Streamlined Energy and Carbon Reporting for academy trusts: a quick guide
For the first time, academies are now required by law to disclose information about their energy use and carbon emissions. We’ve put together this quick guide for academy trustees and chief financial officers, to help you get up to speed.
Why do academies have to start reporting on energy and carbon?
The UK government increasingly needs information on the carbon footprint of large organisations to help it reach its climate targets. The Companies Act 2006 introduced the requirement that companies listed on a stock exchange (quoted companies) should report their carbon emissions as part of their annual reporting and accounts.
Now there’s a new government policy called Streamlined Energy and Carbon Reporting (SECR), which extends the requirements to other types of company, so large unquoted companies and limited liability partnerships are now obliged to do this too. (SECR was brought into law through 2018 legislation that came into force in 2019.)
The Education and Skills Funding Agency has confirmed that academy trusts are within the scope of the legislation, so if an academy meets the criteria it is obliged to report under SECR. (The same thing goes for SECR and charities.)
The government recently published guidance on SECR for academy trusts, but it isn’t very different from the guidance aimed at other businesses.
How do we know if our academy trust has to report under SECR?
The definition of “large company” used by the SECR rules comes from the Companies Act 2006. It means a company that meets two or more of the following criteria:
• turnover (or gross income) of £36 million or more;
• balance sheet assets of £18 million or more;
• 250 employees or more.
If your academy trust meets this definition, it is a large company for SECR purposes and is legally obliged to report on its energy use and carbon emissions.
What about multi-academy trusts?
Roughly two-thirds of academies have come together to form multi-academy trusts (MATs). If your annual financial reporting is for the MAT as a whole, you should consider the MAT as a whole when deciding if it is large enough to come within the scope of SECR. So you need to look at the total turnover, assets and number of employees.
What’s the deadline for SECR reports?
Organisations are expected to file their SECR report along with their normal annual report, for financial years starting on or after 1 April 2019. Obviously the exact deadline depends on the dates of your financial year, but if your academy trust is one of the many organisations with a financial year that starts and ends in April, your first SECR report will be due (along with your annual accounts) in January 2021. The Education and Skills Funding Agency recommends that you also publish this information on your website, but this is not compulsory.
How should we get started with our first SECR report?
The first step is to gather the data on the trust’s UK energy use. This means the energy you’re actually using and paying for. So the heating and lighting of school buildings would count, and so would any petrol used by school-operated transport. But it wouldn’t include the petrol used by parents driving their children to school or teachers commuting to the school as their workplace. An easy rule of thumb is to ask whether the academy is purchasing the fuel itself; using this rule, you can easily see how a school minibus would come under SECR but a coach hired for a day trip would not.
The next step is to calculate the actual greenhouse gas emissions associated with this energy use. The government publishes a list of “conversion factors” to help you calculate this. For example, a litre of petrol is equivalent to about 2.3kg of carbon dioxide.
You then need to come up with what the guidance calls an “intensity ratio”. This is a way of comparing your emissions data with a metric that is meaningful to your organisation. For example, a lawnmower manufacturer might come up with an intensity ratio of carbon emitted per lawnmower created. It might seem more difficult to do this for an organisation in the education sector, but you might choose, for example, tonnes of carbon per pupil.
What must be included in our SECR report?
The legal minimum to include is:
• Your annual UK energy use and associated greenhouse gas emissions;
• Your chosen intensity ratio;
• Your methodologies (how you gathered the data and calculated it);
• What the academy trust is doing to improve energy efficiency. (There are no penalties for doing nothing – you just have to say so.)
In future financial years, you will also have to supply the previous year’s figures for comparison purposes, but you obviously won’t have to do that this year, because it will be your first ever SECR report.
Are there any exceptions to academy trusts’ SECR obligations?
Assuming the trust is large enough to count as a large company under the Companies Act 2006, it probably isn’t an exception. However, if your trust consumes fewer than 40,000 kilowatt-hours (kWh) of energy in the reporting period, you qualify as a “low energy user” and become exempt. However, in order to know whether or not your trust qualifies, you have to get a clear idea of your annual energy use. This means doing the work of calculating your UK energy use, so you can’t escape at least the first step.
However, wondering about loopholes and exceptions is the wrong way to approach SECR. Many large organisations have found that the information they gather as part of their SECR obligations proves to be invaluable in helping them identify ways to become more energy-efficient, reduce their carbon footprint and cut running costs for the trust.
What if nobody is qualified to do our SECR report?
Many big corporations already have someone responsible for matters relating to energy use and carbon, but this may not be the case for academy trusts: compiling a SECR report for the first time might seem a daunting task. The government guidance gives some worked examples to help you with the kind of calculations involved, but you may prefer to engage expert help to ensure compliance and improve the reporting process moving forward.