What is SECR?
The introduction of the Streamlined Energy and Carbon Reporting (SECR) coincides with the end of the Carbon Reduction Commitment (CRC) and Energy Efficiency Scheme. The SECR legislation mandates large businesses and organisations to account for and report their energy and carbon emissions and any efficiency measures taken annually.
Claire Perry, Energy and Clean Growth Minister, rightly said, “If you don’t measure it, you can’t manage it".
From financial years beginning on or after 1st April 2019, large companies in the UK were required to publicly report their business energy use and carbon emissions stated in their Directors' Report. This new requirement is mandatory and has been implemented by the Department for Business, Energy and Industrial Strategy (BEIS).
SECR impacts all companies, LLPs and groups that exceed at least any of two of the following three thresholds in the financial year:
- £36m annual turnover
- £18m balance sheet total
- 250 employees
For businesses that meet the above criteria, company/group reporting is mandatory and, therefore, required regardless of whether an overseas parent company or group has published a similar report. However, they can exclude the energy and carbon information relating to any subsidiaries they are not obliged to report as an individual entity per the thresholds. After this calculation, a disclosure is not needed if the company has consumed less than 40MWh.
So, what needs to be reported?
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- Scope 1 - Direct emissions
- Fuel use from transport, i.e. where the journey begins or ends in the UK
- Combustion of natural gasses
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- Scope 2 - Indirect emissions
- Electricity purchased and used for business operations.
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- Scope 3 - Other indirect emissions
- Energy use and related emissions from business travel in rental cars or employee-owned vehicles where the company is responsible for fuel purchasing.
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- Intensity metric for year on year
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- Supporting narrative
- Methodologies used for the calculation
- Energy efficiency action taken in the year
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- Voluntary disclosures
- Wider scope 1 emissions - including other fuel use, refrigerants & manufacturing emissions
- Scope 3 emissions - upstream and downstream energy use comparison
What is the purpose of SECR?
The SECR framework was introduced to encourage the implementation of energy efficiency measures by providing economic and environmental benefits. It’s designed to support companies in cutting costs, improving productivity, and reducing carbon emissions. It aims to encourage businesses to the benefits of carbon and energy reporting, such as:
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- Identifying low-cost or no-cost efficiency opportunities
- Boosting green and sustainability credentials
- Tracking environmental KPIs year-on-year
- Highlighting risks from volatile energy and commodity prices
- Delivering improved environmental disclosures
The UK government has made it mandatory for all large businesses, including charitable companies, to annually share a report on their energy and carbon emissions and any efficiency measures they’ve taken throughout the year.
The SECR builds on, but does not replace, existing schemes such as the mandatory greenhouse gas (GHG) reporting, the Energy Saving Opportunity Scheme (ESOS), and the Climate Change Agreements (CCA) Scheme.
Who needs to comply with SECR Regulations?
All quoted companies in the UK and unquoted companies that meet the Company’s Act 2006 definition of “large” need to comply. Large LLPs must also prepare and file their Energy and Carbon reports.
The SECR has separate sets of reporting requirements for quoted companies and for large unquoted companies and LLPs.
Businesses in Scope need to comply for financial years starting on or after 1 April 2019 and, therefore, must understand their requirements under SECR. SECR builds on, but it does not replace the existing provisions that companies may face, such as mandatory greenhouse gas (GHG) reporting, the Energy Saving Opportunity Scheme (ESOS), Climate Change Agreements (CCA) Scheme, and the EU Emissions Trading Scheme (ETS). SECR extends the reporting requirements for companies and mandates new annual disclosures for large unquoted and limited liability partnerships (LLPs).
Quoted companies MUST report:
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- Global scope 1 and 2 GHG emissions. Reporting scope 3 emissions is voluntary but strongly recommended.
- At least one emissions intensity ratio. Intensity ratios compare emissions data with an appropriate business metric or financial indicator, such as sales revenue or square metres of floor space, and allow for comparability.
- Underlying global energy use for the current reporting year.
