Context
The Streamlined Energy and Carbon Reporting (SECR) framework was brought into force in April 2019 through updates to The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 and The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008. SECR requires all large companies* as defined by Part 7A of Schedule 7 of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 to report within their Directors’ Report (annual financial report) their:
- greenhouse gas emissions,
- energy usage,
- greenhouse gas emissions intensity, and
- energy efficiency improvements made during the reporting year.
*Large companies are those which meet 2 of the following thresholds for the previous and current financial year:
- turnover of more than £36M,
- total assets of more than £18M,
- number of employees more than 250.
How to report
The table below shows the slight difference between quoted and unquoted large companies in their reporting requirements.
| Quoted Companies | Large Unquoted Companies and LLPs | |
|---|---|---|
| Underlying global energy use (current and previous year) | ||
| UK energy use (current and previous year) | ||
| Annual greenhouse gas emissions (scopes 1 and 2) (current and previous year) | ||
| Greenhouse gas emissions intensity | ||
| Details of energy efficiency actions taken over the year | ||
| Methodology used to calculate figures |
Step 1 of reporting under SECR is to establish the organisational boundary of the report. In essence, data and information should be reported for the aspects of the organisation that the organisation has financial or operational control over, or both. This will determine the data which will need to be collected and analysed.
A company should also establish the reporting period. As the data will appear in the Directors’ Report, it is ideal to align the reporting period with that of the Directors’ Report.
Step 2 means collecting gas and electricity consumption data for activities within a company’s operational and/or financial control, as well as energy use relating to business travel; this applies as a minimum to business travel conducted in a company-owned vehicle. Once this has been collected, the associated greenhouse gas emissions need to be calculated. This can be done using the UK Government conversion factors for company reporting of greenhouse gas emissions.
For companies collecting business travel-related data, key data points to support the calculation of the associated greenhouse gas emissions are:
- distance travelled, and
- type of vehicle travelled in (vehicle size, fuel type).
An intensity ratio is also required, relating to greenhouse gas emissions as a minimum. The intensity ratio that a company uses will depend on the sector operated in. Intensity ratios allow for comparability between reporting years, also between other companies. Annex F of the guidance document provides examples of typical intensity ratios used by sector.
Finally, the methodology used to calculate the data should be explained within the Directors’ Report to demonstrate transparency. If it is not feasible to obtain energy and carbon data, companies must explain the reason for this. This is often referred to as the ‘comply or explain’ principle.
When to report
The information and data required by SECR must be reported within a company’s Directors’ Report, so the exact timings depend on when each company usually publishes their Directors’ Report.
For further information, see the Government guidance.
