SECR – Streamlined Energy and Carbon Reporting – What you need to do now
New carbon reporting regulations are here.
SECR or the Streamlined Energy and Carbon Reporting Regulations require quoted & large unquoted companies & LLPs to include carbon & energy information in their Annual Report.
This applies for financial years starting on or after 1st April 2019.
SECR – What is needed?
The following information needs to be included in the Annual Report for that year:
- Greenhouse gas emissions – Scope 1, 2 & some 3 emissions arising from energy use in buildings & transport – presented in tonnes of CO2e.
Large unquoted companies & LLPs should report on UK operations.
Quoted companies will continue to be required to report on global activities.
- Energy consumption data in kWh used to calculate the emissions – electricity, gas, other fuels, company vehicles, rental cars & grey fleet.
- From 2 year onwards, give comparisons with historical data (e.g. % increase/decrease in energy & emissions).
- Details of the methodology for calculating emissions.
- A suitable carbon intensity metric, e.g. per £m or per unit of production.
- Details of energy efficiency activities undertaken.
For large unquoted companies this information should be reported in the directors’ report. For large LLPs this information should be included within a ‘carbon energy report’ which forms part of the annual report.
Are you in?
SECR applies to quoted and large unquoted companies and LLPs registered in the UK, as defined by the Companies Act 2006. They fulfil at least 2 of the following conditions in the financial year:
annual turnover >£36m,
annual balance sheet >£18m.
Companies with low consumption (<40,000 kWh) will be exempt, also unquoted companies where ‘it is not practical to obtain information’ or to do so would be ‘seriously prejudicial to the interests of the company’.
Companies within groups that qualify for SECR can be covered in combined Annual Reports, but small companies don’t have to put info in their own report.
Companies that are not registered in the UK are not obliged to file annual reports at Companies House and will not be in scope for SECR.
Where an overseas large parent company has subsidiaries in the UK, these subsidiaries will be in scope only if they qualify for SECR in their own right.
Organisations not registered as companies, for example public sector organisations, some charities and some private sector organisations, are not in scope of the SECR framework.
The Conduct Committee of the Financial Reporting Council is responsible for monitoring compliance of company accounts & can apply to court to declare reports being non-compliant.
Additionally, Companies House may not accept any accounts that do not meet the requirements of the Companies Act; if delayed after the filing deadline, you may be liable to a civil penalty.
Many companies are concerned about the reputational risk – of presenting inaccurate data or not showing improvements. As the information is publicly available, this brings greater & wider scrutiny.
Does SECR replace ESOS?
Many SECR companies also needed to comply with ESOS (the Energy Savings Opportunity Scheme) recently. The ESOS regulations require large companies to review consumption, conduct energy audits & report compliance to the regulator every 4 years.
While much of the data required for SECR is the same, ESOS covered a different time period & had other requirements such as audits.
So, unfortunately SECR does not replace ESOS. However, if you’ve put in the processes for collecting the data under ESOS & done energy efficiency projects, then this will help your SECR work.
What you need to do now
SECR applies to Annual Reports released for financial years after April 2019 – i.e. if your reporting year is April-March then your first report will cover April 19 – March 20; for calendar years, your first report cover Jan – Dec 2020 will be expected after the end of December 2020.
Firstly understand your business to determine if you meet the requirements – on staff numbers, turnover or balance sheet.
Put in place processes for collecting data. If you already doing ESOS &/or Mandatory Carbon Reporting, you’re probably always collecting much of the data anyway.
You will need electricity & gas kWh, other fuels in buildings & processes (e.g. litres diesel, kg LPG, m3 of gas oil), fuel or mileage for business travel in company vehicles, grey fleet & rental cars.
Collect & validate the data – a good data management system is useful but not essential.
Calculate the carbon emissions. Make sure your calculation methodology is accurate & up to date (emission factors can change every year).
If making the calculations yourself, it is good practice to have figures verified.
Compile information about your energy efficiency activities for that year. Use the recommendations in your ESOS audits.
Plan your SECR project now
My experience is that there’s a lot of work getting info together for the Annual Report anyway. Put in place your processes now, so it’s not a mad dash later. I have helped numerous companies comply with both the old mandatory carbon reporting regulations & ESOS. Let me help you, so the process is a smooth & useful one.