The UK Government has extended mandatory carbon reporting to more companies than ever with the introduction of the Streamlined Energy Carbon Reporting (SECR) regulations. These new regulations require companies to disclose their energy and carbon usage and support the UK Government commitment to becoming a low carbon economy.
What does this mean?
SECR is replacing the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme and whereas the outgoing scheme impacted about 1600 businesses, the incoming regulations affect circa 10,000 companies.
This means more businesses are now having to capture data about their energy use and carbon emission in the UK to ensure they are compliant. This information will be published in Annual Reports, with financial data.
What’s the timeline?
The regulations came into effect from April 2019 and apply to financial years starting on or after 1st April 2019. As a result, companies affected really do need to be thinking about how they are going to capture and report on data.
Who will SECR affect?
The SECR Regulations will affect quoted companies of any size, large Limited Liability Partnerships (LLP), and large unquote companies incorporated in the UK. The definition of large is where two or more of the following criteria are met in a financial year:
- 250 employees or more
- Annual turnover of £36 million or more
- Annual balance sheet of £18 million or more
Also, companies owned by public-sector organisations, charities, and not-for-profit companies meeting the above criteria are affected.
The regulations do not apply to third sector or public sector organisations. They are subject to other carbon reporting legislation.
What do you need to do to comply?
To comply with SECR, those impacted are required to report their UK energy use and associated greenhouse gas emissions. Reporting is done via annual reports to Companies House.
All companies will be required to report on energy use and GHG emissions. This must include all UK electricity, gas, and transport emissions. They must also include at least one “intensity ratio” in order to compare energy efficiency performance over time and with other similar organisations. This may be tonnes of CO2 per square metre, tonnes of CO2 per million tonnes of product production, or similar.
All companies must also disclose the calculation methodology use to determine emissions and energy use.
There are further requirements for quoted companies. They must report on global, as well as UK, scope 1 and 2 emissions.
Are there any exemptions?
A company can be excluded from reporting if, over the 12-month reporting period, they use less than 40,000kWh or less. In this scenario, a report must state that the information is not included due to low energy usage.
If a group report is needed, it should include information for the parent group as well as its UK subsidiary companies. Therefore, the subsidiary companies do not have to include information in its reports. If a UK subsidiary does not meet the criteria for reporting, they can also be excluded from the group report.
There is also a “comply or explain” clause that enables exemption where “it is not practical to obtain information” - or where disclosure would be “seriously prejudicial” for the company’s interest. A statement explaining what has been omitted and why should still be included.
How will SECR benefit businesses?
Although reporting in this way is a new challenge for many businesses, there are also clear benefits to be gained by businesses that are affected.
Capturing and reporting on data will encourage companies to focus on energy efficiency and work on identifying and implementing actions and measures to improve this - which will not only benefit them financially, but also helps the environmental. The capture of data will enable better informed decisions to be made.
How can Swan help?
Swan Energy has been involved in CRC since its inception and compliance is our area of expertise. We have automated systems in place to aid the capture of data and reporting, and we’re well placed to support you with the capture of data, reporting and auditing.
If you would like to speak to one of our consultants, please call us on 01484 843867.