What is SECR?
The UK’s Streamlined Energy and Carbon Reporting or (SECR) Policy came into force April 2019 and requires companies, or organisations to disclose their energy use and carbon emissions information within their annual report.
SECR may build upon or be additional to other existing reporting requirements that companies or organisations may be subject to. The purpose of it is to broaden the scope of energy and carbon reporting to a larger number of companies and organisations and to encourage energy efficiency actions.
Who has to comply?
Not every company or organisation needs to comply with SECR. The SECR Legislation affects:
- Quoted companies (which means companies that are listed in a public exchange).
- Large unquoted companies (including charitable companies).
- Large Limited Liability Partnerships (LLPs).
What is considered “large”?
Under the SECR definition, companies and LLPs are considered “large” is they meet two or more of the following criteria:
- A turnover of £36 million or more,
- A balance sheet of £18 million or more,
- 250 employees or more.
What needs to be reported?
SECR includes two sets of reporting requirements, one for quoted companies and another for large unquoted companies and LLPs.
Quoted companies
Quoted companies within the scope of the legislation must report:
- Mandatory: annual scope 1 and scope 2 GHG emissions.
- Voluntary (but recommended): scope 3 GHG emissions.
- At least one emissions intensity ratio. An intensity ratio compares emissions data with an appropriate business metric or financial indicator. This could be sales revenue or square metres of floor space, to allow for comparability.
- Underlying global energy use for the current reporting year.
- Previous years figures for energy use and GHG emissions.
- A narrative or description of the company’s energy efficiency actions. I.e, the main measures you have taken to increase energy efficiency in that reporting year.
- The methodology that has been used. It is recommended that companies use a widely recognised independent standard.
- GHG Reporting Protocol (Corporate Standard)
- International Organisation for Standardisation (ISO 14064-1:2018)
- Climate Disclosure Standards Board (CDSB)
- The Global Reporting Initiative Sustainability Reporting Guidelines.
Large unquoted companies and LLPs
Large unquoted companies and LLPs within the scope of legislation must report:
- UK energy use, as a minimum, this includes: purchased electricity, gas and transport.
- Associated GHG emissions.
- At least one intensity ratio.
- Previous year’s figures for energy use and GHG emissions (except in the first year).
- Information about energy efficiency action taken in the financial year.
- Methodologies used in the calculation of disclosures.
Comply or explain
Under the SECR legislation, there is a chapter called “comply or explain”. This chapter explains that under the “comply or explain” clause, it allows companies to omit information when it has not been feasible to collect it – only if they can explain what has been excluded and why. Companies are encouraged to rely on this clause only in exceptional circumstances.
What classes as an “exceptional circumstance”?
- Specific sensitivities from restructuring or acquisitions from a company in the run up to producing the relevant report.
- Exceptional commercial sensitivity considerations.
Please note, that these situations are considered very rare, and when occur, may be questioned by the Financial Reporting Council (FRC).
Supporting sources:
UK Government Environmental Reporting Guidelines.
If you need any help with your SECR Reporting, Combatting Carbon are here to help – please complete our Contact Us form.