- Previous year’s figures for energy use and GHG.
- Energy efficiency actions, with a narrative description of the main measures taken to increase energy efficiency in the relevant financial year.
- Methodology used. It is recommended that companies use a widely recognized independent standard, such as the GHG Reporting Protocol (Corporate Standard), International Organisation for Standardization, ISO (ISO 14064-1:2018), Climate Disclosure Standards Board (CDSB), The Global Reporting Initiative Sustainability Reporting Guidelines.
Large unquoted companies and LLPs('Large' Limited Liability Partnerships) MUST report:
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- UK energy use and associated GHG emissions.
- Previous year’s figures for energy use and GHG emissions.
- At least one intensity ratio.
- Energy efficiency actions.
- Methodology used.
Does SECR include Scope 3?
Some Scope 3 emissions disclosures are included under existing SECR requirements, as large unquoted companies and LLPs are required to report on a subset of Scope 3 emissions and energy use, though this is limited.
What SECR information needs to be reported?
The reporting requirements differ for each business type as follows:
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QUOTED COMPANIES
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LARGE UNQUOTED COMPANIES AND LLPS
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Annual global GHG emissions from activities for which the company is responsible, including combustion of fuel and operation of any facility, and the annual emissions from the purchase of electricity, heat, steam or cooling by the company for its own use.
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UK energy use (as a minimum gas, electricity and transport including UK offshore area).
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Underlying global energy use.
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Associated greenhouse gas emissions.
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Energy use and GHG emissions figures from the previous year (exempt in 1st year).
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Energy use and GHG emissions figures from the previous year (exempt in 1st year).
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At least one emissions intensity ratio.
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At least one emissions intensity ratio.
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Narrative on energy efficiency measures.
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Narrative on energy efficiency measures.
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Details of the methodology used.
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Details of the methodology used.
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Transport energy should include business usage where the company is supplied with the transport fuel, but not journeys where the fuel is paid for indirectly.
For instance, fuel consumed for business use in company cars, fleet and private/hire cars (including where employees are reimbursed for business mileage), and on-site vehicles is included. However, this does not include fuel associated with air, rail, or taxi journeys that the company does not operate or fuel for transporting goods contracted to a third party.
Quoted and unquoted companies and LLPs must report energy use, greenhouse gas emissions, and at least one emission intensity metric for the current and previous financial years.
The relevant report must include a narrative description of measures taken to improve the businesses' energy efficiency in that year. The energy savings that result from these actions should also be stated where possible.
You should include this in the report if no measures have been taken.
What are some of the key challenges and opportunities?
- Determining the operational boundaries of reporting scopes
- Developing processes and controls for collection of data
- Accounting for some of the complex business operations
- The reputational hazard as an impact of public disclosure of a company's energy and carbon use and emissions.
- The company may not align with acceptable practices/industry peers
- Penalisation for disclosing inaccurate results
- Operational cost-savings through increasing awareness of energy use and efficiency
- Differentiating from competitors by demonstrating best practices in energy savings and efficiency
- Demonstrate improved performance yearly by establishing ongoing monitoring of energy use and carbon emissions.
How is this information reported?
While there isn't a particular SECR method, your chosen method must be robust, transparent, and widely accepted.
Companies are encouraged to go beyond the minimum requirements and voluntarily include any other material source of energy use or greenhouse gas emissions outside these boundaries, as well as reporting on scope 3 emissions.
Disclosures should cover the same annual period as the financial year, or an explanation should be provided as to why this isn't the case.
The 'comply or explain' clause also excludes carbon and energy information where it is not practical to obtain. This also applies in exceptional circumstances where the disclosure would be 'seriously prejudicial' to the organisation. A statement explaining what information has been omitted and why must be included.
How can Pro Enviro help you with your SECR?
If you need any assistance with your SECR reporting or need to submit any SECR requests, then we'd be happy to help.
Pro Enviro Energy is a leading energy consultancy based in Rugby. For more information, visit the homepage or call our team today on
01788 538150
