Streamlined Energy and Carbon Reporting (SECR) Guidance: What you need to know

Streamlined Energy and Carbon Reporting (SECR) Guidance: What you need to know

As a result of the UK Governments consultation in July 2018 on carbon emission reporting and energy efficiency legislation, the new Streamlined Energy and Carbon Reporting (SECR) framework has come into force from 1st April 2019. SECR is expected to replace the CRC Energy Efficiency Scheme that ends 2018 / 2019 compliance year. BEIS have issued draft guidance and held a consultation on this which ended 14th January 2019.

The changes form part of the government Clean Growth Strategy to deliver its ambition of businesses to improve their energy productivity by at least 20% by 2030. David Eynon, Associate Director, discusses these changes in more detail and what companies need to know about the new SECR framework.

Why is Streamlined Energy and Carbon Reporting being introduced?

In response to calls from the industry to simplify energy and carbon reporting for UK businesses, the government will be replacing the CRC Energy Efficiency Scheme with the SECR framework. CRC will be phased out and end with the current compliance year (2018 – 2019). It is believed that SECR will enable more holistic investment decisions and reduce the perceived administrative burden on businesses.

SECR replaces the reporting element of the CRC, however the financial elements will be covered through increases in the Climate Change Levy (CCL). The new framework builds on and expands current mandatory greenhouse gas emissions (GHG) reporting that already applies to UK quoted companies under the Companies Act 2006, as well as the Energy Saving Opportunity Scheme (ESOS) regulations 2014.

Which companies are impacted?

Approximately 11,900 UK companies will be impacted by SECR (against the c. 4,000 companies captured by the CRC, and the 1,600 companies captured by MCR regulations). Companies that fall under the following groups will need to comply with the new reporting requirements:

  • Quoted companies as defined by section 385 of the Companies Act 2006 (i.e. listed on LSE Main Market, NYSE, or Nasdaq): the same cohort as currently required to report under mandatory GHG reporting requirements
  • UK registered, unquoted large companies as defined in the Companies Act 2006 (N.B. different from ESOS participation thresholds), which meet at least two of the following in the relevant financial year:
    • At least 250 employees; annual turnover greater than £36m; annual balance sheet greater than £18m
    • Limited Liability Partnerships (LLPs)
  • Large unregistered companies required to report under the Unregistered Companies Regulations 2009, with accounts in line with the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008

SECR exemptions

Companies that meet the participation criteria will be exempt from SECR if they meet one of the following conditions:

  • Companies that can formally demonstrate that their total energy use is 40MWh or less during a period in which the report is prepared
  • UK subsidiaries will not be required to separately report if they are ‘subsidiary undertaking’ at the end of the financial year, or if their activities are included in a UK Group’s report
  • Unquoted companies not registered in the UK, although any UK subsidiaries that meet the participation criteria in their own right will need to report
  • If it is impractical for a company to obtain some or all of its total global energy consumption, as long as full and robust justification is provided. It is recommended that details are provided on the steps being taken to obtain the information for subsequent reporting periods

In addition, if public reporting of energy consumption can be deemed to be commercially sensitive, and disclosure could be seriously detrimental to the company (e.g. during restructurings, acquisitions etc), this can be used to demonstrate an exemption as long as it can be robustly justified – this is to be used on exceptional cases only.

What will companies need to report?

Quoted companies:

  • Global energy use from ‘combustible fuels, heat, renewables, electricity, and other forms of energy’ and the % of this that relates to UK operations
  • Global Scope 1 and 2 GHG emissions (tonnes of CO2e)
  • Intensity metric relevant to the sector
  • Method of calculating energy use and GHG emission figures
  • Global Scope 3 emissions reporting is voluntary

Unquoted large companies, large LLPs, and other unquoted companies:

  • UK energy use from electricity, gas and transport (same data scope as ESOS, although without ‘de-minimis’ option)
  • UK Scope 1 and 2 GHG emissions (tonnes of CO2e)
  • Intensity metric relevant to the sector
  • Method of calculating energy use and GHG emission figures
  • Scope 3 emissions reporting is voluntary

All companies will be required to provide some commentary on the actions taken by the business to improve energy efficiency over the previous financial year. Actions should not relate to periods outside the organisation’s financial year. SECR-specific reporting methodologies will not be specified by the Government, but good practice guidance will be developed – e.g. following ISO, GRI or CDP standards. Data from the following activities may be used, as long as it is supplemented where necessary to meet full SECR requirements:

  • Energy Saving Opportunity Scheme (ESOS)
  • Climate Change Agreement (CCAs)
  • European Union Emissions Trading Scheme (EU ETS)
  • Existing in-house Carbon Reduction Commitment (CRC) data collation processes

In landlord-tenant scenarios, the party responsible for the consumption of the energy shall take responsibility for its reporting under SECR.

When and how will companies need to report?

Companies that qualify will need to report in line with the new SECR requirements. Reporting will need to be contained within the annual Director’s Report, or relevant section within the Annual Report for financial years beginning on or after 1 April 2019, as part of their annual filing obligation. Electronic reporting is not currently mandatory but could become so as general company account reporting requirements develop. It is important to note that auditors will be up-to-speed with the new SECR requirements and will scrutinise this element as part of their wider remit.

SECR enforcements and penalties

The Conduct Committee of the Financial Reporting Council is responsible for assessing and monitoring the compliance of company accounts filed as part of annual obligations. The Committee has the power to investigate cases of apparent non-compliance with disclosure requirements and require that revised reporting sets are prepared and audited through a court order. Companies House does not accept filings that do not meet the relevant requirements, and therefore any delay as a result of the above will incur recourse through the late filing penalty regime.

Next steps

If you have any questions regarding the energy needs of your business, our expert team at ETS are always here to help. You can contact us by calling 0117 205 0542, emailing us at or you can submit a contact form.

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