Today, we’re joined by our resident Carbonologist David Algar to discuss SECR.
What is SECR?
SECR stands for Streamlined Energy and Carbon Reporting, it stemmed from The Companies Act (2006) which was updated in 2013 to require quoted companies to report annual emissions in their directors’ report.
In 2018, the regulations were updated and an additional disclosure requirement for quoted companies was brought in. They now require energy use and associated GHG emissions to be reported by quoted companies, as well as by large, limited liability partnerships (LLPs).
Why was it introduced?
To increase awareness of a business’ energy use and emissions and to encourage the introduction of initiatives to reduce energy usage.
To provide organisations with the relevant data to make informed decisions.
To help increase visibility to key decision makers who may not have been aware of how much carbon their organisation is producing.
Provides transparency on an organisation’s emissions and energy use to external stakeholders.
Is it applicable to you?
SECR reporting is designed to apply to all quoted companies in the UK, as well as unquoted companies and LLPs defined as ‘large’ under the Companies Act 2006.
To be defined as ‘large’ under the Companies Act and therefore qualify for SECR reporting they must meet 2 or more of the following criteria:
- Have a turnover of £36m or more.
- Have a balance sheet of £18m or more.
- Have 250 or more employees.
Who does it not apply to?
Low energy users, those using less than 40MWh per year.
If disclosing energy use data could inadvertently reveal sensitive information about your business, or seriously detrimental to the interests of your business.
Not all public bodies are required to report.
If your data would not be practical to obtain.
What needs to be included?
This is where it gets slightly more complex as this is where reporting guidelines specify what you must report depending on if you are a quoted company compared to a large unquoted or LLP.
Similarities (what everyone needs to report):
- Their energy use in kWh and GHG emissions in tonnes of CO2 equivalent.
- Scope 1 and scope 2 emissions you are responsible for and a subset of scope 3 emissions relating to transport.
- Methodologies, at least one intensity ratio and finally, everyone must report on energy efficiency improvements.
- A key difference between quoted companies and the other two types is that quoted companies must reference their global Scope 1 and 2 emissions they are responsible for, and what proportion of their emissions comes from international sources.
- For unquoted companies and LLPs there is more of a focus on Scope 3 emissions. You will need to report on the energy and emissions associated with Scope 3 transport. This mainly refers to leased road vehicles and vehicles staff own but use for business purposes (grey fleet), but also covers larger vehicles such as ships, planes and trains if you have directly paid for the fuel yourself.
What are the benefits for your organisation?
You would have quantified a significant proportion of your emissions, which paints a good picture of where your largest emission sources are from.
You would have just taken one of the first steps towards achieving carbon neutrality.
SECR also helps provide greater transparency for investors and other stakeholders.
It also supports other reporting such as ESOS and the new requirement for businesses looking to obtain large government contracts to have a carbon reduction plan in place.
How can Blackmores help?
By quantifying your emissions for your reporting period, in the long term we can help quantify any remaining emissions that are not referred to in SECR, specifically any remaining Scope 3s
We can also help provide clarity on the definitions of each scope and the subcategories within them.
We have various templates that we have created and refined to help simplify the process.
We can produce the SECR report, meeting all the requirements of UK Environmental Reporting Guidance, and as well as the main SECR report, we can produce the summary of your Director’s Report.
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If you’d like further information on how we can help you with Carbon verification, SECR or Carbon Neutrality, check out our Carbonology Service.