Streamlined Energy and Carbon Reporting (SECR)
The legislative instrument used to mandate this is known as SECR - Streamlined Energy and Carbon Reporting.
The Government’s goal is to enable businesses and industry to improve energy efficiency by at least 20% by 2030. In 2016 therefore, the UK government announced reforms to improve the tax and reporting regime in this area. Reporting has a valuable role to play – what gets measured gets managed.
The accrual regulations came into force on 1 April 2019, when the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 came into force. Businesses in scope need to comply for financial years starting on or after 1 April 2019 and therefore need to understand their requirements under SECR.
How do the various schemes compare?
The ultimate aim of SECR is to harmonise reporting, removing the multiple carbon reports with different reporting dates and is streamlined to be consistent with financial reporting years. It will also make it easier to monitor and achieve reductions in carbon and cost each year.
SECR is enforced by the Conduct Committee of the Financial Reporting Council and they will be monitoring the compliance of reports submitted via Companies House. Failure to comply will see a company report rejected, which will then incur a late filing penalty under section 453 of the Companies Act 2006.
This could then escalate to civil action taken against directors or the various members of an LLP under section 451 of the Act.
Who needs to comply with SECR requirements?
SECR is now in force & covers financial reporting years starting on or after 1 April 2019. It replaces Mandatory Greenhouse Gas Reporting. The first reports will be published in 2020 – i.e. for financial years starting on or after 1st April 2019.
The qualifying conditions are met by a company or LLP in a year satisfying two or more of the following criteria:
-
Turnover of £36 million or more
-
Balance sheet TOTAL of £18 million or more
-
Number of employees of 250 or more
Low energy users are exempt from most of this requirement. Where an organization is a low energy user (less than 40MWh/year) it is not required to make the detailed disclosures of energy and carbon information.
Instead, such an organization is required to state, in its relevant report, that its energy and carbon information is not disclosed for that reason.
How is this reported?
Companies in scope of the legislation will need to include their energy and carbon information in their Directors’ Report as part of their annual filing obligations. In the case of charitable companies, the reporting should be in the combined Directors’ and Trustees’ Annual Report.
Charities, not-for-profit companies or others undertaking public activities – such as companies owned by universities, academies or NHS Trusts – will need to check whether they meet the above qualifying criteria.
Note: Criteria is different from ESOS & qualification or exemption from that is not necessarily carried across to SECR.
What should be reported?
Disclosures should cover the same annual period as the financial year, or an explanation should be provided as to why this is not the case.
How does this impact my ISO 14001 and ISO 50001 certification?
If your company falls within the detailed criteria - this should be listed under your compliance obligations in both your ISO 14001 and ISO 50001 management systems.
If you'd like to discuss this topic with us or have any questions please email us or call us on 0800 052 2424 and a member of the team will be happy to help.
To see our range of CQI and IRCA approved training courses please see below:
Author: Richard Walsh, NQA's Energy & Environment Principal Assessor.
