Demystifying SECR Reporting: A Sustainable Path to Energy and Carbon Transparency

In today’s world, sustainability isn’t just a buzzword; it’s a global imperative. Governments and organizations worldwide are recognizing the importance of measuring and disclosing energy usage and greenhouse gas (GHG) emissions. In the United Kingdom, Streamlined Energy and Carbon Reporting (SECR) has emerged as a pivotal framework to promote energy efficiency and sustainability. Let’s embark on a journey to demystify SECR reporting and explore its significance.

What is SECR?

SECR, or Streamlined Energy and Carbon Reporting, is a sustainability reporting framework designed to address GHG emissions and energy consumption. It’s a progressive step in encouraging enhanced energy efficiency. The UK is at the forefront of GHG emissions accounting, and SECR is a testament to its commitment to sustainability.

The Evolution of SECR

SECR builds upon the foundation laid by the UK Companies Act, which mandated GHG emissions reporting since 2013. However, SECR takes it a step further. It streamlines reporting requirements, reducing the reporting burden while elevating the quality of disclosed information. This aligns with the UK’s long-term vision to harmonize with Task Force on Climate-related Financial Disclosures (TCFD) reporting for all businesses.

SECR equips businesses with the guidance to create comprehensive and comparable sustainability reports. By enhancing transparency, it empowers stakeholders and the public to make informed decisions.

Who Needs to Report Under SECR?

SECR applies to various categories of organizations:

  1. Quoted companies of any size.
  2. Large unquoted companies incorporated in the UK, including charitable companies.
  3. Large limited liability partnerships (LLPs).

“Quoted companies” refers to those officially listed on the London Stock Exchange, European Economic Area state listings, or exchanges like NASDAQ or the New York Stock Exchange.

“Large companies” under SECR fulfill at least two of these criteria:

  • A turnover of at least £36 million.
  • A balance sheet of at least £18 million.
  • At least 250 employees.

Exemptions exist for organizations categorized as low energy users, public bodies, those incorporated outside the UK, and private sector entities. Low energy users are organizations consuming 40MWh or less over the financial year.

The Purpose Behind SECR

SECR’s introduction serves several critical purposes:

  1. Enhanced Transparency: SECR aims to enhance transparency surrounding energy and carbon use for stakeholders.
  2. Improved Efficiency: It fosters improved efficiency and productivity for UK companies.
  3. Harmonization: SECR aligns with other UK energy efficiency measures, creating a harmonized approach.
  4. Comprehensive Insight: By analyzing both energy and carbon usage, SECR provides a holistic view of a company’s performance, surpassing assessments based on either energy or emissions alone.
  5. Standardization: SECR’s standardization ensures fair and accurate comparisons among organizations, benefiting stakeholders and the public.

SECR Reporting Requirements

SECR mandates companies to disclose information related to energy use and GHG emissions, including methodologies and comparisons with the previous year. Key components of SECR reporting include:

  • Energy use, encompassing gas, purchased electricity, and transport fuel.
  • GHG emissions reported in tonnes of carbon dioxide equivalent (CO2e).
  • Methodology used for emission and energy calculations.
  • At least one intensity ratio comparing emissions to a business metric.
  • A narrative description of efforts to enhance energy efficiency.
  • Previous years’ figures for GHG emissions and energy use.

Companies must define their reporting boundaries, whether financial control, operational control, equity share, or alignment with CDSB and FRC frameworks.

Omitted Information and Voluntary Enhancements

SECR allows for the omission of certain information under exceptional circumstances or when impractical to obtain. Companies can use estimates if exact figures are unavailable but must explain these omissions.

For robust reporting, SECR encourages voluntary actions like aligning with TCFD recommendations, external verification, reporting specific scope 3 emissions, and setting science-based emissions reduction targets.

SECR Requirements for Different Organizations

Requirements vary between quoted companies and large unquoted companies incorporated in the UK and LLPs.

Quoted Companies must report annual global emissions, emissions from purchased energy, methodologies, intensity ratios, previous years’ data, energy efficiency actions, and more. They must report on specific GHGs, including carbon dioxide, methane, nitrous oxide, and more.

Large Unquoted Companies and LLPs disclose UK energy use, associated GHG emissions, methodologies, intensity ratios, previous years’ data, energy efficiency actions, and more.

Striving for Sustainability with SECR

SECR reporting signifies a transformative journey toward sustainability. It’s not just a regulatory requirement but an opportunity for organizations to demonstrate their commitment to environmental responsibility. SECR helps create a level playing field, promotes transparency, and empowers stakeholders.

At Sustainext, we understand the importance of SECR reporting. Our Comprehensive Carbon Accounting Solution simplifies emissions management, making SECR compliance seamless. Together, we can accelerate your sustainability journey, contributing to a greener, more sustainable future.

Take the first step toward energy and carbon transparency with Sustainext. Contact us today and embrace a sustainable path forward.