SECR will require all quoted companies, large UK incorporated unquoted companies, and limited liability partnerships (LLPs) to report their energy use and carbon emissions relating to gas, electricity, and transport, and apply an intensity metric, through their annual Directors’ reports.
Summary of the Government’s proposed SECR framework
From April next year, large organisations in the UK will need to comply with the SECR regulations. The new scheme is part of the Government’s reform package.
Its aim is to reduce some of the administrative burden of overlapping carbon schemes and improve visibility of energy and carbon emissions. As such, it will be introduced to coincide with the end of the current Carbon Reduction Commitment (CRC) Energy Efficiency Scheme.
SECR will build on the existing mandatory reporting of greenhouse gas emissions by UK quoted companies and the Energy Savings Opportunity Scheme (ESOS).
Who needs to comply with SECR?
SECR qualification will follow the Companies Act 2006 definition of a ‘large organisation’, where two or more of the following criteria apply to a company within a financial year:
- More than 250 employees.
- Annual turnover greater than £36m.
- Annual balance sheet total greater than £18m.
There is no exemption for involvement for energy used in other schemes – e.g. Climate Change Agreements (CCAs) or EU Emissions Trading Scheme (ETS).
What are the reporting requirements?
From 1 April 2019, affected organisations will be required to:
- Make a public disclosure within their annual directors’ report of energy use and carbon emissions.
- Report using a relative intensity metric e.g. tCO2/number of employees.
- Provide a narrative on energy efficiency actions taken during the reporting period.
Reporting will align with an organisation’s financial reporting year.
Is anyone exempt from SECR?
Yes – those exempt from complying with SECR include:
- Public sector organisations.
- Organisations consuming less than 40,000kWh in the 12-month period are not required to disclose SECR information.
- Unquoted companies where it would not be practical to obtain some or all of the SECR information.
- Disclosure of information which Directors think would be seriously prejudicial to interests of the company.
There seem to be similarities to ESOS – can ESOS compliance help with SECR?
Yes. Though ESOS and SECR are separate schemes, and will continue as such, the information from your ESOS compliance can be used to support SECR reporting.
Where do I start with compliance?
The detailed guidance for SECR will soon be published. EIC can assist with compliance as well as providing bespoke reporting to ensure that you have real visibility of your energy and carbon emissions both at organisational and site level.