What does the new SECR framework mean for you?
The new Streamlined Energy and Carbon Reporting framework (SECR) comes into force on 1 April 2019. It contributes to the government’s Clean Growth Strategy which encourages business and industry to reduce their energy production by 20% by 2030.
Building on existing mandatory greenhouse gas emissions reporting and the Energy Savings Opportunity Scheme (ESOS), SECR replaces the reporting element of the Carbon Reporting Commitment (CRC) Energy Efficiency Scheme.
Reporting is intended to encourage the implementation of energy efficiency measures in business and industry. This has both economic and environmental benefits and supports companies to cut costs and improve productivity at the same time as reducing carbon emissions.
The aim for this new framework is to simplify carbon and energy reporting and help reduce emissions and energy costs. It doesn’t intend to create additional complexity and reporting burdens.
So, who needs to comply with the SECR framework?
Compared to the 4,000 organisations who report for the CRC Energy Efficiency Scheme, the new SECR framework will apply to an estimated 11,900 UK companies.
The businesses who will need to comply with the new reporting requirements fall into four groups:
- Quoted companies 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 an EEA 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.
- UK registered, unquoted large companies as defined in the Companies Act 2006 (this differs from the definition of “large” in the ESOS Regulations). This refers to companies that fulfil at least two of the following conditions three in the financial year for which they are reporting:
- at least 250 employees;
- an annual turnover greater than £36m; and/or
- an annual balance sheet total greater than £18m.
- Large Limited Liability Partnerships (LLPs) that would already be obligated to carry out energy audits under the requirements of the ESOS Regulations 2013, and that were also likely to have been required to report under the CRC. This applies to an estimated 230 large LLPs.
- Large unregistered companies that operate for gain and currently have to produce directors’ reports under the Unregistered Companies Regulations 2009, with those reports needing to comply with the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. This is estimated to apply to fewer than 50 unregistered companies.
Are there any exemptions from SECR?
Companies will not need to comply with the SECR framework if they meet one or more of the following exemptions:
- If a company’s energy use is very low it’s not cost-effective to audit and report on; their energy is 40,000kWh or less over a 12-month period.
- UK subsidiaries will not be required to report separately if they are covered by parent company’s group report, although they may report on a voluntary basis.
- Unquoted companies not registered in the UK will fall outside the scope of the mandatory framework. However, any qualifying UK registered subsidiaries under these parent groups will need to report in their own right.
- If obtaining all global energy use is impractical for a company then it does not need to be reported. But excluded information should be clearly stated, with justification of why this has been done.
- In cases where publicly reporting on energy use could be deemed to be disclosing commercially sensitive information and therefore seriously prejudicial to a company’s interests.
What SECR means to you
If your organisation is eligible to start emissions reporting under this framework you will need to begin reporting at the end of your financial year. If you have never done CRC reporting before, the first important step is to start thinking about what data should be included and what data records are available. No fixed methodology is being specified for SECR, so the next step will be to determine what methodology will suit your organisation, how the figures should be calculated and what is to be reported on.
Getting ahead of this sooner rather than later will ensure that the actual reporting process goes smoothly.
Our specialists have years of experience in CRC and GHG reporting. We are defining a suite of services that will help you to fulfil SECR obligations and reduce your emissions and energy costs.
The key is understanding what is in scope based on your current business operations, and we can help you in the following ways:
- Analyse the scope of energy data relevant to your business
- Help you to set your own reporting methodology to suit your organisation
- Collect and maintain your data on your behalf
- Produce a SECR report on your behalf.
If you need advice about reporting on your organisation’s greenhouse gas or guidance around the new SECR framework, contact us today or learn more about our SECR services.