In the UK, Streamlined Energy and Carbon Reporting (SECR) dominates the carbon reporting universe. As the risks of climate change continue to increase, the demand for companies to align with sustainability reporting also increases. In today’s climate, a company’s environmental image is becoming increasingly crucial to attract investment, stakeholders, and meet legal requirements. Studies show that 77% of customers value sustainability and environmentally responsible brands, alongside 2 in 3 employees being more likely to work for companies with a strong environmental ethos.
In this blog, we explore:
- What SECR means
- Who SECR applies to
- Why companies need to do it
- The benefits of SECR
- How carbon accounting platforms can speed up the process
- Our most frequently asked SECR questions
What Is SECR?
SECR stands for Streamlined Energy and Carbon Reporting. It is a legal requirement for companies in the UK that requires businesses to report their annual greenhouse gas emissions. Additionally, SECR examines the efforts taken to improve a company’s energy efficiency.
The policy was introduced and implemented on 1st April 2019, when the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 came into full force. SECR expands upon crucial requirements that businesses may face, for example, greenhouse gas reporting (GHG), the Energy Saving Opportunity Scheme (ESOS), Climate Change Agreements (CCA) Scheme, and the EU Emissions Trading Scheme (ETS). SECR essentially builds upon the sustainability reporting requirements for companies. It aims to bring benefits into businesses by supporting cutting costs and reducing carbon emissions.
Who Needs To Comply With SECR?
In accordance with the Companies Act 2006, SECR applies to large companies with:
- At least 250 employees
- A turnover of £36 million or more
- A balance sheet total of £18 million or more
If your organisation meets at least two requirements in the above criteria, you will need to comply with SECR regulations in the UK.
How Does SECR Work?
To comply with SECR, organisations will, at a minimum, need to report on:
- Energy usage, including gas, purchased electricity, transport fuel, and greenhouse gas emissions.
- Information about the methodology used to track energy usage and emissions.
- A detailed description about the efforts taken to improve energy efficiency over the last 12 months.
- An intensity ratio, used to compare emissions data, to allow for comparison with businesses in a similar sector over the previous years.
- Figures from previous years, used as a base for comparison on business changes and improvements.
Under SECR, reporting on Scopes 1 and 2 are mandatory reporting requirements for large companies. While scope 3 reporting is voluntary, it is highly recommended in order to gain a more comprehensive understanding of your company’s environmental impact.
Emissions Recap:
- Scope 1 Emissions: Emissions that are directly from your individual and organisations’ activities, and are the greenhouse gases emitted when you burn things such as fuel. Example: Driving company cars, burning fuel in company boilers or furnaces.
- Scope 2 Emissions: Emissions generated from electricity, steam or heating. Example: Using electricity to power your home or office.
- Scope 3 Emissions: Indirect emissions caused by activities which occur in the supply chain or on a company’s behalf. Example: Purchased goods and services.
What Are The Benefits Of SECR?
Complying with SECR is not just about meeting legal requirements. It can also have a positive effect on your corporate reputation. There are a variety of benefits of complying with SECR, including:
- Improved Environmental Management
SECR helps companies identify opportunities to improve a company’s environmental performance by also reducing energy consumption and costs. Compliance with SECR can also help with creating a comprehensive Net Zero strategy, demonstrating your company’s commitment to sustainability.
By improving your environmental management, companies can identify and mitigate significant environmental risks, leading to a more sustainable business.
- Energy Efficiency and Cost Savings
Compliance with SECR helps businesses identify the areas where you can reduce energy consumption and improve efficiency. By identifying these areas of opportunity, companies can also save money and operational costs.
- Increase Stakeholder Engagement and Business Reputation
Ensuring your business is transparent about sustainability efforts can help build trust with stakeholders and attract investment. Studies show that 88% of employees in management positions are more likely to stay in a job for a longer period of time if their employer is striving to make a positive environmental impact. Studies also show that 60-70% of employees from a younger demographic prefer to work for employers that report and act upon climate change.
- Regulatory Compliance
SECR is a mandatory regulation in the UK for large companies. Ensuring compliance with SECR avoids penalties or legal risks to your business.
- Improve Corporate Transparency and Take Accountability
Businesses who take accountability for their sustainability efforts and maintain transparency are likely to enhance their reputation among employees, stakeholders and investors.
How Can Carbon Accounting Platforms Help?
Investing in carbon accounting platforms can significantly help with SECR reporting by automating data collection. Ensuring SECR compliance in alignment with complex legislation eats into valuable time. Carbon accounting platforms can help to speed up this process and enable organisations to accurately track and measure their greenhouse gas emissions efficiently. Investing in a carbon accounting platform helps businesses stay fully compliant and avoid any environmental risks or penalties.
Frequently Asked Questions ➡️
When Do You Need To Publish Your SECR Report?
There is no specific deadline for when you need to publish your SECR report, however, you are required to include your SECR report when you publish your annual accounts on Companies House. SECR reporting is strongly encouraged to align with either your financial year or just annually.
What Happens If You Don’t Comply With SECR?
If you do not comply with SECR, you risk being fined by the UK government (as the regulation is mandatory). SECR is also a public report, and so not complying with it can damage your reputation.
Will SECR include more information in the future?
In the future, it is expected that you will need to include more information about your carbon emissions in order to comply with SECR. This information could include an analysis of your Carbon Footprint, a Carbon Reduction plan and net zero assessments.
Does SECR need to be verified by a third-party?
SECR does not need to be verified by a third party. Though not legally mandated, it is recommended as best practice to ensure accuracy and completeness of the data.
To Summarise…
SECR stands for Streamlined Energy and Carbon Reporting, and is a legal requirement for large companies in the UK to disclose their annual greenhouse gas emissions and their plans to improve energy efficiency. SECR is an excellent way for companies to stay on top of their carbon emissions and identify areas for environmental improvement. If you are interested in learning more about SECR, don’t hesitate to get in touch with us.