Streamlined Energy and Carbon Reporting (SECR)

An Introduction to SECR

In an effort to simplify energy and carbon reporting for business and industry and following an extensive consultation process, the UK government is to replace the CRC Energy Efficiency Scheme with the Streamlined Energy and Carbon Reporting initiative. The initiative aims to help business and industry improve their energy productivity by at least 20% by 2030 and forms part of the government’s Clean Growth Strategy. The Department of Business Energy and Industrial Strategy (BEIS) recognised that the range of energy efficiency policies had created administrative to qualifying businesses and SECR has been designed to make energy and carbon reporting easier and less time consuming for businesses.

Who needs to comply?

There are four groups of businesses that will need to comply with the new SECR requirements.

All quoted companies.

Under changes introduced by the 2013 and 2018 Regulations, quoted companies of any size that are required to prepare a Directors' Report under Part 15 of the Companies Act 2006, are required to disclose information relating to their energy use and GHG emissions. Quoted companies are as defined in section 385 of the Companies Act 2006.

These are companies that are UK registered with equity share capital officially listed on the Main Market of the London Stock Exchange or in a European Economic Area State, or admitted to dealing on either the New York Stock Exchange or Nasdaq.

This is the same group of around 1,200 companies already required to report under mandatory greenhouse gas reporting requirements.

All large UK unquoted companies and large Limited Liability Partnerships (LLPs).

Under changes made by the 2018 Regulations, unquoted companies incorporated in the UK which are required to prepare a Directors' Report under Part 15 of the Companies Act 2006, and which are "large"(see below) are required to prepare and file energy and carbon information in their Directors' Reports.

This applies to both registered and unregistered companies which are required to prepare company accounts and reports.

Under the 2018 Regulations, LLPs which are "large" are also required to prepare and file energy and carbon information in their accounts and reports (in a new "Energy and Carbon Report").

The definition of "large" is the same as applies in the existing framework for annual accounts and reports, based on sections 465 and 466 of the Companies Act 2006. The qualifying conditions are met by a company or LLP in a year which satisfies two or more of the following requirements:

at least 250 employees
an annual turnover greater than £36m
an annual balance sheet total greater than £18m

Public bodies which include limited company or LLP elements.

Not for profit or organisations undertaking public activities, eg. universities, charities or NHS Trusts that fall within the above categories will have to comply with SECR.

Qualifying UK registered businesses of parent companies not registered in the UK.

Parent companies must report on the information of any subsidiaries which are quoted companies, unquoted companies or LLPs. In this case, subsidiaries are not obliged to report their energy and carbon information independently.

Currently 4,000 companies and 1,200 other public/private sector organisations report on CRC. Some 11,900 companies and 230 LLPs will be required to report on their energy and carbon emissions under these new SECR regulations. (SECR applies to both registered companies and to unregistered companies that are required to prepare company accounts and reports). Some companies will be eligible for ESOS and SECR. If you are then why not save time and money and look at our Sustainability as a Service offering and map out a clear route to your net-zero objectives at the same time.

A company meeting any of the criteria listed below will be exempt:

Using less than 40,000-kilowatt hours (kWh) of energy within the reporting year (this aligns with the ESOS threshold).
Not registered in the UK.
Organisations that are not registered as companies.
Public sector organisations, charities and private sector organisations that don't file reports to Companies House.
UK subsidiaries that are already covered by the parent company's group, although they may report on a voluntary basis.

If the parent company is not registered in the UK but its subsidiaries are, each subsidiary will be evaluated based on the qualification criteria. SECR does not apply to public companies.

What do companies need to report?

Qualifying businesses must prepare and publish the following information for each financial year.

Quoted companies need to report on:

Global GHG Protocol Scope 1 and Scope 2 emissions.
Previous year's figures (except in the first year).
The methodology used in the calculations of disclosures.
Underlying global energy use.
Information about energy action taken
What proportion of their energy consumption and emissions is related to the UK and the rest of the world.
At least one emissions intensity metric.

