Approximately 11,900 organisations across the UK will need to comply with SECR and report their energy consumption and carbon emissions in their annual financial report. The scheme sets out to support companies cut costs, improve productivity and reduce carbon emissions. 

The businesses who will need to comply with SECR reporting requirements fall into the following groups: 

1. Quoted companies of any size that are already obliged to report under mandatory greenhouse gas reporting regulations. 
2. UK registered, unquoted companies incorporated in the UK that meet the definition of ‘large’ under the Companies Act 2006. This applies to registered and unregistered companies. Note that the criteria for ‘large’ differs from the ESOS Regulations. 
3. ‘Large’ Limited Liability Partnerships (LLPs) who will be required to prepare and file an ‘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 £36m or more; 
• a balance sheet of £18m or more; or 
• 250 employees or more. 

• Determining the operational boundaries and scope for reporting 
• Developing processes and controls for data collection 
• Accounting for complex operations 
• Manage potential reputational impact of public disclosure of energy use and carbon emissions 
• Ensure your reporting is in line with acceptable industry practices and regulatory requirements 
• Avoid penalties from disclosing inaccurate results 
• Operational cost-savings through increasing awareness of energy use and efficiency 
• Differentiating from competitors by demonstrating best practice in energy savings and efficiency 
• Demonstrate improved performance year on year by establishing ongoing monitoring of energy use and carbon emissions 

Investing the time to define, establish and maintain a robust reporting framework to achieve SECR will also provide invaluable long-term compliance assurance. 

A solid environmental reporting framework can be achieved by adopting the following principles: 

• Relevant: Ensure the data collected and reported appropriately reflects the environmental impacts of your organisation and serves the decision-making needs of internal and external users. 
• Quantitative: KPIs need to be measurable. Targets can be set to reduce a particular impact. In this way the effectiveness of environmental policies and management systems can be evaluated and validated. 
• Accurate: Seek to reduce uncertainties in your reported figures where practical. Achieve sufficient accuracy to enable users to make decisions with reasonable confidence. 
• Complete: Quantify and report on all sources of environmental impact within the reporting boundary that you have defined. Disclose and justify any specific exclusions. 
• Consistent: Use consistent methodologies to allow for meaningful comparisons of environmental impact data over time. Document any changes to the data, changes in your organisational boundary, methods, or any other relevant factors. 
• Comparable: Report data using accepted KPIs. Using accepted KPIs will aid your benchmarking and allow users to judge your performance against that of your peers. 
• Transparent: Address all relevant issues in a factual and coherent manner, keeping a record of all assumptions, calculations, and methodologies used. 

There is no prescriptive methodology with SECR. Establishing a methodology that is right for your business is crucial as it will be the foundation that will be used for efficient and comparable reporting in future years.

Your SECR report will be included in your annual accounts as submitted to Companies House. 

The Conduct Committee of the Financial Reporting Council will be responsible for monitoring compliance of your SECR information provided. If your report does not meet the requirements, it may be rejected, and a penalty applied for late compliance. 

1. Annual energy use, which includes global energy use for UK quoted companies.
2. Reporting of greenhouse gas emissions.
3. Inclusion of related information in the annual Directors’ Report.

Although SECR is compulsory for specific companies, the government encourages all other companies to voluntarily adopt similar reporting practices. For full SECR reporting guidance seek professions energy consulting advice.

The Streamlined Energy and Carbon Reporting (SECR) includes a provision known as the “comply or explain” clause. Under this clause, companies have the flexibility to exclude certain information if it is impractical to collect or report. However, they must provide a clear explanation for any omissions and justify why specific details were left out. SECR was designed to enhance transparency in carbon reporting and energy efficiency efforts, so omitting information should be avoided whenever possible.

From April 1st, 2019, companies have the requirement to include information related to energy use and carbon emissions in their annual Director’s Report for each subsequent financial year.

Both are UK government schemes that require large businesses to report on energy use, but they have different formats and reporting requirements:

SECR:

• The SECR compliance threshold is:
  • At least 250 employees.
  • Annual turnover greater than £36 million.
  • Annual balance sheet total greater than £18 million.
• Requires annual reporting of energy use and greenhouse gas emissions.
• Includes an intensity ratio comparing emissions to a metric like turnover or units of production.
• Reports are submitted to Companies House as part of annual accounts.

ESOS:

• Operates on a four-year cycle, with companies choosing a 12-month period for reporting.
• Focuses on identifying opportunities for improving energy efficiency but does not require reporting on emissions.
• Compliance is notified to the Environmental Agency and made publicly available.

While both schemes aim to improve energy efficiency and reduce carbon emissions, SECR is more about reporting emissions annually, and ESOS is about identifying energy-saving opportunities every four years.

Reporting Scope 3 emissions is optional, but highly recommended.