SECR has arrived – and our expert consultants have broken down the key facts!

SECR has arrived – and our expert consultants have broken down the key facts!

Following much research, and an extensive consultation in summer 2018, the UK government have now launched the Streamlined Energy and Carbon Reporting Framework (SECR). The new framework is effective from today, 1st April 2019, and as well as aiming to simplify the current reporting strategy, SECR replaces the CRC Energy Efficiency Scheme, which also comes to an end this month.

The changes have largely come off the back of the governments ‘Clean Growth Strategy’, published in October 2017, which set out an ambition of assisting businesses to improve their energy efficiency by at least 20% by 2030. It is designed to build on the existing Mandatory Greenhouse Gas Reporting (MGHG) requirements already in existence (since 2013) for UK Quoted Companies under Companies Act 2006, as well as the Energy Savings Opportunity Scheme (ESOS) Regulations 2014. The new framework recognises the consultation responses that a mandatory reporting scheme is very important, and should be aligned with best international practise but that it should not create additional complexity, and administrative or financial burdens.

Following extensive research, the government have recognised that reporting is proven to encourage the implementation of energy efficiency measures in industry, which can provide both financial and environmental benefits, allowing companies to reduce energy and emissions whilst also cutting costs on energy expenditure. Further, despite BREXIT meaning we may no longer have to comply with EU Environmental Regulations, we still have domestic targets and remain part of the International Paris Agreement.

 

 

Who needs to comply?

The SECR Framework is estimate to affect just under 12,000 companies in the UK, extending the scope from the previous CRC scheme, which covered only 4,000. The four categories of businesses needing to comply include:

  1. Quoted Companies, as defined by Companies Act 2006, and who have admitted to trading on the London Stock Exchange, in an EEA state, New York Stock Exchange, or NASDAQ. This group of companies already report under MGHG (2013).
  2. UK registered, unquoted, large companies, as defined by Companies Act 2006, who fulfil at least 2 of the 3 following conditions for the financial year they’re reporting:
  • 250 or more employees
  • Annual turnover > £36 million
  • Annual balance sheet total > £18 million

 

  1. Limited Liability Partnerships (LLP’s) that are already obligated to carry out energy audits under ESOS, and previous CRC scheme.
  2. Large, unregistered companies that operate for gain and currently produce Directors Reports under Unregistered Companies Regulations 2009, with reports needing to comply with Large and Medium Companies Regulations 2008.

As with similar schemes, there are exemptions, including very low, domestic level energy use, or if gaining info would be impractical or prejudicial to the company’s interests. However, companies should research this further to ensure an exemption would apply, and must be able to evidence and justify this in their Directors Report.

What will companies need to report?

Quoted Companies will need to report on their scope 1 and 2 emissions as an intensity metric, and global energy use. Reporting of scope 3 emissions remains voluntary. Unquoted, Large Companies, and LLP’s will need to report on UK energy use from electricity, gas and transport, as well as associated scope 1 and 2 emissions as an intensity metric.

All companies (quoted, unquoted and LLPs) must provide narrative commentary on any energy efficiency action taken in the previous 12 months.

There is no specific methodology for reporting under the SECR framework but the government do intend to set out guidance on what will be considered ‘good practise’. The new framework should be included in Directors Report, or equivalent in their Annual Report for the first financial year beginning on or after 1st April 2019. Electronic Reporting will remain voluntary for the time being but the government will continue to review the feasibility of Mandatory Electronic Reporting in the near future.

Our team of expert Energy Management Consultants are on hand to advise on what your business will need to do for SECR, and can also assist in the collation, analysis and reporting of data on an ongoing basis. To find out more call us on 01455 883 259 or give email the team


Article published 1st April 2019

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