Unquoted companies and LLPs need to report on:

UK energy use. Electricity, gas and transport as a minimum. (Transport includes road, rail, air and shipping).
The Scope 1 and Scope 2 data requirement covers both consumption and emissions and must include gas, electricity and transport.
Previous year's figures for energy use and GHG emissions (not the first year).
Reporting on energy efficiency action taken in the last twelve months. (A narrative commentary on energy efficiency actions taken in the financial year, differing from ESOS, which requires participants to report energy savings opportunities. The data and information need to be included within their Directors' report).
Methodologies used in the calculation of disclosures.
At least one emissions intensity metric.

For companies already reporting under Mandatory Carbon reporting the only difference is the inclusion of energy consumption and energy efficiency measures.

The exact format of the SECR has not been specified yet but likely inclusion of an SECR section within the company's annual report.

SECR affects most organisations currently covered by ESOS legislation who up until now have only been involved in the four-yearly cycle.

Some larger organisations have already been measuring their energy use under the Energy Savings Opportunity Scheme (ESOS) so this data may be available. Organisations may disclose ESOS recommendations and those initiatives that have been implemented. Reporting can be either paper-based or electronic.

As a minimum, energy usage should include electricity, gas and transport. Transport is defined as road, rail, air and shipping. Companies are encouraged to report their Scope 3 emissions (e.g. supply chain), but this is not mandatory.

Reporting requirements:

Total kilowatt-hours (kWh) of gas consumed and the CO2e emissions from gas consumption in tonnes (including the previous year's figures)
Total kilowatt-hours (kWh) of electricity consumed and the CO2e emissions from electricity consumption in tonnes (including the previous year's figures)
Total litres of petrol, diesel, LPG and CNG used in vehicles used by the business and CO2e emissions from consumption of road fuels in tonnes
An intensity ratio relevant to their industry, for example, tonnes of CO2e per £1 million of revenue.

Intensity ratios examples:

Tonnes of CO2e per total £m sales revenue
Tonnes of CO2e per total £m EBITDA
Tonnes of CO2e per square metre of the gross warehouse area
Tonnes of CO2e per £m of turnover
Tonnes of CO2e per total thousand tonnes of production
Tonnes of CO2e per total square metres

When do I need to report by?

Your first SECR reporting will be required following your organisation's first full financial year commencing on or after 1st April 2019.

How Eco3 Partnership can help?

Eco3 Partnership's Consultancy & Compliance Team have been guiding qualifying organisations through CRC and ESOS Compliance since the legislation launch dates and can provide end-to-end compliance assistance for your business.

Our Smart cloud-based Energy & Carbon Management Portal can help you meet all the UK government's Streamlined Energy and Carbon Reporting regulations.

Data entry can be manually from bills or fully automated.
Data monitoring and reporting
Compare and validate year on year comparisons
Manage energy performance across all your assets.
Track any metric, from any source.
Identify opportunities to reduce costs and carbon, and improve health and wellbeing.
GHG conversion factors in the system are updated automatically.
Engage all stakeholders.
One platform provides you with a single version of the truth.
Integrated and transparent energy management.
Learn how smart and electronic technologies can play a key role in improving visibility in your supply network.
Increase communication in your supply network by, improving supplier commitment and fostering information sharing amongst suppliers.
Enhance your reputation and green credentials and improve your overall financial performance.
Management dashboard

Our team of energy assessors will work with you to help reduce consumption and emissions across your organisation. All of our Engineers and Low Carbon Energy Assessors are accredited by the Chartered Institute of Building Service Engineers (CIBSE).

We can help deliver clear insight into energy consumption across your organisation, driving increased efficiency and reduced costs by providing a unique managed service.

Benefits of Reporting

The Department for Business Energy and Industrial Strategy (BEIS) has stated that SECR will deliver benefits of £1549m from 2019 to 2035

Organisations of all sizes are increasingly expected to measure and report on their environmental performance or risk losing out to competitors who do record their environmental performance. Some of the direct benefits are outlined below.

Energy Cost Savings

SECR is designed to highlight inefficiency; by measuring your energy consumption, you will be able to manage, control and monitor your energy and carbon more effectively.

Supply Chain Advantages

Businesses are increasingly looking further down their supply chain and can reduce supply chain costs by enhancing operational processes and re-engineering their existing supply network. Improve the sustainable performance of your supply network.

Reputational Gains

The direct benefits to your organisation in measuring and reporting your environmental performance will result in lower energy and resource costs, give you a better understanding of exposure to the risks of climate change and demonstrate leadership, which will help strengthen your green credentials in the marketplace.