From financial years beginning on or after 1 April 2019, large UK companies will be required to report publicly on their UK energy use and carbon emissions within their Directors’ Report. This new requirement has been implemented by the Department for Business, Energy and Industrial Strategy (BEIS).
SECR will impact any companies, LLPs and groups that exceed at least two of the following three thresholds in the financial year:
- £36m annual turnover
- £18m balance sheet total
- 250 employees
For businesses meeting the above criteria, company or group reporting is required regardless of whether an overseas parent company or group has published a similar report. A group may however exclude any energy and carbon information relating to any subsidiaries which would not be obliged to report individually according to the thresholds. After undertaking a calculation, where a company has consumed less than 40MWh, a disclosure is not required.
What needs to be reported?
UK (and UK offshore) energy use and related Scope 1 & 2 Greenhouse Gas (GHG) emissions.
- Scope 1 - Direct emissions
- Scope 2 - Indirect emissions
- Scope 3 - Other indirect emissions
- Intensity metric for year-on-year
- Supporting narrative
- Voluntary disclosures
Scope 1 - Direct emissions
- Fuel use from transport (where thejourney begins or ends in the UK)
- Combustion of natural gas
What are the key challenges and opportunities?
- Determining the operational boundaries and scope for reporting
- Developing processes and controls for data collection
- Accounting for complex operations
- The potential reputational impact of public disclosure of energy use and carbon emissions
- The entity may not be in line with acceptable practices/industry peers
- Facing penalties from disclosing inaccurate results
- Operational cost-savings through increasing awareness of energy use and efficiency
- Differentiating from competitors by demonstrating best practice in energy savings and efficiency
- Demonstrate improved performance year on year by establishing ongoing monitoring of energy use and carbon emissions
What you will need to do
Compliance with the reporting requirements can be complex and confusing, especially for companies reporting for the first time. SECR reporting also presents an opportunity for private companies to monitor their environmental performance and identify areas for improvement.
- 1. Establish reportable operations and the organisational boundaries
- 2. Set up an accounting and reporting framework
- 3. Report and disclose
1. Establish reportable operations and the organisational boundaries
- Identify entities thatrequire reporting
- Determine theorganisationalboundaries for eachscope of emissions
- Understand how todeal with complexoperational activities
- Assist you with defining the reporting scope, including operational control and organisation boundaries
- Review your processes, controls and data outputs to assess the accuracy and completeness of your carbon disclosures
- Recommendations on best practice in monitoring and reporting operations
- Review your reporting set up and outputs
- Provide independent assurance over your carbon reporting and disclosure in your Annual Report
What you gain
- Accurate, compliant reporting
- Accelerate delivery; efficient reporting
- Increased stakeholder trust and confidence
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