What is SECR?

Streamlined Energy and Carbon Reporting or SECR is a mandatory UK government policy for large businesses which was launched on 1st April 2019; building on the existing Mandatory Greenhouse Gas (MGHG) reporting, ESOS scheme and the EU Emissions Trading Scheme.

SECR has been designed to ease the process of mandatory reporting for businesses, replacing the likes of CRC and reducing the complexity of energy efficiency policies. This new policy means that a far greater number of businesses will need to carry out this reporting.

This annual energy and carbon reporting is designed to raise awareness with key decision makers within companies, as well as informing markets and government policy. Ideally, SECR should increase the uptake of energy efficiency measures to deliver both economic and environmental benefits.

How do you comply with SECR?

While it isn’t a requirement, it’s recommended that you have external verification or assurance to ensure the accuracy, completeness and consistency of data for both internal and external stakeholders.

Every company will need to report energy use, GHG emissions and at least one emissions intensity metric for the current and previous financial years. You’ll also need to describe your efficiency measures across the year and highlight the resulting energy savings.

They also require that you disclose the methodology used to calculate your findings and it must be robust, transparent and widely accepted.

Other aspects you need to include largely depend on whether your company is quoted or not.

If it is, you’ll need to report your global scope 1 and 2 GHG emissions in tonnes of carbon dioxide equivalent, as well as looking at all seven gases listed in the Kyoto Protocol and an emissions intensity ratio. All of this needs to be done for the current and previous reporting periods.

You’ll also need to report on your underlying global energy use and split it between UK and other countries, which will become a comparison against previous year from 2020 onwards.

For unquoted large companies or LLPs, you’ll need to report UK energy use from electricity, gas and transport fuel and the associated GHG emissions – with at least one intensity metric.

The Comply or Explain Clause

You may have heard about the ‘comply or explain’ clause. This basically allows companies to be able to exclude carbon and energy information where it isn’t practical to get it, or if there’s an exceptional circumstance where disclosure would be prejudicial to the interest of the organisation.

If you feel this applies to you, then you’ll need to put forward a statement explaining what information has been omitted and why. Steps should then be taken to fill any material gaps in the future.

Who needs to comply with SECR?

• Businesses that need to comply with the new SECR framework include:
• Businesses that already report under mandatory greenhouse gas reporting regulations
• Large businesses:
  • Turnover of £36million or more
  • Balance sheet of £18 or more
  • 250 employees or more
• Large Limited Liability Partnerships will need to file an Energy and Carbon Report

The government also suggests that private sector organisations that fall outside of this scope voluntarily report in a similar manner, although this is not required.

Does SECR apply throughout the UK?

Yes, all quoted, large unquoted companies and large LLPs in the UK will need to be compliance with SECR. Companies incorporated outside of the UK are not required to comply, including offshore parent companies of UK subsidiaries.

Brexit will not have an impact on SECR as the UK government’s commitment to carbon reduction is not dependent on its status within the EU.

Who’s exempt from SECR?

Basically, anyone who can confirm that their energy use is low – 40MWh or less over the reporting period won’t need to complete the SECR report but will need to confirm that they’re a low energy user.

It’s important to note that if your business is part of a group or has subsidiaries then the energy consumption applies to all businesses within that group.

What needs to be included in the report?

Quoted companies must disclose:

• Annual greenhouse gas (GHG) emissions
• At least one intensity ratio
• The previous year’s figures for comparison purposes (exception for the first year of reporting)
• Methodology for gathering data and the calculations
• The total energy consumption that you’ve used for the calculation of GHG emissions
• What proportion of both energy consumption and GHG emissions is linked to the UK
• What you’ve done in the past financial year to improve the energy efficiency of the business

Large unquoted companies and large LLPs must disclose:

• UK energy use, including the electricity, gas and transport.
• The GHG emissions arising from your UK energy use.
• At least one intensity ratio.
• Last year’s figures (except for the first year of reporting).
• What steps you’ve taken to improve energy efficiency in the relevant year.
• How you gathered your company’s data and worked out the totals.

Do you need to report SECR and ESOS?

There will be a significant number of companies who fall under both SECR and ESOS, and both require the reporting and measurement of energy data.

ESOS requires the identification of all energy savings opportunities, while SECR simply requires a commentary on any energy efficiency actions that the organisation has taken during the financial year.

If you fall under both you will need to comply with both - except if your business is ISO50001 compliant, in which case you are not required to fulfil ESOS.

With clever planning, our team make it easy to complete annual SECR reporting.

What are the Penalties for not complying?

The Conduct Committee of Financial Reporting Council will be responsible for monitoring and enforcing compliance of SECR and it has the power to enquire into cases where relevant disclosures haven’t been provided.

If the report doesn’t comply with the requirements, the Committee can apply to the Court (under section 456 of the Companies Act 2006) for an order that requires the directors to prepare a revised report and/or set of accounts.

Companies House may not accept any accounts that do not meet the requirements of the Companies Act, and where acceptable accounts are delivered after the filing deadline, the company is liable to a civil penalty in accordance with section 453 of the Companies Act 2006.

The civil penalty for the late filing of accounts is in addition to any action taken against directors (or members of an LLP), under section 451 of the Act. This could potentially result in a conviction, but more likely a daily default fine.

Do I need help with SECR?

Part of our service includes the provision of information to our clients regarding their portfolio. This can be delivered in a way that matches SECR, but if you handle your own data then you just need to understand the formatting and requirements to do this yourself.

If you require an external assessment of your portfolio, then our chartered energy managers can assist you with providing accurate information in the required format.