Are you ready for SECR?
On 1 April 2019, Streamlined Energy and Carbon Reporting, or SECR, is due to come into force. But what do businesses need to know about the government’s new framework?
SECR is one of a number of policies falling under the government’s Clean Growth Strategy and aims to help businesses and industry boost energy productivity by at least 20% by 2030.
The new SECR framework has two clear goals: to simplify carbon and energy reporting requirements for companies, and ensure they have the information needed to reduce energy emissions and costs.
The framework recognises that the reporting scheme needs to align with UK best practice, but should not create unnecessary complexity and burden.
The SECR framework will apply to nearly 12,000 companies (CRC applies to around 4,000).
Businesses not registered in the UK or those with annual energy consumption of less than 40,000 kWh will be exempt. For those over the threshold, two of the following must apply: 250+ employees; £36 million+ annual turnover; £18 million balance sheet total.
Quoted companies are already required to report global scope 1 and 2 greenhouse gas emissions (i.e. those from direct sources) and their intensity. Scope 3 reporting will remain voluntary, but companies will now be required to report on global energy use.
Unquoted companies will need to report UK energy use from electricity, gas and transport (road, rail, air and shipping), as well as the associated scope 1 and 2 greenhouse gas emissions. Companies can also, if they wish, report additional energy use or greenhouse gas emissions and/or scope 3 emissions (i.e. those from indirect sources).
Businesses will need to deliver clarification of any energy efficiency action from the previous year, but will not be required to divulge Energy Saving Opportunity Scheme (ESOS) recommendations and progress. The government intends to revisit how the SECR framework interacts with ESOS at a later date.
The legislation will not specify particular reporting methodologies or intensity metrics, but will instead create guidelines for good practice. Those will encourage transparency in areas such as purchase of low carbon energy, emissions offsetting, and on-site clean energy generation.
Companies will also need to demonstrate their emissions as a ratio against at least one quantifiable factor (such as turnover, staff numbers or production volume).
The first SECR reports will be due on or after 1 April 2020.