Streamlined Energy and Carbon Reporting (SECR) Framework: What is it and what does my business need to do about it?

By 13 May 2020General

The UK government’s Streamlined Energy and Carbon Reporting (SECR) policy was implemented on 1 April 2019, when the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 came into force.

Businesses of a certain size (large intensive users) need to comply starting on or after 1 April 2019.

Am I a large business?

  • a turnover of £36 million or more.
  • a balance sheet of £18 million or more.
  • 250 employees or more.

The implementation of SECR comes with the removal of the current compliance model and sees the end of the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme.

The new regulations will see an estimated 11,900 large companies in the UK have to disclose their energy and carbon emissions. This number by far supersedes the number of businesses that had to comply with CRC.

We are all familiar with other compliance requirements and must be clear that this does not replace them. We will still have to comply with environmental and sustainability projects such as ESOS (Energy Saving Opportunity Scheme) and our CSA’s (Climate Change Agreements). SECR only builds on but does not replace existing requirements.

Why has SECR been implemented?

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

Who needs to comply with the SECR framework?

  1. Quoted companies of any size that are already obliged to report under mandatory greenhouse gas reporting regulations.
  2. Unquoted companies incorporated in the UK that meet the definition of ‘large’ under the Companies Act 2006 will have new reporting obligations. This applies to registered and unregistered companies. Note that the criteria for ‘large’ differs from the ESOS Regulations.
  3. ‘Large’ Limited Liability Partnerships (LLPs) will be required to prepare and file a ‘Energy and Carbon Report.

Unquoted companies or LLPs are defined as ‘large’ if they meet at least two of the following three criteria in a reporting year:

  • a turnover of £36 million or more;
  • a balance sheet of £18 million or more; or
  • 250 employees or more.

There are certain large business types that don’t have to meet the requirements which fall under the SECR. Public bodies do not fall under the new regulations;

  • Charities
  • Not-for-Profit
  • Academies
  • Universities
  • Hospitals
  • NHS

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

What will companies need to report

You will need to report, as a minimum, UK energy use from electricity, gas and transport fuel – as well as the associated GHG emissions – including at least one intensity metric. Transport energy should include business usage where the company is supplied with the transport fuel, but not journeys where the fuel is paid for indirectly.

Quoted and unquoted companies and LLPs all need to report energy use, GHG emissions and at least one emissions intensity metric for the current and previous financial years. The relevant report must include a narrative description of measures taken to improve the businesses’ energy efficiency in that year. Where possible, resulting energy saving from the actions reported should also be stated. If no measures have been taken this should also be included in the report.

Where, when and how will companies need to report?

Qualifying companies will need to include information in line with the SECR framework in their Directors’ Report, or an equivalent Energy and Carbon Report for LLPs, for financial years beginning on or after 1 April 2019.

For any queries or questions surrounding this please feel free to contact us and we will guide and support you through the process. Unlike ESOS and other compliance arms the cost to serve this isn’t great and we will take the time and effort away from you to leave you to do what you do best.

enquiries@utilityteam.co.uk  / 02476 997901

 

Article written by: Kieran Dixon, Business Development Manager