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Sunday, 18th August 2019

Streamlined Energy and Carbon Reporting (SECR): Frequently Asked Questions

The Energy Advice Hub is powered by BiU, the UK’s leading energy and utility consultancy.

We’ve put together the most frequently asked questions on the Government’s new Streamlined Energy and Carbon reporting scheme, to help you meet compliance.

Got a question that we’ve not covered? Give BIU’s SECR team a call on 01253 785409 or email [email protected]

1. What is SECR (Streamlined Energy and Carbon Reporting)?

Streamlined Energy and Carbon Reporting (SECR) is a new, mandatory carbon and energy reporting scheme for large UK companies.

Companies within scope need to collect and measure their energy and carbon information – and submit this as part of their annual accounts filed with Companies House.

2. When does Streamlined Energy and Carbon Reporting start?

SECR came into force on 1st April 2019. Businesses that come under the scope of SECR will have to do their reporting for their first financial year that starts on or after 1st April 2019. This means that your first financial report will be due on or after 1st April 2020, with the exact date depending on your organisation’s financial year.

3. Which companies must report under SECR?

Broadly speaking, SECR affects:

  • Companies quoted on a stock exchange
  • Companies that aren’t quoted, but qualify as “large”
  • LLPs that qualify as “large”.

The definition of “large” for SECR purposes the one used by the Companies Act 2006. Your organisation is “large” if you meet at least two of the following criteria:

  • your turnover is £36 million or over
  • your balance sheet total is £18 million or over
  • you have 250 employees or more

4. Does SECR require disclosure of information?

Yes it does, as your Energy and Carbon report needs to be submitted as part of your annual accounts filed with Companies House.

5. Does SECR apply throughout the UK?

Yes, SECR applies to all quoted companies, large unquoted companies and large LLPs throughout the UK.

Companies incorporated outside of the United Kingdom are NOT required to comply with SECR, including foreign parent companies of UK subsidiaries.

6. What about BREXIT and SECR?

The UK government’s commitment to carbon reduction is not dependent on the UK remaining within the EU. Their proposed reporting process for SECR will be unchanged by the UK’s departure from the EU.

7. Which details must companies report for SECR?

It depends on whether you are a quoted company, or a large unquoted company/LLP:

Quoted companies must disclose:

  • Annual greenhouse gas (GHG) emissions from activities for which your company is responsible.
  • At least one intensity ratio.
  • 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.
  • 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 LLPs must disclose:

  • UK energy use, including the electricity and gas you’ve purchased in the relevant financial year and energy use from transport.
  • 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.

8. Do some firms need to report under both SECR and ESOS?

BEIS’s impact assessment suggests around 25% of companies affected by the Energy Savings Opportunity Scheme (ESOS) and SECR will end up falling under both.

ESOS and SECR both require the measurement of energy consumption; once every four years under ESOS, and annually for the SECR framework.

With some smart planning you can transition easily from ESOS data reporting to SECR data reporting. Call the BiU team on 01253 785409 for advice on streamlining your reporting.

9. Under SECR, do firms need to identify energy saving actions and opportunities?

Companies in scope of SECR will be required to provide a ‘narrative commentary’ on energy efficiency action taken in the financial year, but, unlike ESOS, will not be required to identify further opportunities.

The required information will be backward looking as it will provide data in relation to the year of the annual report and a preceding year.

If no measures have been taken this should also be included in the report.

10. How do the SECR rules differ for quoted and unquoted companies?

The official Government guidance offers a handy checklist:

Quoted companies Large unquoted companies and LLPs
Annual GHG emissions from activities for which the company is responsible including combustion of fuel and operation of any facility; and the annual emissions from the purchase of electricity, heat, steam or cooling by the company for its own use UK energy use (as a minimum gas, electricity and transport, including UK offshore area)
Underlying global energy use Associated greenhouse gas emissions
Previous year’s figures for energy use and GHG Previous year’s figures for energy use and GHG emissions
At least one intensity ratio At least one intensity ratio
Energy efficiency action taken Energy efficiency action taken
Methodology used Methodology used

11. Where do companies report under SECR?

Companies in scope of the SECR legislation will need to include their energy and carbon information in their Directors’ Report as part of their annual filing obligations.

Large LLPs are required to prepare an equivalent report to the Directors’ Report (called an “Energy and Carbon Report”) for each financial year.

12. Are there any exemptions from SECR?

Yes, several.

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 of the detailed information required by SECR. 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.

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.

13. What will SECR be worth to the UK?

BEIS estimates SECR should result in a reduction of £1.3 million in annual costs to business. Some 4TWh of annual energy savings and associated annual carbon savings of 0.8MtCO2e are also predicted, leading to a total forecast benefit to UK society of £1.5 billion.

14. Do charities and not for profits need to report under SECR?

If your charity or not for profit organisation is registered with Companies House and would qualify as “large” under the Companies Act 2006, it will be obliged to report under SECR. If it doesn’t meet those criteria, there is currently no obligation.

