An insight into SECR

SECR will require all quoted companies, large UK incorporated unquoted companies, and limited liability partnerships (LLPs) to report their energy use and carbon emissions relating to gas, electricity, and transport, and apply an intensity metric, through their annual Directors’ reports.

 

Summary of the Government’s proposed SECR framework

From April next year, large organisations in the UK will need to comply with the SECR regulations. The new scheme is part of the Government’s reform package.

Its aim is to reduce some of the administrative burden of overlapping carbon schemes and improve visibility of energy and carbon emissions. As such, it will be introduced to coincide with the end of the current Carbon Reduction Commitment (CRC) Energy Efficiency Scheme.

SECR will build on the existing mandatory reporting of greenhouse gas emissions by UK quoted companies and the Energy Savings Opportunity Scheme (ESOS).

 

Who needs to comply with SECR?

SECR qualification will follow the Companies Act 2006 definition of a ‘large organisation’, where two or more of the following criteria apply to a company within a financial year:

  • More than 250 employees.
  • Annual turnover greater than £36m.
  • Annual balance sheet total greater than £18m.

There is no exemption for involvement for energy used in other schemes – e.g. Climate Change Agreements (CCAs) or EU Emissions Trading Scheme (ETS).

 

What are the reporting requirements?

From 1 April 2019, affected organisations will be required to:

  • Make a public disclosure within their annual directors’ report of energy use and carbon emissions.
  • Report using a relative intensity metric e.g. tCO2/number of employees.
  • Provide a narrative on energy efficiency actions taken during the reporting period.

Reporting will align with an organisation’s financial reporting year.

 

Is anyone exempt from SECR?

Yes – those exempt from complying with SECR include:

  • Public sector organisations.
  • Organisations consuming less than 40,000kWh in the 12-month period are not required to disclose SECR information.
  • Unquoted companies where it would not be practical to obtain some or all of the SECR information.
  • Disclosure of information which Directors think would be seriously prejudicial to interests of the company.

 

There seem to be similarities to ESOS – can ESOS compliance help with SECR?

Yes. Though ESOS and SECR are separate schemes, and will continue as such, the information from your ESOS compliance can be used to support SECR reporting.

 

Where do I start with compliance?

The detailed guidance for SECR will soon be published. EIC can assist with compliance as well as providing bespoke reporting to ensure that you have real visibility of your energy and carbon emissions both at organisational and site level.

If you would like to know more about SECR, what it means for your business, and how EIC can support you with compliance contact us on 01527 511 757 or email SECR@eic.co.uk.

How ESOS can help you get ahead with SECR

You probably know all about ESOS, and you may feel that even now, with 15 months until the next deadline, there’s still no rush to get started with Phase 2. We disagree. Rather than put off compliance until the bitter end, we recommend getting ahead of the curve to avoid any bottleneck in resources later on.

The ESOS Phase 2 compliance deadline is 5 December 2019, however, the qualification date is 31 December this year. This means that if you know your business will fit the criteria, you can start some compliance activities now.

ESOS applies to large organisations, classified as those with:

  • More than 250 employees or;
  • A turnover of more than €50,000,000 and an annual balance sheet total of more than €43,000,000 or;
  • Part of a corporate group containing a large enterprise.

 

It’s time to get started

In their latest ESOS newsletter, the Environment Agency (EA) emphasised that businesses can start audit work now. They state that although you won’t be able to complete the assessment of your Total Energy Consumption (TEC), as this has to include the qualification date, if you expect to qualify for Phase 2 – and you know that an energy supply will be included in your Significant Energy Consumption (SEC) – you can do the audit work on this supply.

This audit will need to have at least one-year’s energy measurement, but this can be from anytime between 6 December 2015 and 5 December 2019. The audit can use data that has been collected at any time during this period provided that it is carried out no later than 24 months after the data period (and the data has not already been used for an audit in Phase 1).

 

SECR is coming – ESOS can help get you ready

Streamlined Energy and Carbon Reporting (SECR) aims to further incentivise the improvement of energy efficiency and reduction of carbon emissions. It’s also hoped that SECR will reduce some of the administrative burden of overlapping carbon schemes. As such, it’ll be introduced from April 2019 to coincide with the end of the current CRC Energy Efficiency Scheme.

Taking action with ESOS compliance will help you get a head start with preparing for SECR compliance. Though ESOS and SECR are separate schemes, and will continue as such, you can use information from your ESOS compliance to support energy and emissions reporting and narrative on energy efficiency action taken in your annual reports.

 

Make EIC your trusted compliance partner

Whether it’s ESOS, SECR, or CCA, EIC will work with you to reach compliance deadlines and targets. In Phase 1 of ESOS we identified a total of 527GWh worth of energy savings for our clients, equivalent to £49,000,000 in cost savings.

With just 15 months until the next ESOS deadline, we’re urging you to make a start with compliance. To find out more about how we can help you comply, call us on 01527 511 757, email esos@eic.co.uk, or visit our website.