New Streamlined Energy and Carbon Reporting (SECR) regulations will take effect in 2019. What does your business need to know?

What is Streamlined Energy and Carbon Reporting (SECR)?

The UK Government has announced its plans for anew mandatory reporting framework to replace the CRC Energy Efficiency Scheme (CRC EES), which is due to end in 2019. The new regulations will also extend the scope of the existing Mandatory Carbon Reporting (MCR) regulations.

Company annual reports will need to include more detailed reporting on energy usage, energy efficiency and greenhouse gas emissions.

When does SECR come into play?

Organisations will need to comply with the new energy and carbon reporting framework from April 2019. Government is expected to issue more detailed guidance on the SECR in January 2019.

Why Streamlined Energy and Carbon Reporting?

As the name suggests, SECR is designed to reduce complexity and streamline the carbon and energy reporting landscape. It aims to help businesses increase productivity energy efficiency, as well as to improve the security of energy supplies.

The SECR is designed to help businesses as they become more energy conscious in the latest stage in UK’s transition to becoming a low-carbon nation. The new regulations will present an opportunity for larger global businesses not currently reporting to consider applying best energy efficiency practice.

What is the impact of SECR?

Many more companies in the UK will be required to comply with energy and carbon reporting legislation.

Which companies does the SECR affect?

SECR will affect all UK incorporated quoted and large unquoted companies and limited liability partnerships.

‘Large’ companies are defined as those that meet two or more of these criteria:

Over 250 employees

Annual turnover greater than £36 million

Annual balance sheet greater than £18 million

The number of companies required to report into the SECR will also include those in the Energy Saving Opportunities Scheme (ESOS). This takes the number of businesses involved from 1,200 to 11,900.

Companies that are exempt:

Companies that use 40,000 kWh or less of energy in the 12-month reporting period

Unquoted companies where ‘it is not practical to obtain information’

What does SECR mean for your business?

If you fall into the reporting category, you’ll be automatically entered into the SECR scheme. You’ll need to make the following publicly available, with suitable intensity metrics:

energy use

carbon emissions

energy efficiency actions

These figures will likely be published in Annual Reports alongside financial data.

The new SECR scheme means that more firms will need to get to grips with their energy management, but the specific impacts of the new legislation will vary depending on your current situation.

Already reporting under Mandatory Carbon Reporting? There’s little change except for the inclusion of energy use and energy efficiency measures.

Reporting and purchasing credits in the CRC EES? The new SECR regulations will replace these.

Don’t fall into either scheme? These organisations will experience the largest change.

Although this reporting may mean additional administrative costs, the drive to improve energy efficiency can have its own financial advantages.

What are the SECR reporting requirements?

The SECR reporting requirements differ according your company’s category:

UK incorporated quoted companies:

Report on the annual quantity of Greenhouse gas (GHG) Emissions and energy consumed from their purchase of energy (gas, electricity) for their own use

State what proportion of energy consumed relates to emissions in the UK and UK offshore areas.

Describe the principal measures taken to increase their energy efficiency.

Large UK incorporated unquoted companies:

Report on the annual quantity of GHG Emissions and energy consumed in the UK arising from their activities relating to the combustion of fuel for transport or the combustion of gas

Report on the purchase of electricity for their own use.

Describe actions taken to increase energy efficiency.

Large UK incorporated LLPs:

Prepare a report equivalent to the directors' report for each financial year, including figure on energy consumptions and energy efficiency measures.

How to prepare for SECR

Although the SECR may seem like an administrative burden on your business, being proactive about energy efficiency is beneficial to all businesses. It removes unnecessary costs and helps your business become more sustainable and environmentally-friendly.

Organisations with an energy management system that encompasses people, process and technology will make reporting for regulatory purposes a much smoother process.