SECR: your top 10 questions answered

The Streamlined Energy and Carbon Reporting (SECR) regulations are coming into force soon and businesses need to understand the new requirements before the deadline. We answered some of the most common questions.

1. When does SECR start?

The SECR regulations come into force on 1 April 2019. If your business is within the scope of SECR, you will have to report on energy use and greenhouse gas emissions through your annual report, for financial years starting on or after 1 April 2019.

The first publication of reports is therefore expected to be filed with Companies House in 2020.

2. Who is affected by the SECR rules?

The new rules affect quoted companies, large unquoted companies and large LLPs. Quoted companies already have carbon reporting obligations, but these have been extended. Large LLPs and large unquoted companies will have new obligations when the rules come in

3. Do I need to report under both ESOS and SECR?

BEIS’s impact assessment suggests around 25% of companies affected by the Energy Savings Opportunity Scheme (ESOS) and SECR will end up falling under both.

ESOS and SECR both require the measurement of energy consumption; once every four years under ESOS, and annually for the SECR framework.

With some smart planning you can transition easily from ESOS data reporting to SECR data reporting when it starts in April 2019. Contact us for advice on streamlining your reporting.

4. How do the SECR rules differ for quoted and unquoted companies?

The official Government guidance offers a handy checklist:

Quoted companies

  • Annual GHG emissions from activities for which the company is responsible including combustion of fuel and operation of any facility; and the annual emissions from the purchase of electricity, heat, steam or cooling by the company for its own use
  • Underlying global energy use
  • Previous year’s figures for energy use and GHG
  • At least one intensity ratio
  • Energy efficiency action taken
  • Methodology used

Large unquoted companies and LLPs

  • UK energy use (as a minimum gas, electricity and transport, including UK offshore area)
  • Associated greenhouse gas emissions
  • Previous year’s figures for energy use and GHG emissions
  • At least one intensity ratio
  • Energy efficiency action taken
  • Methodology use

(Source: the Government’s Environmental Reporting Guidelines.)

5. Do charities need to report under SECR?

If a charity is registered with Companies House and would qualify as “large” under the Companies Act 2006, it will be obliged to report under SECR. If it doesn’t meet those criteria, there is currently no obligation. (See our very short post: Do charities have to report on SECR?)

6. How does SECR apply to public bodies like councils and government departments?

SECR doesn’t apply to public bodies, but they’re subject to other legislation that still requires them to carry out carbon reporting.

Government departments, non-ministerial departments, agencies and Non-Departmental Public Bodies (NDPBs) are required to calculate their greenhouse gas emissions and state them in their annual reports, as part of their statements on sustainability performance for the year. They are subject to the Greening Government Commitments.

Local authorities in England are also required by the Government to measure and report their greenhouse gas emissions.

The Scottish Parliament, National Assembly for Wales and Northern Ireland Assembly have their own carbon reporting commitments.

7. What about other not-for-profit organisations?

If your organisation qualifies as a “large” company or LLP under the Companies Act 2006, you still fall under the SECR rules even if you’re not for profit. This includes companies or LLPs owned by universities, academies or NHS trusts.

8. What are my obligations for reporting at group level? What about subsidiary level SECR reporting?

If you’re reporting at group level, you need to include not just your own information but that of any subsidiaries which count as quoted companies, large companies or large LLPs. However, if there is information that a subsidiary would not be obliged to include if it was reporting on its own account, you are under no obligation to report it either.

If you’re reporting at subsidiary level and your energy and carbon information has already been included in the group-level report, you’re not obliged to report it in your own accounts and reports.

9. If my company is a low energy user, are we exempt from SECR?

If your company falls under the scope of SECR (because it’s a quoted company, a large unquoted company or a large LLP), you will still need to calculate your total UK energy use even if that usage is low. If the usage turns out to be 40MWh or less, you qualify as a low energy user and you don’t have to give the detailed information required by SECR.

It is important to remember that you’re still required to do the calculations and make a statement (either in your Directors’ Report or your Energy and Carbon Report) that you are a low energy user.

10. Is there any other way to win an exemption from the SECR reporting requirements?

In exceptional circumstances, an organisation’s directors or members may make the case that disclosing energy and carbon information would be seriously prejudicial to that organisation. For example, your company might be going through a takeover at the time you’re supposed to be producing the report and the information that would otherwise be contained in the report might affect the takeover. The relevant report must make the case for this and your claim for exemption may be investigated by the Financial Reporting Council.

You may also leave out certain information if it is not practical to obtain it, but you must state:

  • What information you’re leaving out.
  • Why it wasn’t possible for you to gather this data for this financial year.
  • How significant the missing information is to your overall carbon and energy reporting.
  • What steps you are taking to acquire the information for future reports.

Are you affected by SECR? Contact us for advice on how to make the most of compliance.