New Streamlined Energy and Carbon Reporting (SECR) regulations have taken effect. What does your business need to know? Certain companies are now required to participate SECR under The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 which come into force on 1 April 2019.
The Department for Business, Energy & Industrial Strategy (BEIS) has published new guidance to help more than 11,000 businesses to prepare for the new energy and emission rules due to come into play this April.
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.”
What is Streamlined Energy and Carbon Reporting (SECR)?
The UK Government has announced its plans for anew mandatory reporting framework to replace the CRC Energy Efficiency Scheme (CRC EES), which is due to end in 2019. The new regulations will also extend the scope of the existing Mandatory Carbon Reporting (MCR) regulations.
Company annual reports will need to include more detailed reporting on energy usage, energy efficiency and greenhouse gas emissions.
When does SECR come into play?
Organisations will need to comply with the new energy and carbon reporting framework from April 2019. The reporting changes apply (for companies within scope)to all financial years which begin on or after 1 April 2019.
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.
Why Streamlined Energy and Carbon Reporting?
As the name suggests, SECR is designed to reduce complexity and streamline the carbon and energy reporting landscape. It aims to help businesses increase productivity energy efficiency, as well as to improve the security of energy supplies.
The SECR is designed to help businesses as they become more energy conscious in the latest stage in UK’s transition to becoming a low-carbon nation. The new regulations will present an opportunity for larger global businesses not currently reporting to consider applying best energy efficiency practice.
What is the impact of SECR?
Many more companies in the UK will be required to comply with energy and carbon reporting legislation.
Which companies does SECR affect?
SECR will affect all UK incorporated quoted and large unquoted companies and limited liability partnerships.
‘Large’ companies are defined as those that meet two or more of these criteria:
- Over 250 employees
- Annual turnover greater than £36 million
- Annual balance sheet greater than £18 million
The number of companies required to report into the SECR will also include those in the Energy Saving Opportunities Scheme (ESOS). This takes the number of businesses involved from 1,200 to 11,900.
Companies that are exempt:
- Companies that use 40,000 kWh or less of energy in the 12-month reporting period
- Unquoted companies where ‘it is not practical to obtain information’
Although it’s voluntary to do so, the government encourages all other companies to conduct similar reporting.
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.
The new SECR scheme means that more firms will need to get to grips with their energy management, but the specific impacts of the new legislation will vary depending on your current situation.
- Already reporting under Mandatory Carbon Reporting? There’s little change except for the inclusion of energy use and energy efficiency measures.
- Reporting and purchasing credits in the CRC EES? The new SECR regulations will replace these.
- Don’t fall into either scheme? These organisations will experience the largest change.
Although this reporting may mean additional administrative costs, the drive to improve energy efficiency can have its own financial advantages.
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.
How to prepare for SECR
Although Streamlined Energy and Carbon Reporting may seem like an administrative burden on your business, being proactive about energy efficiency is beneficial to all businesses. It removes unnecessary costs and helps your business become more sustainable and environmentally-friendly.
Organisations with an energy management system that encompasses people, process and technology will make reporting for regulatory purposes a much smoother process.
The energy experts at Smarter Business can help your organisation define, implement, measure and refine an energy management strategy and system.
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.
Get in touch to find out how we can help you get on top of your energy management and reporting.
Find out more about SECR
The Government recently published its guidance on SECR here.