Streamlined Energy & Carbon Reporting
An Introductory Guide - everything you need to know to comply with SECR.
Streamlined Energy and Carbon Reporting (SECR), a regulatory requirement in the UK, mandates companies to disclose their energy consumption, greenhouse gas emissions, and actions taken to mitigate environmental impact. There are 3 key elements:
Calculating your carbon footprint and energy usage, and methodology used
Disclosing any energy efficiency activities undertaken
Include an intensity ratio
This Introductory Guide sets out everything you need to know about SECR for your company, or your client’s company if you are an adviser or accountant.
SECR Requirements
SECR applies to large UK-incorporated companies, Limited Liability Partnerships (LLPs), and certain unregistered companies meeting specific criteria. It requires qualifying entities to include their energy and carbon-related information in their annual reports, providing transparency on energy consumption, greenhouse gas emissions, and energy efficiency measures.
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Any publicly quoted company, including: FTSE 100, FTSE 250, FTSE Small-cap, and FTSE Fledgling companies.
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Any private or AIM-listed company which has exceeded two or more of the following thresholds in the last two years:
Annual turnover: £36 million+
Balance sheet total: £18 million+
Number of employees: 250+
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- Subsidiary companies (see later)
- Companies which use <40,000 kWh per annum
- Impracticality, with reasons provided by the Company
- Seriously prejudicial to the interests of the Company, and the report states that the information is not disclosed for that reason.
What to include in your SECR Report
Methodology
How the required information has been calculated.
Annual Energy Use
Annual UK energy use (in kWh), relating to gas purchased electricity and transport fuel and associated greenhouse gas emissions (in tonnes of carbon dioxide equivalent (CO2e)).
Intensity Ratio
Intensity ratios compare emissions data with an appropriate business metric or financial indicator, such as turnover, to allow comparison over time or with other organisations. Intensity ratios are chosen by the Company.
Subsidiaries
Group companies must include energy and carbon disclosures of any subsidiaries, unless the subsidiary would not itself be obliged to include the information if reporting on its own accounts.
Energy efficiency improvements
A description of measures taken to improve energy efficiency in the period of the report. If no measures have been taken, this should be stated.
Prior Year Comparison
The prior year equivalent figures are also required to be disclosed for comparison.
Calculating your carbon footprint & energy usage
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1. Gather Data
Set the boundaries: which entities to include and what is reportable within each.
Energy Usage: Collect data on electricity, gas, and fuel consumption for all company operations, including buildings, vehicles, and any other significant energy sources.
Emissions Data: Calculate direct emissions from fuel combustion and indirect emissions from purchased electricity using emission factors.
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2. Use Carbon Accounting Tools
Emission Factors: Use the government-provided emission factors and industry benchmarks to convert energy usage into CO2 equivalents (CO2e).
Carbon Calculators: Utilise online tools or specialised software designed for carbon accounting. These tools streamline the process by inputting energy data and calculating emissions based on established methodologies.
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3. Calculate Scope 1, 2, and 3 Emissions
Scope 1: Direct emissions from owned or controlled sources, such as company vehicles or onsite fuel combustion.
Scope 2: Indirect emissions from purchased electricity, heat, or steam.
Scope 3: Optional reporting of indirect emissions from sources not owned or controlled by the company, like business travel, supply chain activities, or employee commuting.
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4. Verify and Review Data
Accuracy Check: Ensure data accuracy and consistency in calculations to avoid discrepancies.
Verification: Consider external verification or audits for credibility and adherence to reporting standards. We can assist you with this.
SECR Reporting
Once you’ve calculated your carbon footprint, incorporate this data into your annual reports. Ensure compliance by:
Accurate Disclosure: Include all required information on energy use, greenhouse gas emissions, and energy efficiency actions.
Report Format: Follow SECR reporting guidelines for the presentation and formatting of disclosed information.
Submission Deadline: Submit the report alongside your annual financial statements within the specified timeframe.
Benefits of Complying with SECR
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Improved Transparency.
Demonstrates commitment to sustainability and transparency to stakeholders.
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Enhanced Reputation.
Positive environmental actions can boost brand reputation and appeal to environmentally conscious consumers and investors.
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Cost Savings.
Identifying energy inefficiencies can lead to cost-saving opportunities.
In summary, complying with SECR involves a systematic approach to calculating and reporting a company’s carbon footprint. It’s a pivotal step towards environmental accountability and fostering a sustainable business model.
By understanding SECR requirements, accurately calculating emissions, and transparently reporting this data, companies in the UK can contribute to a greener future while meeting regulatory obligations.
This page summaries some of the key information set out in official guidance: The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018.