Streamlined Energy & Carbon Reporting (SECR) Briefing Update

• Streamlined Energy & Carbon Reporting (SECR) Service

What is the Streamlined Energy & Carbon Reporting (SECR)?

The new Environmental Reporting Guidelines, which come into effect from 1st April 2019, replaced the guidance on Mandatory Greenhouse Gas Reporting (MGHG) that was contained in the previous version of the guidance.

Quoted companies of all sizes are now required to report their total global energy use and information relating to energy efficiency action alongside the methodology used to calculate the new and existing disclosure requirements.

The SECR will apply to all quoted companies and large incorporated unquoted companies with at least 250 staff or an annual turnover greater than £36m, and an annual balance sheet total greater than £18m.

This has been chosen based on the responses from the consultation and is taken from the Companies Act 2006. 

Limited Liability Partnerships (LLPs) are required to include SECR information in their annual reports.

SECR will be reported annually through directors’ reports. In the case of charitable companies, the reporting should be in the combined Directors’ and Trustees’ Annual Report.

Energy usage and carbon emissions are of strategic importance to the company, disclosure of the relevant information may be included in the Strategic Report instead of the Directors’ Report.

Overview of the Environmental Reporting Guidelines

The publication outlines seven (7) key principles for accounting and reporting your organisation’s environmental impacts. The following principles should be applied when collecting and reporting on environmental impacts:

• Relevant: Ensure the data collected and reported appropriately reflects the environmental impacts of your organisation and serves the decision-making needs of users – both internal and external to your organisation.
• Quantitative: KPIs need to be measurable. Targets can be set to reduce a particular impact. In this way, the effectiveness of environmental policies and management systems can be evaluated and validated.
• Accuracy: Seek to reduce uncertainties in your reported figures where practical. Achieve sufficient accuracy to enable users to make decisions with reasonable confidence as to the integrity of the reported information.
• Completeness: Quantify and report on all sources of environmental impact within the reporting boundary that you have defined. Disclose and justify any specific exclusions.
• Consistent: Use consistent methodologies to allow for meaningful comparisons of environmental impact data over time. Document any changes to the data, changes in your organisational boundary, methods, or any other relevant factors.
• Comparable: Companies should report data using accepted KPIs rather than organisations inventing their own versions of potentially standard indicators. The narrative part of a report provides the opportunity for a company to discuss any tensions which exist between providing comparable data and reporting company-specific KPIs. Use of accepted KPIs will aid in benchmarking an organisation and will aid users of the report to judge performance against that of peers.
• Transparent: This is essential to producing a credible report. Address all relevant issues in a factual and coherent manner, keeping a record of all assumptions, calculations, and methodologies used. Internal processes, systems and procedures are important, and the quantitative data will be greatly enhanced if accompanied by a description of how and why the data are collected. Report on any relevant assumptions and make appropriate references to methodologies and data sources used.

Alongside these principles, the guidance outlines the steps and actions required when identifying your environmental impacts and KPI’s to report on:

• Step 1: Determine the boundaries of your organisation
• Step 2: Determine the period for which you should collect data
• Step 3: Determine the key environmental impacts for your organisation
• Step 4: Measure
• Step 5: Report

Working through the steps is recommended, along with developing at least three (3) KPI’s linked to your organisation’s environmental impacts. The following actions should provide information on developing your environmental strategy.

• Action i: Intensity ratios
• Action ii: Setting a base year
• Action iii: Setting a target
• Action iv: Verification & assurance
• Action v: Your upstream supply chain
• Action vi: Downstream impacts
• Action vii: Business continuity and environmental risks

What needs to be reported?

Low Energy User:

A quoted company preparing a Directors’ Report which has consumed 40MWh or less during the period in respect of which the report is prepared.

Unquoted companies or LLPs preparing a Directors’ Report or Energy and Carbon Report which have consumed 40MWh or less in the UK, including offshore area, during the period in respect of which the report is prepared.

Unless reporting is part of a group or parent. Then all energy consumptions need to be taken into consideration.

Exclusions from the report

When the directors or members consider the disclosure of the energy and carbon information would be seriously prejudicial to the interests of the organisation. The relevant report must state that the energy and carbon information is not disclosed for that reason.

Where the energy and carbon information is not practical to obtain. The relevant Report must still state what energy and carbon information is not included and why.

Reporting Renewable Energy

Reporting on renewable energy and associated emissions is not a mandatory requirement under the SECR legislation, organisations are encouraged to use dual reporting if they wish to reflect their consumption of renewable energy.

Deadlines

The first set of SECR reporting must be filed with Companies House in 2020.

What Greenhouse Gases need to be reported?

Organisations are required to quantify and report on emissions of the following greenhouse gases: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6) and nitrogen trifluoride NF3.

Organisations must state in your Directors’ Report the annual quantity of GHG emissions in tonnes of carbon dioxide equivalent (CO2e) including from the following emission sources:

1. The combustion of fuel
2. The operation of any facility
3. A separate figure giving the annual quantity of emissions in tonnes of carbon dioxide equivalent resulting from the purchase of electricity, heat, steam or cooling by the company for its own use.

We will be launching our SECR service in time for April 2019 for clients who are required to report under this new reporting scheme.

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