. The reporting framework is intended to encourage the implementation of energy efficiency measures, with both economic and environmental benefits, supporting companies in cutting costs and improving productivity at the same time as reducing carbon emissions.

Requiring companies to make disclosures on energy and carbon is also in line with the recommendations of the G20 Financial Stability Board’s Taskforce on Climate-related Financial Disclosures, by providing important information for investors and financial actors to help them navigate the transition to a sustainable, low carbon economy.

When is SECR reporting required?

SECR reporting is not required until 1 April 2020. If the annual period used for SECR reporting is not the same as the financial year covered by the relevant report, this must be made clear in the report.

What does SECR mean for your business?

If you fall into the reporting category, you’ll be automatically entered into the SECR scheme. You’ll need to make the following publicly available, with suitable intensity metrics: energy use carbon emissions energy efficiency actions These figures will likely be published in Annual Reports alongside financial data.

What are the SECR reporting requirements?

Streamlined Energy and Carbon Reporting requirements differ according to your company’s category: UK incorporated quoted companies: Report on the annual quantity of Greenhouse gas (GHG) Emissions and energy consumed from their purchase of energy (gas, electricity) for their own use State what proportion of energy consumed relates to emissions in the UK and UK offshore areas. Describe the principal measures taken to increase their energy efficiency.

Large UK incorporated unquoted companies Report on the annual quantity of GHG Emissions and energy consumed in the UK arising from their activities relating to the combustion of fuel for transport or the combustion of gas Report on the purchase of electricity for their own use. Describe actions taken to increase energy efficiency. Large UK incorporated LLPs Prepare a report equivalent to the directors’ report for each financial year, including figure on energy consumptions and energy efficiency measures.

Applicable principles when collecting and reporting on environmental impacts Relevant:

Ensure the data collected and reported appropriately reflects the environmental impacts of your organisation and serves the decision-making needs of users.

Quantitative: KPIs need to be measurable and targets can be set to reduce a particular impact. In this way, the effectiveness of environmental policies and management systems can be evaluated and validated. Quantitative information should be accompanied by a narrative, explaining its purpose, impacts and giving comparators where appropriate.

Accuracy: Seek to reduce uncertainties in the reported figures where practical and achieve sufficient accuracy to enable users to make decisions with reasonable confidence as to the integrity of the reported information.

Completeness: Quantify and report on all sources of environmental impact within the reporting boundary that has been defined as well as disclose and justify any specific exclusions.

Consistent: Use consistent methodologies to allow for meaningful comparisons of environmental impact data over time. Document any changes to the data, change in organisational boundary, methods and any other relevant factors.

Comparable: Companies should report data using accepted KPIs rather than organisations inventing their own versions of potentially standard indicators.

Transparent: Address all relevant issues in a factual and coherent manner, keeping a record of all assumptions, calculations and methodologies used. Internal processes, systems and procedures are important, and the quantitative data will be greatly enhanced if accompanied by a description of how and why the data are collected.

Report on any relevant assumptions and make appropriate references to methodologies and data sources used.

Find out more about SECR The Government recently published its guidance on SECR.