What Is Streamlined Energy and Carbon Reporting (SECR)?
Streamlined Energy and Carbon Reporting is a regulatory framework designed to help UK businesses meet global energy efficiency standards and greenhouse gas (GHG) emissions. It requires companies to report information on energy usage, carbon emissions, and efforts to improve these areas. It applies to all UK-incorporated quoted companies on stock exchanges, large UK-incorporated companies not quoted on exchanges, and large limited liability partnerships (LLPs). Companies also may elect to participate in SECR voluntarily as a means to improve their energy consumption and carbon footprint.
What Is the Purpose of SECR?
SECR is intended to encourage businesses to be environmentally responsible. It aims to achieve this by raising companies’ awareness of energy costs, providing them with data they can use to pursue greater energy efficiency, and helping them reduce carbon emissions. With respect to carbon emissions, SECR is aligned with global standards promoting net-zero emissions, where companies’ output of greenhouse gases is balanced by carbon removed from the environment.
SECR Reporting Requirements
SECR reporting is mandatory for all companies quoted on UK stock exchanges and all companies designed as large. The latter designation currently includes companies meeting at least two of the following criteria:
- Annual turnover (or gross income) of at least £36 million
- Balance sheet assets of at least £18 million or more
- At least 250 employees
Large companies consuming less than 40,000 kWh of energy in a reporting period are exempt.
Affected companies must report:
- Electricity usage, both for powering operations and transportation
- Gas consumption for both mobile and stationary activities
- Transportation fuel consumption is used for purposes such as fueling company vehicles and minibusses
- Greenhouse gas consumption
- Emissions intensity ratio, which is a metric measuring emissions from one year to the next
- The methodology used to calculate the required information
- A narrative explaining steps being taken to improve energy efficiency
- Prior year figures for comparison, when applicable
SECR reports must be filed annually.
How the SECR Framework Reporting Process Works
SECR reports are submitted to Companies House. Quoted and unquoted companies should include them in their annual directors’ reports. LLPs should submit an energy and carbon report with their annual reports. Companies, where energy use and carbon emissions are of particular strategic importance should include them in their strategic reports. Charitable organizations should include them in combined directors’ and trustees’ annual reports.
There is no prescribed reporting format. However, all reports should include all required elements, namely:
- Annual energy use and greenhouse gas emissions
- An emissions intensity ratio, using a metric selected by the company
- Methodologies used to calculate the required information
- A narrative on how the company is improving energy efficiency
- Prior year figures for comparison, if available
Your reporting deadline is based on your company’s financial year and should be aligned with deadlines for your annual reports, as described above.
Three Benefits of Participating in the SECR Framework
Participating in the SECR framework, whether out of obligation or voluntarily, offers companies a variety of benefits. Some of the most important are:
- Enhanced risk management and decision-making: reviewing energy consumption and carbon emission patterns can help companies understand and avoid the impact of risks stemming from wasteful energy usage and climate-based factors
- Potential cost savings: monitoring energy consumption can help businesses reduce usage and increase energy efficiency, promoting savings.
- Improved transparency and accountability: greater environmental transparency can be attractive to investors and consumers
Of course, if your business is required to file an SECR report, an additional benefit is achieving regulatory compliance and avoiding penalties for non-compliance.
Consequences for Non-compliance with the SECR Framework
Failing to comply with SECR reporting regulations can trigger financial penalties. The Conduct Committee of the Financial Reporting Council can levy fines for non-compliance. Additionally, since reports are submitted with your annual reports to Companies House, that agency can reject your application and make you submit it again if you fail to include SECR information. This can trigger late filing penalties from £150 up to £7,500, depending on the size of your company and how late you end up filing.
Potential Challenges in Reporting Energy and Carbon Emissions
When preparing your SECR filing, you may run into several common challenges:
- Gathering accurate and complete data on energy and carbon emissions can be time-consuming and resource-intensive, especially if you don’t have an automated system in place to collect the information.
- There may be discrepancies in the methods used to measure and report emissions, leading to inconsistencies in your reported data.
- You may encounter difficulties in accurately accounting for emissions from complex supply chains or operations, which you’ll need to know to provide information on indirect emissions from sources you don’t own or control which aren’t energy providers (Scope 3 emissions).
The best way to overcome these challenges is to consult professional advisors and use enterprise-quality carbon management software with Scope 3 tracking capability.
Improve Your SECR Compliance With carbmee
The SECR framework requires affected UK businesses to report information about energy usage, greenhouse gas emissions, energy efficiency progress, and steps to improve consumption. Staying in compliance with the framework requires access to all relevant data and an accurate methodology for analyzing data.
Using carbon management software, you can automate the process of collecting and analyzing the data you need and preparing your reports. Smart software can also help you identify opportunities to improve energy efficiency and reduce emissions. The carbmee platform is designed to help you achieve SECR compliance by automating your data collection, identifying opportunities for energy optimization, and producing reports to demonstrate your progress over time. We also provide an online knowledge base and answers to FAQs to help you find the necessary information to achieve compliance. Book a free demo to see how our solution can help you and discuss your company’s needs with our industry experts.