SECR Reporting explained – Streamlined Energy and Carbon Reporting 2024

22 February, 2023

Your Guide to SECR reporting

SECR, Streamlined Energy and Carbon Reporting, was introduced in 2019 as a replacement for the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme. SECR is part of a wider effort to tackle climate change and reduce greenhouse gas emissions in the UK. By requiring businesses to report on their energy usage and emissions, the government aims to encourage them to take action to reduce their carbon footprint and work towards the goal of achieving net zero emissions by 2050.

What is SECR (Streamlined Energy and Carbon Reporting)?

SECR, or Streamlined Energy and Carbon Reporting, is a UK government regulation which mandates that large companies include information on their energy consumption and greenhouse gas emissions in their yearly reports. SECR incentivizes businesses to minimise their carbon footprint and increase accountability and openness among them.

Businesses must report their energy use, greenhouse gas emissions, and steps they took to improve energy efficiency under SECR. That is if they fulfil specific requirements, such as having more than 250 employees or an annual turnover above a particular threshold. Their yearly reports and accounts, which are made public, must contain this information.

As we know, climate change is a significant risk not only to the environment but also to the economy. With no proper policy and regulations, it is predicted that there can be a significant loss in GDP in the coming decades.

SECR is an approach to update the regulations regarding carbon regulations and check the type of companies that need to be reviewed. The SECR is formulated to offer an excellent solution for carbon accounting. It reduces the costs of the business, encourages prompt carbon disclosures, improves energy use, and supports companies in taking rightful measures to be more energy efficient.

In short, SECR reporting benefits the environment and the economy.

The input sourced from SECR concerning the carbon emissions data and other energy carbon data can also be valuable to investors. If a company strives to be energy efficient and its plans align to be energy efficient, it can result in better decision-making. It can help the world to be more sustainable and efficient. It also helps to create a low-carbon economy without hampering progress and innovation.

SECR Reporting

The SECR is required to be submitted by 11,900 companies in the UK. The companies need to meet certain criteria that make it compulsory for them to report their emission consumption. The following companies are required to report.

Quoted companies: These companies are already subject to the regulations concerning greenhouse reporting.
Large companies – in accordance with the Companies Act 2006
Large limited liability partnerships (LLPs) – LLPs that meet the definition of large companies as per the Companies Act 2006.
Not-for-profit companies, private sector organisations, charitable trusts and other public organisations that carry any public activities

Important note: Even though public bodies are not included in the list, they are still obligated to comply by GHG emissions reporting requirements. Any other organisations or entities can voluntarily submit reports of the energy consumed, emissions metrics, direct and indirect emissions reports and other related data. In fact, it is encouraged by BEIS.

How can Imvelo help with SECR?

SECR and ESOS: Energy management and carbon reduction programmes

SECR Reporting Requirements

Under the Streamlined Energy and Carbon Reporting (SECR) regulations, companies that meet certain criteria are required to include specific information in their annual reports, including:

Energy consumption – companies must report on the total amount of energy they consume during the reporting year, broken down by fuel type and source.
Greenhouse gas emissions – companies must report on their greenhouse gas emissions. It includes direct emissions from company operations (Scope 1), indirect emissions from purchased energy (Scope 2), and other indirect emissions (Scope 3).
Energy efficiency measures – companies must report on any energy efficiency measures they have taken during the reporting year, such as implementing energy-saving initiatives or switching to renewable energy sources.
Methodology – companies must describe the methodologies used to calculate their energy consumption and greenhouse gas emissions, including any changes made to the methodologies from previous reporting years.
Narrative – companies must provide a narrative statement explaining their energy efficiency measures and any plans to improve energy efficiency in the future.

SECR applies to large UK-registered companies that meet at least two of the following criteria: (1) annual turnover of £36 million or more, (2) balance sheet total of £18 million or more, or (3) 250 employees or more. Some exemptions apply, such as for companies that are already reporting under the Climate Change Agreements (CCA) or the EU Emissions Trading Scheme (ETS).

Companies must include this information in their annual reports for financial years starting on or after April 1, 2019.

SECR reporting terms explained

Here are some common terms used in a Streamlined Energy and Carbon Reporting (SECR) report and their explanations:

Scope 1 emissions

Direct emissions from sources that are owned or controlled by the company, such as emissions from on-site combustion of fuels.

Scope 2 emissions

Indirect emissions from the generation of purchased electricity, heat or steam consumed by the company.

Scope 3 emissions

Indirect emissions that are not included in Scope 2. This includes emissions from the extraction and production of purchased materials, transportation of purchased goods and services, and employee commuting.

Total energy consumption

The total amount of energy consumed by the company during the reporting year is expressed in megawatt hours (MWh) or gigajoules (GJ).

Carbon intensity

The amount of carbon emitted per unit of activity, such as revenue or production volume.

Energy efficiency measures

Actions taken by the company to reduce its energy consumption and associated greenhouse gas emissions. Installation of energy-efficient lighting or the adoption of renewable energy sources fall under this.

Methodology

The approach and calculations used by the company to determine its energy consumption, greenhouse gas emissions, and carbon intensity.

