Streamlined Energy and Carbon Reporting (SECR) from TEAM Energy

A recent shift in government commitments has set out an initiative to make the UK carbon neutral by 2050. This has initiated action and commitment from many organisations. The Welsh public sector and many UK local authorities have declared climate change emergencies, pledging to become carbon neutral by 2030. Many public sector and private organisations are familiar with carbon reporting through the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme, which has now ended, and many are continuing their commitment to reducing emissions with the voluntary emissions pledge.

Organisations can lead the way in driving the net-zero agenda through environmental reporting. The Streamlined Energy and Carbon Reporting framework (SECR) has been introduced to bring the benefits of carbon and energy reporting to many more UK businesses. SECR came into effect on 1 April 2019; organisations with a financial year that start on or after this date will fall into scope.

SECR will put green credentials into the public domain and could be seen as a mandatory task that has many benefits, including:

Elevating your business as a sustainable supplier
Improving staff retention and recruitment
Strengthening your organisation’s reputation
Helping you publicly contribute to a mass movement of change

SECR builds on existing mandatory Greenhouse Gas emissions (GHG) reporting, the Energy Savings Opportunity Scheme (ESOS), and EU Emissions Trading System (EU ETS). It also replaces the reporting element of the closed CRC Energy Efficiency Scheme.

Who needs to comply?

The framework requires approximately 11,900 organisations across the UK to report their energy consumption and carbon emissions in their annual report. It sets out to support companies to cut costs, improve productivity and reduce carbon emissions.

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

Quoted companies of any size that are already obliged to report under mandatory greenhouse gas reporting regulations.
UK registered, 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.
‘Large’ Limited Liability Partnerships (LLPs) 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.

Building the foundation of environmental reporting

Investing the time to define, establish and maintain a robust reporting framework will 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.
Accuracy: Seek to reduce uncertainties in your reported figures where practical. Achieve sufficient accuracy to enable users to make decisions with reasonable confidence.
Completeness: 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.

How TEAM can help

We are experts in data, energy and reporting and can support you with your first reporting and help you deliver your published sustainability promises. Our services can help in a number of ways:

Analyse the scope of energy data relevant to your business and help you define your own reporting methodology to suit your organisation
Help you set your organisational boundaries and understand the environmental issues that are applicable to you
Manage the data for your entire energy estate, on your behalf. Validating utility bill information, identifying and correcting errors to produce an accurate compliance submission
With a range of sector expertise, our energy specialists are on hand to advise and help you to implement energy efficiency projects and help you build out your energy and sustainability strategy
Utilise our industry leading Sigma energy management software to produce your own advanced reports suitable for UK regulations.

Penalties for non-compliance

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.

For help and guidance on how to get started with SECR, contact us today.