Streamlined Energy and Carbon Reporting (SECR) is a mandatory UK government framework that replaced the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme in April 2019. The aim is to simplify the reporting process for companies and reduce emissions from businesses and industries by 80% by 2050.

SECR does not replace requirements that businesses may face including mandatory greenhouse gas (GHG) reporting for quoted companies, the Energy Saving Opportunity Scheme (ESOS), Climate Change Agreements (CCA) Scheme, and the EU Emissions Trading Scheme (ETS).

Penalties for late filing of SECR range from £150 up to £7,500 depending on the type of company and how late the accounts  are submitted. The Conduct Committee of the Financial Reporting Council (FRC), which enforces SECR  can also impose civil penalties of up to £50,000 for non-compliance.

A primary goal is for more businesses to benefit carbon and energy reporting as the framework encourages implementation of energy efficiency measures that have both economic and environmental payback - cutting costs, improving productivity, and reducing carbon emissions.

Scope of SECR

UK quoted companies need to report on their global energy use in addition to greenhouse gas emissions in their annual Directors’ Report. There are also requirements for large unquoted companies and limited liability partnerships to disclose their annual energy use and greenhouse gas emissions and related information.

These requirements affect:

·      All UK incorporated companies listed on the main market of the London Stock Exchange, a European Economic Area market, or whose shares are dealing on the New York Stock Exchange or NASDAQ.

·      Unquoted large companies incorporated in the UK, which are required to prepare a Directors’ Report under Part 15 of the Com panies Act 2006.

·      Large Limited Liability Partnerships (based on sections 465 and 466 of the Companies Act).

·      SECR includes large charitable companies.

The government encourages all other companies to report on a range of environmental matters, including greenhouse gas (GHG) reporting and the use of key performance indicators (KPIs), although this remains voluntary. (1)

Aims of SECR

SECR aims to:

·      Make energy and carbon reporting easier

·      Provide stakeholders with greater visibility into an organisation's energy and carbon use 

·      Encourage businesses to take action to improve their energy efficiency 

·      Reduce carbon emissions.

What’s required?

The regulations require large companies, as determined by sections 465 and 466 of the Companies Act 2006, which consume in the UK more than 40,000 kWh of energy in a reporting period to include:

·        UK annual energy use (in kWh) as a minimum relating to gas, purchased electricity and transport fuel (and previous year’s figures, except in the first year) and associated greenhouse gas emissions (in tonnes of carbon dioxide equivalent). There are Government conversion factors to help measure energy consumption in common units.

·        An emissions intensity ratio chosen by the company. Intensity ratios compare emissions data with an appropriate business metric or financial indicator to allow comparison over time or with other organisations.

·        Methodologies used in calculation of disclosures.

·        A narrative of measures taken to improve energy efficiency in the period of the report. If no measures have been taken, this should be stated. (2)

Quoted companies also need to state what proportion of their energy consumption and their emissions 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 are 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

·       Associated greenhouse gas emissions

·       At least one intensity ratio

·       Previous year’s figures for energy use and GHG emissions

·       Information about energy efficiency action taken

·       Methodologies used in calculation of disclosures.

Low energy consumption

Organisations with low energy consumption (e.g. less than 40MWh annually) are not required to make detailed disclosures of energy and carbon information but need to state that energy and carbon information is not disclosed for that reason.

Bibliography

1 ‘Environmental reporting guidelines: including Streamlined Energy and Carbon Reporting requirements’ (Accessed November 2024) https://www.gov.uk/government/publications/environmental-reporting-guidelines-including-mandatory-greenhouse-gas-emissions-reporting-guidance#full-publication-update-history (© Crown copyright. OGL)

2 ‘Environmental reporting guidelines: including Streamlined Energy and Carbon Reporting requirements’ (Accessed November 2024) https://www.gov.uk/government/publications/environmental-reporting-guidelines-including-mandatory-greenhouse-gas-emissions-reporting-guidance(© Crown copyright. OGL)