Narrative

A written explanation of the company’s energy consumption, greenhouse gas emissions, and energy efficiency measures, as well as its plans to improve energy efficiency in the future.

Intensity ratio

The ratio of greenhouse gas emissions to a chosen metric of activity or output, such as revenue, floor space, or production volume. The intensity ratio helps to provide a standardized measure of a company’s carbon footprint relative to its level of activity or output. This enables stakeholders to compare the relative emissions intensity of different companies within the same sector. It is a useful metric for companies to identify areas where they have the highest carbon emissions intensity and target efforts to reduce those emissions. Companies can also track their progress over time, and benchmark their performance against other companies in their industry.

SECR reporting requirements vary depending on the size and type of the company. All reports should include information on the company’s energy consumption and greenhouse gas emissions, as well as measures taken to improve energy efficiency. The goal of SECR is to increase transparency and accountability among companies and encourage them to reduce their carbon footprint.

What are the exemptions?

There are a few exceptional situations in which the companies are exempt from the requirements mentioned in SECR.

If the quoted or large-scale unquoted companies use less than 40MWh in an annual year, they are subject to a minimum exemption. To avail of exemption, the company needs to make sure that are low energy users in a statement.

A brief of group and subsidiary level of reporting

In certain cases, a group-level report is required. This report contains the data regarding energy use and carbon emissions data of all the companies under the parent company. Companies should take note that this guideline is different in the case of ESOS and the CRC Energy Efficiency Scheme.

What is mentioned in the disclosure?

The conditions mentioned in SECR requirements depend on the type and size of the business.

A. For quoted companies

1. Scopes 1, 2 and 3

Quoted companies are obligated to comply with Scope 1 and 2 for GHG emissions. Submission of carbon dioxide should be made in tonnes – with seven prominent gas types mentioned in the Kyoto Protocol.

2. Emissions intensity ratios

Emissions intensity ratios of the previous and current year need to be mentioned in the Director’s reports. These ratios represent the percentage of GHG emissions in relation to the quantum of business operations. It helps the investors and regulators understand the companies’ energy efficiency and compare the same with other similar companies.

3. Energy consumption

Companies are also required to mention their energy consumption in the UK and overseas.

4. Measures Implemented

The report requires the implementation of measures taken in a particular year concerning the reduction of carbon emissions. Quoted companies need to give a proper brief of the plan, detail the methodology and the impact to improve energy efficiency by adding sufficient data recorded.

Important points that you need to know about SECR

If a business is registered outside the UK, it is exempt from SECR. This also includes parent companies registered overseas with UK subsidiaries.
Currently, there are around 11,300 UK businesses under the scope of SECR.
Even though it is not necessary for the company to have the SECR reporting aligned with the financial year, it is encouraged to maintain compatibility and consistency of information.
It is possible that the rules of SECR may change, subject to consultation.
The companies in the scope are required to mention at least one intensity ratio in their SECR reporting.

No matter whatever changes that we observe in the next years, it is essential to note that there are many opportunities present with it. This is indeed valuable and can help businesses kickstart their path to carbon and energy reductions sustainably.

FAQs

What is an SECR report?

SECR (Streamlined Energy and Carbon Reporting) report is a mandatory report for large UK-registered companies. The report includes information on a company’s greenhouse gas emissions, energy consumption, and energy efficiency measures.

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What do you need to report in SECR?

SECR requires companies to report on their greenhouse gas emissions, energy consumption, and energy efficiency measures. The report should include information on scope 1 and 2 emissions, and an intensity ratio. Companies may also include information on scope 3 emissions, but this is not mandatory.

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Does SECR include scope 3?

SECR does not require companies to report on scope 3 emissions. However, companies may choose to include this information in their report.

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What is the difference between Esos and Secr?

ESOS (Energy Savings Opportunity Scheme) and SECR are both mandatory reporting schemes for large UK-registered companies. ESOS requires companies to assess their energy use and identify energy-saving opportunities. SECR requires companies to report on their greenhouse gas emissions, energy consumption, and energy efficiency measures.

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What happens if you fail to comply with SECR?

Companies that fail to comply with SECR may face financial penalties. In addition, non-compliance may damage a company’s reputation and make it more difficult to attract investors and customers.

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Why is SECR important?

SECR is important because it provides transparency and accountability for companies’ greenhouse gas emissions and energy consumption. It also helps to drive the transition to a low-carbon economy by encouraging companies to reduce their carbon footprint and improve energy efficiency.

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What is SECR intensity ratio?

SECR intensity ratio is a metric that measures the carbon emissions intensity of a company’s operations. It is calculated by dividing a company’s annual greenhouse gas emissions by its chosen metric of activity or output, such as revenue, floor space, or production volume.

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What are scope 1 emissions?

Scope 1 emissions are direct greenhouse gas emissions from sources that are owned or controlled by the company, such as emissions from on-site combustion of fuels.

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What are scope 2 emissions?

Scope 2 emissions are indirect greenhouse gas emissions from the generation of purchased electricity, heat, or steam consumed by the company.

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What are scope 3 emissions?

Scope 3 emissions are indirect greenhouse gas emissions that are not included in Scope 2, such as emissions from the extraction and production of purchased materials, transportation of purchased goods and services, and employee commuting.