15. Do public sector and higher education organisations need to report under SECR?

You are not required to report under the SECR framework at an organisational level if your organisation is defined as a public body, (note – you may still have other reporting requirements such as under the Greening Government Commitments).

However, you may fall within the scope of SECR even if undertaking public, or not for profit activities if you are a registered company or company/LLP owned by universities, academies or NHS Trusts.

Contact us if you are unsure of what your reporting requirements are.

16. What are my obligations for SECR reporting at group level? What about subsidiary level SECR reporting?

If you’re reporting at group level, you need to include not just your own information but that of any subsidiaries which count as quoted companies, large companies or large LLPs. However, if there is information that a subsidiary would not be obliged to include if it was reporting on its own account, you are under no obligation to report it either.

If you’re reporting at subsidiary level and your energy and carbon information has already been included in the group-level report, you’re not obliged to report it in your own accounts and reports.

17. Does the SECR reporting period need to align with my company’s financial year?

According to the official SECR guidance, organisations are encouraged to align all information to their financial years, “to aid comparability and consistency of information across reports and organisations.”

However, it’s not mandatory. The guidance states that: “The obligation is to disclose annual figures for emissions and energy use. If the annual period used is not the same as the financial year covered by the relevant Report, this must be made clear in the Report.”

18. Can a company report on SECR electronically?

Electronic reporting will be voluntary for SECR information from 2019, although BEIS plans to keep mandatory electronic reporting an option for the longer term.

19. Will the total number of UK firms reporting on energy and carbon grow under SECR?

Yes. BEIS estimates some 11,900 companies will report their energy and carbon emissions under SECR, compared with about 4000 companies and 1,200 other public and private sector organisations reporting under the abolished Carbon Reduction Commitment (CRC) scheme.

20. Do I need to report on renewable energy use under SECR?

No. It’s not mandatory, but organisations are encouraged to use dual reporting if they wish to reflect their consumption of renewable energy.

Organisations are encouraged to use location-based grid average emission factors to report the emissions from electricity, including those consumed from the grid. Where available, time specific (e.g. hour by hour) grid average emission factors should be used in order to accurately reflect the timing of consumption and the carbon-intensity of the grid.

Where organisations have entered into contractual arrangements for renewable electricity, e.g. through Power Purchase Agreements or the separate purchase of Renewable Energy Guarantees of Origin (REGOs), or consumed renewable heat or transport certified through a Government Scheme and wish to reflect a reduced emission figure based on its purchase, this can be presented in the relevant report using a “market-based” reporting approach. It is recommended that this is presented alongside the “location based” grid-average figures and in doing so, you should also look to specify whether the renewable energy is additional, subsidised and supplied directly, including on-site generation, or through a third party. A similar “dual reporting” approach should be taken for biogas and biomethane (including “green gas”).

21. Is a 'large company' the same thing under ESOS and SECR?

No. For SECR, large companies are now defined using the Companies Act definition of ‘large’ (see question 3).

This is different to the ESOS definition, which is potentially confusing for businesses. Contact us if you are unsure whether your company falls within scope of either ESOS or SECR.

22. Can SECR really help grow energy efficiency?

BEIS believes the requirement to report on energy efficiency during the 12 months of the reporting period will increase energy savings across UK business by 5% with no associated additional costs.

23. When will SECR be reviewed?

The Government is committed to reviewing the SECR framework. The planned publication date is 29th February 2024, within five years of the policy implementation date.

24. Does SECR spell the end for the CRC?

Yes, it does. The CRC Energy Efficiency Scheme closed at the end of the compliance year, on 31 March 2019. SECR aims to fulfil a Government commitment to make it easier for businesses to report on their energy efficiency and their carbon emissions.

25. Does SECR come from EU legislation?

No – the Streamlined Energy and Carbon Reporting framework is not linked to EU directives. It is a mandatory scheme for UK companies, to meet the requirements of new UK legislation – The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018.

Companies incorporated outside of the United Kingdom are not required to include energy and carbon information in their Directors’ Report under this legislation, including foreign parent companies of UK subsidiaries.

26. Is the qualification criteria for SECR the same as for the CRC?

No. Qualification for the CRC was assessed according to electricity use (those with half-hourly consumption over 6 GWh), whereas SECR qualification is based on company size and type. If you are a quoted company, a large unquoted company or a large LLP you will qualify for SECR. CRC did not include transport emission reporting, or the need for narrative on specific areas of improvement.

BEIS estimates some 11,900 companies will report their energy and carbon emissions under SECR, compared with about 4000 companies and 1,200 other public and private sector organisations reporting under CRC.

The Energy Advice Hub is powered by BiU, the UK’s leading energy and utility consultancy.

Got a question that we’ve not covered? Give BiU’s SECR team a call on 01253 785409 or email [email protected]

FREE SECR Pocket Guide