Guide to Streamlined Energy and Carbon Reporting (SECR)
Are you one of the 11,900 organisations that need to comply with SECR? This guide will help you to get started.
What is SECR?
SECR is a sustainability regulation that came into force on the 1st April 2019. It requires organisations to publicly report on carbon emissions and energy use. SECR is closely aligned with previous mandatory legislation.
We see SECR as a wonderful opportunity and not just another compliance exercise. It gives you the chance to assess your current emissions and find ways to reduce them.
The idea is to streamline reporting in the UK making it easier for organisations to benchmark
What energy and carbon information must be reported under SECR?
Quoted Companies
Quoted companies within the scope of the legislation must continue as a minimum to disclose in their Directors’ Report their:
- Annual global emissions from activities for which that company is responsible including the combustion of fuel and the operation of any facility; together with the annual emissions from the purchase of electricity, heat, steam or cooling by the company for its own use. Also referred to as Global GHG Protocol Scope 1 and Scope 2 emissions (see below for more information.
- At least one intensity ratio*.
- Previous year’s figures for energy use and GHG emissions (except in the first year).
- Methodologies used in calculation of disclosures.
*An intensity ratio is a way of defining your emissions data in relation to an appropriate business metric, such as tonnes of CO2e per sales revenue, or tonnes of CO2e per total square metres of floor space. This allows comparison of energy efficiency performance over time and with other similar types of organisations. SECR Intensity ratios are calculated by dividing your emissions by your organisation-specific metric. (Ref: SECR Hub).
Additionally, for financial years that start on, or after, 1 April 2019, quoted companies must also report:
- Underlying global energy use that is used to calculate GHG emissions, including previous year’s figure (in the first year, previous figures are not required).
- Information about energy efficiency action taken in the organisation’s financial year.
For financial years starting on or after 1 April 2019, quoted companies also need to state what proportion of their energy consumption and their emissions are related to emissions and energy consumption in the UK (including offshore area).
Unquoted Companies and LLPs
Unquoted companies and Limited Liability Partnerships in scope of the legislation will be required to disclose energy and carbon information in their accounts and reports, including:
- UK energy use (to include as a minimum purchased electricity, gas and transport, outlined in more detail in Section 7).
- Associated greenhouse gas emissions.
- At least one intensity ratio
- Previous year’s figures for energy use and GHG emissions (except in the first year).
- Information about energy efficiency action taken in the organisation’s financial year.
- Methodologies used in calculation of disclosures.
- Additionally, if you are an offshore undertaking (i.e. if your activities consist wholly or mainly of offshore activities as defined in the 2018 Regulations) you must disclose your emissions and energy use for the UK and the offshore area.
Low energy users
Where an organisation is a low energy user (see below) it is not required to make the detailed disclosures of energy and carbon information referred to above. Instead, such an organisation is required to state, in its relevant report, that its energy and carbon information is not disclosed for that reason.
The following qualify as low energy users:
A quoted company preparing a Directors’ Report which has consumed 40MWh or less during the period in respect of which the report is prepared. If the quoted company is preparing a group Directors’ Report, the assessment is of the energy consumption of the parent and its subsidiaries which are included in the consolidation and are quoted companies, unquoted companies or LLPs. In assessing whether or not the 40MWh threshold is met, companies in scope must consider all the energy usage.
Unquoted companies or LLPs preparing a Directors’ Report or Energy and Carbon Report which have consumed 40MWh or less in the UK, including offshore area, during the period in respect of which the report is prepared. If the company or LLP is preparing a group Report, the assessment is of the energy consumption of that parent and its subsidiaries. In assessing whether or not the 40MWh threshold is met, companies in scope must consider all the energy from gas, electricity and transport fuel usage.
Who needs to report?
Where an organisation is a low energy user (see below) it is not required to make the detailed disclosures of energy and carbon information referred to above. Instead, such an organisation is required to state, in its relevant report, that its energy and carbon information is not disclosed for that reason.
The following qualify as low energy users:
A quoted company preparing a Directors’ Report which has consumed 40MWh or less during the period in respect of which the report is prepared. If the quoted company is preparing a group Directors’ Report, the assessment is of the energy consumption of the parent and its subsidiaries which are included in the consolidation and are quoted companies, unquoted companies or LLPs. In assessing whether or not the 40MWh threshold is met, companies in scope must consider all the energy usage.
Unquoted companies or LLPs preparing a Directors’ Report or Energy and Carbon Report which have consumed 40MWh or less in the UK, including offshore area, during the period in respect of which the report is prepared. If the company or LLP is preparing a group Report, the assessment is of the energy consumption of that parent and its subsidiaries. In assessing whether or not the 40MWh threshold is met, companies in scope must consider all the energy from gas, electricity and transport fuel usage.
- Applicable to all quoted companies and large UK incorporated unquoted companies with at least 250 employees or annual turnover greater than £36m and annual balance sheet total greater than £18m (two criteria or more must apply).
- Organisations using low levels of energy (less than 40,000 kWh per annum) can opt out.
- Inclusion of Limited Liability Partnerships.
Companies who were already reporting under Mandatory Carbon Reporting (MCR), will now need to include energy use and energy efficiency measures in the reporting requirements.
The Climate Change Levy (CCL) increased in April 2019 to 0.847 p/kWh from 0.583p/kWh for electricity, with similar percentage increases for the other qualifying fuels
Companies who were reporting and purchasing carbon allocations in the CRC scheme, will see the SECR regulations replace the reporting side of CRC and the charging replaced by increased Climate Change Levy (CCL). Companies who did not have to report under CRC nor MCR will see the largest change.
Now that unquoted large organisations are required to include environmental data in their annual strategic report, this introduces annual public disclosure of UK energy use and carbon emissions to over 11,000 organisations, up from approximately 1,600 required to report for MCR.
How can we help you?
Compare Your Footprint can assist with this process by running the required data through our tool to calculate and report on Scope 1 and 2 emissions in the most simple and fast way. Scope 1 and 2 emissions can then be reported in your next company financial and strategic report.
