New SECR guidance: an overview
The government recently published official guidance on the new Streamlined Energy and Carbon Reporting scheme, or SECR for short.
Even if your business doesn’t currently have to do any carbon reporting, it might end up with new obligations once the scheme comes into force in April.
We’ve reviewed the guidance to help you understand whether – and how – your organisation needs to comply:
Regulations in force from 1 April 2019
The relevant law is the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, and it will apply to financial years starting on or after 1 April 2019. Companies quoted on a stock exchange already have carbon reporting obligations, but this new legislation extends the requirements for quoted companies and, crucially, imposes new carbon reporting requirements on other types of company: unquoted large companies and LLPs.
If your company is quoted, you already have to disclose:
- Annual greenhouse gas (GHG) emissions from activities for which your company is responsible.
- At least one intensity ratio, for example, tonnes of CO2 per kWh for the energy sector, or tonnes of CO2 per square metre for the property sector.
- The previous year’s figures for comparison purposes (except of course in the first year of reporting).
- How you gathered data and did your calculations.
Under the new regulations, you will also have to disclose:
- The total energy consumption that you’ve used as the basis for your calculation of GHG emissions.
- What proportion of both energy consumption and GHG emissions is linked to the UK rather than abroad.
- What you’ve done in the past financial year to improve the energy efficiency of the business.
Large unquoted companies and large limited liability partnerships (LLPs)
If your company is already legally required to prepare an annual Directors’ Report and qualifies as “large” under the Companies Act 2006, the forthcoming legislation now requires you to prepare a new kind of document called an Energy and Carbon Report. The same goes for any LLP that counts as large.
Your Energy and Carbon Report should include:
- UK energy use, including the electricity and gas you’ve purchased in the relevant financial year and energy use from transport. (See our blog post for guidance on how to gather transport energy consumption data for your business.)
- The GHG emissions arising from your UK energy use.
- At least one intensity ratio
- Last year’s figures (except for the first year of reporting).
- What steps you’ve taken to improve energy efficiency in the relevant year.
- How you gathered your company’s data and worked out the totals.
Some companies are exempt from the new rules.
If your organisation qualifies as a “low energy user” by consuming 40MWh or less during the relevant financial year, you are not required to provide all this detailed information. But you still need to make it clear to Companies House why you’re exempt, either in your Energy and Carbon Report or your Directors’ Report. (See our blogpost: Do low energy users need to report under SECR? for more information.)
You may also apply for an exemption on the grounds that your company’s energy and carbon information is commercially sensitive, but this only applies in truly exceptional circumstances.
It is also possible to leave out certain energy and carbon information from your company’s report if it is truly impractical to obtain, but you’ll need to explain what you’re leaving out and why it isn’t possible to include it.
The Government’s Environmental Reporting Guidelines contain official guidance on SECR. There is also information on voluntary reporting, for organisations who aren’t yet legally obliged to report their carbon emissions but see it as best practice.
At the Energy Advice Hub we aim to keep you up to date on SECR and other mandatory compliance schemes. Take a look at our SECR pages for blog posts, articles and answers to your frequently asked questions. Or – if you’ve got a question we’ve not covered – contact us for advice.