One thing is inevitable, Streamlined Energy and Carbon Reporting (SECR) will bring about a change to business processes and the emphasis on your organisations emissions and actions taken to mitigate them.
The podcast linked to this article explains why SECR is a new paradigm for annual reports and why companies need to view environmental information in the same way they do their financial information. The disclosure of sustainability data is going to become as important as financial disclosures are, and on an annual basis.
Streamlined Energy and Carbon Reporting (SECR) is a reporting framework introduced April 2019 by the Department for Business, Energy and Industrial Strategy (BEIS). It is designed to make carbon reporting easier and replaces the Carbon Reduction Commitment Energy Efficiency Scheme (CRC). There are several schemes under which businesses have been expected to footprint their energy or carbon. The CRC impacted under 2,000 businesses. The Mandatory Greenhouse Gas (MGHG) Reporting regulation only affects listed companies. The Energy Savings Opportunity Scheme (ESOS) impacts roughly 7,000 companies. SECR impacts close to 12,000 companies, thousands of which will never have previously been required to footprint their energy or carbon, nor will have had to make that information public. A company must meet at least two of the following conditions to qualify: (1) annual turnover greater than £36m, (2) annual balance sheet total greater than £18m, or (3) more than 250 employees.
SECR also delivers on its ‘streamlined’ namesake by aligning reporting methodologies with global standards for carbon accounting like the GHG Corporate Standard. It also describes a very similar data collection process to that of ESOS. Most companies having just finished ESOS Phase 2 are likely impacted by SECR and should maintain the momentum built up during the ESOS data collection for a straightforward experience with SECR.
The CRC was a complicated reporting framework that bore no resemblance to other reporting standards and excluded certain business energy supplies. It also aimed to fulfil a dual role of both a carbon reporting and taxation framework, with a cost incurred based on calculated CO2 emissions. SECR, in contrast, is not a tax and requires reports to disclose methodologies used. It also represents business energy more fully by including transport and covers the Kyoto Protocol basket of six GHGs with CO2e rather than CO2 only.
The key message SECR aims to send is that it is time for companies to begin thinking about their energy and carbon in the same way that they do their finances. SECR compliance happens in published annual accounts on Companies House. Organisations must report on their energy and carbon, contextualise their emissions in their operations using an intensity metric, provide a narrative on energy efficiency action, and provide year-on-year comparisons of their figures. For prospective clients or investors, SECR is a new tool with which to evaluate companies along green selection criteria that are increasingly influencing purchasing decisions.
To learn more about SECR, the change it is bringing and why, although more streamlined in reporting, it will be more challenging to get compliance right compared with the outgoing CRC, listen to our podcast here.
You will learn why and how:
- SECR compliance is more complicated and wide ranging than CRC
- It will be more embedded in business processes and in a more fundamental way
- SECR is broadening transparency and what that means for your business
- You’ll need a much better handle on data collection and reporting
- You can lower overhead costs of producing and maintaining the measurement of carbon footprinting
- SECR will be audited
- Exposure and transparency will demand the need for quality disclosures
- You still need to act promptly on SECR, despite the opportunity of a 3-month extension to annual accounts submissions in the wake of COVID-19
This is a promoted article.