April 1st 2019 saw the introduction of some significant legislation changes for UK registered companies, especially regarding the requirement to report on energy consumption, GHG emissions, and energy intensity within annual reports.
These changes are due to the Streamlined Energy and Carbon Reporting (SECR), which is a replacement scheme for the Carbon Reduction Commitment (CRC) which ended on the same day the SECR began.
It is hoped that the result of these changes will mean obligatory carbon reporting for at least 8,000 businesses from the CRC. As well as this, at least 10,000 companies will be required to report their energy and emissions in their annual reports for the first time, due to the qualification criteria of the Energy Savings Opportunity Scheme (ESOS).
Tough to chew
That opening paragraph might seem a little complicated, so allow us to break down what is being introduced.
- Under the SECR scheme:
Energy use and carbon emissions will be visible to company boards and investors
- An energy intensity metric will put usage into context
Metrics will be used to help gauge productivity, efficiency, and market risk
- The legislation will begin in parallel with the proposed increase to the Climate Change Lecy (CCL), to continue incentivising energy reductions
- Companies will be eligible under the same terms as ESOS except SECR does not require companies to have at least 250 employees
- UK Quoted Companies (MGHG)
- UK listed companies with two of the below:
- More than 250 employees
- Turnover more than £36m
- Balance sheet total more than £18m
Who is exempt?
- Unquoted companies who can prove that it is not practical to obtain their SECR information (in part or full) can apply for exemption
- When Directors believe and can prove that SECR information disclosure could seriously negatively harm the business
- Low energy users (<40,000kWh annually) are not required to disclose their SECR information
Why are we changing from CRC to SECR?
The new SECR framework has been designed to build upon the good work done by the CRC and enable businesses to have more actionable data for reducing emissions and energy consumption. The Government is implementing this framework as part of its Clean Growth Strategy, which wants all industries to improve energy productivity by at least 20% before 2030.
The framework has been carefully designed to simplify reporting processes, rather than introduce added levels of complexities or burdens. Instead, it should align better with the best practice in the UK and internationally.
How can Imvelo support you with SECR changes?
- We can determine your SECR compliance risks
- We can help you with your annual report submissions
- We can implement a data collection strategy in your organisation, to capture relevant energy information relating to things like utilities and transport. This process can also be automated to improve accuracy and reduce human monitoring.
- We can calculate your Scope 1, Scope 2, and Scope 3 emissions
- We can report your energy use, emissions, chosen intensity metric, and more as part of your Annual Report, in line with the SECR legislation.
How do the SECR, ESOS, and ISO50001 all work together?
SECR is a mandatory reporting framework.
ESOS is a compliance scheme for large non-public sector organisations.
ISO50001 is the international standard for best practice energy management.
If your business is eligible for SECR or ESOS, you must report your energy use and carbon emissions.
To simplify this, by having already achieved ISO50001, which puts your business in the best possible position for energy management and contains the requirement for reporting, you will be compliant with both SECR and ESOS.
Be aware, however, that ISO50001 takes over a year to achieve compliance in, and ESOS requires a full 12-month period of energy data if you opt to go down this route.