Streamlined Energy and Carbon Reporting (SECR): What it means for business

Since building on the requirements of the Carbon Reduction Commitment (CRC), the UK government's Streamlined Energy and Carbon Reporting (SECR) framework has placed greater focus and responsibility on how organisations choose to measure and report their emissions. 

This means there are significant implications for energy and carbon emissions reporting for large companies.

For organisations unfamiliar with the framework, we've put together a guide on SECR to help them further understand what it means for business. In this extensive resource, we'll touch on what SECR entails, why it was introduced, who needs to comply and a host of other important details concerning the framework.

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What is Streamlined Energy and Carbon Reporting?

The SECR is legislation mandating that large businesses and organisations must report their energy and carbon emissions – along with any efficiency measures taken throughout the year – on an annual basis.

Through this legislation, the SECR aims to introduce more businesses to the benefits of carbon and energy reporting, such as:

  • Identifying low-cost or no-cost efficiency opportunities
  • Boosting green and sustainability credentials
  • Tracking environmental KPIs year on year
  • Highlighting risks from volatile energy and commodity prices
  • Delivering improved environmental disclosures

Why has Streamlined Energy and Carbon Reporting been introduced?

The SECR framework is intended to encourage the implementation of energy efficiency measures by providing economic and environmental benefits. It’s designed to support companies in cutting costs and improving productivity while also reducing carbon emissions.

Making disclosures on energy and carbon also remains in line with the recommendations of the G20 Financial Stability Board's Taskforce on Climate-related Financial Disclosures. Providing information for investors and financial actors, it helps businesses make the transition to a sustainable, low-carbon economy.

The SECR builds on, but does not replace, existing schemes such as the mandatory greenhouse gas (GHG) reporting, the Energy Saving Opportunity Scheme (ESOS), and the Climate Change Agreements (CCA) Scheme.

Who needs to comply with Streamlined Energy and Carbon Reporting?

Over 11,900 UK organisations are required to comply with SECR regulations. These regulations affect three separate groups of business which fall into the following definitions:

  • Quoted companies of any size that are already obliged to report under mandatory greenhouse gas reporting regulations
  • Unquoted companies incorporated in the UK which meet the definition of 'large' under the Companies Act 2006
  • 'Large' Limited Liability Partnerships (LLPs)

You can also confirm whether your company qualifies as 'large' by meeting two of the following three criteria:

  • You have more than 250 employees
  • You have a turnover greater than £36m
  • Your balance sheet totals more than £18m

Although public bodies do not fall under the new regulations, they're still subject to other legislation which requires carbon reporting. Charities, not-for-profit companies and universities, academies or NHS Trusts will have to check whether they meet the above criteria.

Private sector organisations falling outside of the new regulations are encouraged to voluntarily report in a similar manner.

What SECR information needs to be reported?

The reporting requirements differ for each business type as follows:

 

Transport energy should include business usage where the company is supplied with the transport fuel, but not journeys where the fuel is paid for indirectly.

For instance, fuel consumed for business use in company cars, fleet and private/hire cars (including where employees are reimbursed for business mileage) and on-site vehicles are included. However, this does not include fuel associated with air, rail or taxi journeys that the company does not operate or fuel for the transportation of goods contracted to a third party.

Quoted and unquoted companies and LLPs all need to report energy use, greenhouse gas emissions and at least one emissions intensity metric for the current and previous financial years.

The relevant report must include a narrative description of measures taken to improve the businesses' energy efficiency in that year. Where possible, resulting energy savings from the actions should also be stated.

If no measures have been taken, then you should also include this in the report.

How is this information reported?

While there is no single methodology used for SECR, whichever method you use needs to be robust, transparent and widely accepted.

Companies are encouraged to go beyond the minimum requirements and voluntarily include any other material source of energy use or greenhouse gas emissions outside these boundaries, as well as reporting on scope 3 emissions.

Disclosures should cover the same annual period as the financial year, or an explanation should be provided as to why this isn't the case.

The 'comply or explain' clause also allows carbon and energy information to be excluded where it is not practical to obtain it. This also applies in exceptional circumstances where the disclosure would be 'seriously prejudicial' to the organisation. A statement explaining what information has been omitted and why must be included.

Although not a requirement, external verification or assurance is recommended as best practice. This ensures greater accuracy, completeness and consistency of data for both internal and external stakeholders.

Can a company be exempt from Streamlined Energy and Carbon Reporting?

There is a statutory de minimis exemption that exists for quoted or large unquoted companies and LLPs that confirms their energy use is 40MWh or less over the reporting period.

Even so, these companies will still need to include a statement in their report confirming that they are a low energy user. If preparing a group report, the low energy user threshold applies to the energy consumption of the parent group and its subsidiaries.

Group-level and subsidiary-level reporting

Where a group-level report is needed, it should include energy and carbon information for the parent group, along with any subsidiaries as part of the consolidation. However, there is also the option to exclude energy and carbon information from the group report relating to a subsidiary that would not be obliged to report in its own right under SECR.

A UK subsidiary that is required to report under the SECR framework may not need to include the energy and carbon information in its own subsidiary accounts and reports, providing these obligations are already met through a parent's group-level report.

Companies are also exempt if they are registered in a country that is not in the UK.

How can Gazprom Energy help with your SECR?

If you need any assistance with your SECR statements or need to submit any SECR requests, then we'd be happy to help.

In your statement request, please include all supply numbers that have been registered with Gazprom Energy. All requests must be made by an employee or your company, or by a third party (which includes local authorities acting on behalf of a customer). If you're a third party requesting the statement on behalf of a customer, then please ensure that you attach a letter of authority.

Gazprom Energy is a leading supplier of energy for small businesses, offering competitive gas and electricity contracts that are simple to set up and manage. For more information, visit the homepage or call our team today on 0161 837 3395.

The views, opinions and positions expressed within this article are those of our third-party content providers alone and do not represent those of Gazprom Energy. The accuracy, completeness and validity of any statements made within this article are not guaranteed. Gazprom Energy accepts no liability for any errors, omissions or representations.