Understanding SECR reporting: Breaking down the framework

Posted in on Jun 30 2023,by Ben Churchill Ben Churchill
Understanding SECR reporting: Breaking down the framework

Ben Churchill

Ben Churchill

Chief Strategy Officer

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In 2022, the UK was responsible for emitting over 417 million tonnes of greenhouse gases (GHG) (Department for Energy Security & Net Zero, 2022). Rising energy prices and warmer weather helped curb energy consumption, and GHG emissions dropped about 2.2% since 2021. But there’s still a way to go to put a stopper on the amount of carbon pouring into the atmosphere. And that’s the purpose of one piece of legislation introduced in 2019.

The Streamlined Energy Carbon Reporting (SECR) was implemented not just to spark more climate transparency in the UK, but also as a mechanism to hold corporations accountable for their contributions to the climate crisis.

What is Streamlined Energy and Carbon Reporting (SECR)?

The SECR is a regulation implemented in 2019 that requires large businesses in the UK to regularly report on their energy and carbon emissions. The purpose of the SECR was to widen the scope of required reporting, particularly for large companies in the UK. It was put into place just as the Carbon Reduction Commitment (CRC) was going out of effect in 2019, and builds on the reporting requirements in the CRC.

The SECR includes more companies and large Limited Liability Partnerships, and companies are required to report more details about their annual GHG emissions annually than they were under the CRC Energy Efficiency Scheme. These companies must report on their Scope 1 and 2 emissions to be in compliance with the regulation. Scope 3 emissions reporting is voluntary but still recommended according to the reporting framework.

Who needs to comply with SECR regulations?

The short answer is: any large unquoted company or Limited Liability Partnership (LLP) in the UK is required to report on their emissions under the SECR. Any quoted company listed on the public exchange is also already required to report on greenhouse gas emissions.

The Companies Act of 2006 lists specific criteria to determine what qualifies as a large company in the UK. If a company meets at least two of the following criteria, they qualify:

  1. A balance sheet of £18m
  2. Turnover of more than £36m
  3. At least 250 employees

Approximately 11,900 companies across the UK need to adhere to the SECR and report on their emissions (GOV.UK, 2020). Private sector companies can voluntarily report their emissions based on SECR regulations (or similar compliance standards) if they choose to. But they aren’t required to follow SECR guidelines or reporting schedules.

Some charitable companies and organisations might also be required to comply with SECR based on their size or other criteria. It’s recommended that they check and see what they’re obligated to report, so that they can stay compliant with the SECR and other regulations.

A company might also be exempt from reporting under SECR regulations if it consumes less than 40,000 kWh (40mWH) of electricity in one reporting period. According to SECR guidelines, that qualifies your organisation as a “low energy user” and you can include a statement saying so in your directors’ report.

The benefits of SECR reporting

Reporting on your emissions not only helps your business comply with the SECR, but also uncover opportunities for cost savings and increasing efficiency. SECR reporting provides a framework for you to better understand your own energy consumption and monitor progress over time.

Benefits of mandatory reporting

You might be required to comply with SECR guidelines based on the above criteria. In that case, you’ll see the following benefits from reporting your emissions data:

  • Stay in compliance: You can eliminate any legal risk by fulfilling your reporting obligations under the regulation. This helps you avoid any fines and penalties.
  • Transition to sustainable practices: The insights generated from SECR reporting will help you scale to the economy of the future: one that features low-carbon practices and sustainable energy solutions. The Task Force on Climate-Related Financial Disclosures has already made recommendations on how to prepare and transition; you just need the data to get started.

Benefits of reporting for your business

It’s not just about staying in compliance with new regulations. Reporting on your emissions, especially when following guidelines like the SECR, can have a net positive effect on your business. Here are a few examples:

  • Lower your energy costs: Use the insights you generate about your carbon footprint to make decisions about carbon management and where energy consumption is costing you money — and where you can introduce savings.
  • Increase energy efficiency: Identify opportunities to cut back on GHG emissions and energy consumption so you can be more efficient in your operations. With the data from your reporting, you can implement lasting solutions that improve your overall production processes. For example, upgrading or installing industrial heat pumps, which burn less fuel, will help to reduce emissions.
  • Improve transparency: Publishing regular SECR reports improves transparency around your GHG emissions and factory operations. It also shows progress towards your sustainability goals. And your investors, customers, and other stakeholders will be keen to hear that you’re reducing your footprint.

How SECR reporting works: A framework for compliance

Businesses that fall under the scope of the SECR must report their global Scope 1 and 2 emissions annually, and it’s recommended that they report their Scope 3 emissions (although not required). To comply, organisations should use an acceptable framework and up-to-date data in their reporting.

There are five main components to SECR reporting that companies should follow, according to the official guidance:

  1. UK energy usage: Companies need to disclose their electricity consumption, gas combustion, and transport data for each financial year. Transportation doesn’t need to include Scope 3 emissions, since those are voluntary; these can be reported separately, if a company chooses.
  2. GHG emissions: Companies are required to state “the annual gross quantity of emissions in tonnes of carbon dioxide equivalent resulting from the total UK energy use from electricity, gas and transport” in their reporting.
  3. Emissions intensity ratio: The report needs to include at least one metric in order to define emissions data as a quantifiable factor. The SECR guidelines recommend using tonnes of carbon dioxide equivalent (CO2e) per pupil. No matter the intensity ratio you select, the same metric should be used each reporting year for consistency.
  4. Methodology: Your report should disclose the methodology you used to gather and report on your emissions and energy use data.
  5. Energy efficiency action: In this section, you’ll name the steps your company will take to increase energy efficiency in the relevant year. Focus on actions that have a direct impact on efficiency and where you can report specific savings. Note those savings in your report and keep track of progress annually. You should also report when no energy efficiency measures have been taken.

When you’re submitting your report, you also need to include data from the previous year for the sake of comparison.

When selecting a method for gathering data, it’s good practice to use a recognised independent standard to ensure consistency — not just within your own organisation but across emissions reporting and targeting. For instance, you could use standards set out by the Climate Disclosure Standards Board or ISO for reporting GHG as a starting point.

Keep your reporting in check with the right technology

While carbon accounting software can help you track your emissions, reliable technology like sub-metering is also essential to ensure you’re pulling and acting on accurate insights on your company’s energy usage and emissions. Make sure you have the most up-to-date technology, such as  CoolPlanetOS, installed in your facilities and running efficiently so that you can pull emissions data quickly and accurately.

A decarbonisation partner like CoolPlanet can assess your existing technology and recommend new implementations. You’ll stay in compliance with SECR reporting, other legal requirements, and identify new opportunities for energy savings and efficiency.

Let's talk about how we help companies with their reporting and net zero goals with a full decarbonisation management system.