FAQ: Streamlined Energy & Carbon Reporting (SECR)
Nearly 12,000 UK businesses must comply with SECR, is yours one of them? With the potential risk of fines in the region of £40k for non-compliance, your business may benefit from our years of experience in energy and carbon reporting. Here are some of the questions that we get asked about SECR every day. If you don’t find what you’re looking for, call us on 0207 371 5360 – we can guide you through every step, quickly, easily and cost-effectively.
What is Streamlined Energy & Carbon Reporting (SECR)?
Streamlined Energy and Carbon Reporting (SECR) is a mandatory carbon and energy, reporting scheme introduced for large companies by the UK government on 1 April 2019.
Companies within scope need to collect and present their energy and carbon information as part of their annual accounts filed with Companies House. Your information will be publicly visible and needs to be produced professionally.
How many businesses in the UK have to comply with SECR?
In 2018, the Department for Business, Energy and Industrial Strategy (BEIS) estimated that it would be mandatory for around 11,900 businesses in the UK to report on SECR.
Who needs to comply with SECR?
SECR applies to the following companies throughout the UK.
Quoted companies i.e. Companies listed on the London Stock Exchange (LSE).
A quoted company is defined in section 385(2) of the Companies Act 2006 as a company that is UK incorporated and whose equity share capital is listed on the Main Market of the London Stock Exchange UK or in an EEA State, or admitted to trading on the New York Stock Exchange or Nasdaq.
Unquoted companies that are not listed on the LSE but that qualify as ‘large’
Unquoted companies must be definable as ‘large’ under the Companies Act 2006 to qualify for SECR reporting obligations. Both registered and unregistered unquoted companies will now have reporting obligations, regardless of if they have been required to do so previously or not.
‘Large’ Limited Liability Partnerships (LLPs)
A company is ‘large’ if it meets at least two of the following criteria within a reporting year:
> 250 or more employees
> A balance sheet of, or greater than, £18 million
> An annual turnover of, or greater than, £36 million
> Companies that are incorporated outside the UK, including foreign parent companies of UK subsidiaries, are not required to comply.
What businesses are exempt from SECR?
If, over the reporting period, the energy your business uses is low – 40MWh or less, you won’t need to complete the SECR report but will need to confirm that you are a ‘low energy user’.
If your business is part of a group or has subsidiaries, the energy consumption applies to all businesses within that group.
It is only mandatory to include subsidiaries if they qualify for SECR themselves (this is different to ESOS where all companies within a group structure apply if at least one qualifies).
Who enforces SECR?
SECR is enforced by The Conduct Committee of the Financial Reporting Council.
What are the penalties for not doing SECR?
Failing to comply can lead to fines of up to £40k or, in really exceptional cases, prison sentences for company directors.
Penalties for non-compliance have yet to be published, though if these are anything like those of ESOS or the CRC they will be substantial (fines of £40,000 plus have been issued).
Does SECR replace greenhouse gas reporting like ESOS, CCA Scheme, and the ETS?
SECR builds on but does not replace existing requirements such as mandatory greenhouse gas (GHG) reporting for quoted companies, the Energy Saving Opportunity Scheme (ESOS), Climate Change Agreements (CCA) Scheme, and the EU Emissions Trading Scheme (ETS).
What’s the difference between SECR and ESOS?
The Energy Savings Opportunity Scheme (ESOS) originated from EU legislation and is to some degree separate from SECR,only applying to large entities (under the EU definition).
ESOS only requires reporting once every four years and proven reductions are not obligated, because of this, ESOS alone cannot be trusted to generate the scale of carbon savings year on year needed to mitigate climate change.
Some companies will have to report on both SECR and ESOS. Call one of our Energy Experts on 0207 371 5360 for guidance on how to make this an efficient process.
What SECR information is required?
The information that needs to be disclosed in the report is different dependent on your business type.
Quoted companies must include:
Energy and carbon information to be included in the Directors’ Report submitted to Companies House.
Annual greenhouse gas (GHG) emissions – the emissions as a result of your business’ activities
At least one intensity ratio
Last year’s figures (except for the first year)
How the data is gathered and the calculations completed
The total energy consumption that you’ve used to calculate your GHG emissions
What proportion of both energy consumption and GHG emissions is linked to the UK (not abroad)
What you’ve done in the past financial year to improve the energy efficiency of the business
Large unquoted companies / Large LLPs must include:
Large LLPs must file an Energy and Carbon Report, which is equivalent to a Directors’ Report.
UK energy use, including the electricity, gas and transport in that financial year.
The GHG emissions arising from your UK energy use.
At least one intensity ratio.
Last year’s figures (except for the first year of reporting)
What steps the business has taken to improve energy efficiency in the relevant year.
How you gathered your company’s data and worked out the totals.
What are the business benefits of SECR?
SECR aims to simplify carbon and energy requirements for businesses in the UK whilst also ensuring those businesses have the information they need to take action on reducing their carbon emissions.
It allows a business to:
Collect and analyse its energy use data
Develop a data-driven strategy to manage its energy usage
Identify energy saving and carbon emissions reduction opportunities
Potentially cost save across the business and its sites.
What help is available for SECR?
Carbon and energy reporting can be complex and time-consuming, and the need for a business to undertake a report can fall under multiple legislative requirements.
Contact one of our Energy Experts today on 0207 371 5360 to find out how we can help you achieve full legislative compliance.