The UK government’s Streamlined Energy and Carbon Reporting (SECR) policy was implemented on 1st April 2019, when the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 came into force. Businesses in scope need to comply for financial years starting on or after 1st April 2019.
The introduction of SECR coincides with the end of the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme. The new regulations will require a significantly increased number of companies incorporated in the UK to disclose their energy and carbon emissions.
SECR builds on, but does not replace, existing requirements that companies may have to comply with e.g. mandatory greenhouse gas (GHG) reporting for quoted companies, the Energy Saving Opportunity Scheme (ESOS), Climate Change Agreements (CCA). SECR extends the reporting requirements for quoted companies and mandates new annual disclosures for large unquoted and limited liability partnerships (LLPs).
Three groups of businesses are affected by the SECR regulations. Companies that fall within the following definitions must comply unless they meet certain exemption criteria:
- Quoted companies of any size that are already obliged to report under mandatory greenhouse gas reporting regulations.
- Unquoted companies incorporated in the UK that meet the definition of ‘large’ under the Companies Act 2006 will have new reporting obligations. This applies to registered and unregistered companies. Note that the criteria for ‘large’ differs from the ESOS Regulations.
- ‘Large’ Limited Liability Partnerships (LLPs) will be required to prepare and file a ‘Energy and Carbon Report’.
Unquoted companies or LLPs are defined as ‘large’ if they meet at least two of the following three criteria in a reporting year:
- a turnover of £36 million or more;
- a balance sheet of £18 million or more; or
- 250 employees or more.
Public bodies do not fall under the new regulations, but they are subject to other legislation which requires carbon reporting.
Not-for-Profit companies or others undertaking public activities, such as companies owned by universities, academies or NHS Trusts, will need to check whether they meet the above qualifying criteria.
Private sector organisations which fall outside of the scope of the new regulations are encouraged to voluntarily report in a similar manner.
Qualifying companies will need to include information in line with the SECR framework in their Directors’ Report, or an equivalent Energy and Carbon Report for LLPs, for financial years beginning on or after 1st April 2019.
Where energy use and carbon emissions are considered to be of strategic importance to the organisation, the disclosure may be made in the Strategic Report instead, with a statement in the director’s report to indicate and explain this decision.
If you would like to find out whether your company qualifies for SECR or if you would like to understand more about this new reporting requirements, please contact our Energy Team for a no obligation discussion.
