SECR (the Streamlined Energy and Carbon Reporting Framework) launched on 1 April 2019, affecting large UK companies. But what does it mean for you? We asked Optimised Energy's Mark Earnshaw to give his responses to our most frequently asked questions…
Who is obligated to report?
SECR applies to all quoted companies (who were previously required to report via Mandatory GHG reporting), large limited liability partnerships and large UK incorporated unquoted companies. Companies that are not quoted must comply with the legislation if they meet two of the qualification criteria below, and organisations using less than 40,000 kWh per annum will not be required to report.
An organisation is considered large, and must comply if it meets at least two of the following criteria:
250 or more employees
Turnover in excess of £36 million
Balance sheet in excess of £18 million
Why should my business care about SECR?
The simple answer is that it’s a legal requirement from 1 April 2019 – so large companies have to take it seriously. But actually, SECR is worth taking seriously because it raises the profile of energy cost and environmental impact to the board room and ensures energy and environmental performance is transparent. And, if acted upon, it is a means of competitive advantage within your industry.
What’s the difference between ESOS and SECR?
The two are interrelated but have slightly different qualification criteria and how the scheme is reported. ESOS data was submitted online and SECR data must be disclosed in the Director’s Report within Company Accounts for unquoted companies, or in an Energy and Carbon Report for LLPs.
I am already reporting under CRC. How is SECR different from CRC?
CRC finished in April 2019 and was a carbon tax based on a company’s emissions from gas and electricity only. Typically, this was 5% of the client’s energy bills, paid every year. SECR has no direct carbon cost associated with the emissions reported.
Unlike CRC, SECR includes travel and transport data (like ESOS) – and a good ESOS report will be a cracking start to an SECR reporting template / methodology.
I am worried about our information being in the public domain. Are there alternatives to complete transparency?
Where energy usage and carbon emissions are of strategic importance to the company, you can disclose the relevant information in the Strategic Report rather than the Directors’ Report. Also, when directors or members consider that disclosure of the energy and carbon information would be seriously prejudicial to the interests of the organisation, the report can be excluded.
Businesses are encouraged to rely on this only in exceptional circumstances, such as where specific sensitivities arise from restructuring or acquisitions by an organisation in the run up to producing the relevant report, or when there are exceptional commercial sensitivity considerations.
Does SECR affect every sector?
Mostly. The majority of large companies in sectors in which Optimised Energy is active (manufacturing, CRE, hospitality etc) all require SECR. One exception is the public sector which is required to submit reports according to the Greening Government Commitment (GGC) instead.
If I place SECR on the next board meeting agenda, how will it help drive buy-in for our energy saving activities?
I think there are two main cases to make here:
No one is standing still. Your competitors are striving to be more competitive and one weapon in their arsenal is improved energy efficiency. So you have to compete.
Your energy costs have probably increased by 10-30% over the past year. You need to get that under control and SECR can help you do that.
Can we do SECR reporting in-house? Is this something we should outsource to a specialist?
There’s no requirement to involve a specialist - independent assurance is voluntary. That said, there is most definitely a part to play from a specialist’s point of view in helping to pull together a valid and meaningful Energy and Carbon Report, and to monitor data on an ongoing basis between annual accounts submissions. Doing this on an ongoing basis will save a lot of hassle at year end.
In talking to the clients who have already outsourced this to us, I know they have engaged us because we know how to handle and validate energy data, and we know the format of the annual report that will keep them compliant.
They get a proven service which saves time and effort, and avoids them having to reinvent the wheel:
Planning – what needs to be reported, which intensity metric etc.
Reporting – we set up a reporting framework/system to collect data monthly
Annual Report – we write the Energy and Carbon Report to meet scheme requirements
What can we do now?
A free gap analysis can help identify where you already comply and where you need to take additional steps. We’ll help you meet your obligations under SECR. Contact us
What can I be doing now to make year-end reporting easier? What happens if I do nothing now?
If your financial year starts on or after 1 April 2019, start recording data now. If you leave it until financial year end, there is a good chance that your consumption data will not be recorded appropriately.
If you want to avoid year end panic and associated costs, doing nothing really isn’t an option – so here are three things you can be doing right now:
Engage a professional to identify how you are going to collect data relevant to the scheme, including which intensity ratio to use
Decide whether to use a system for data management or do it manually
Make the board aware of their obligations now, rather than at year end
To explore the specific benefits of SECR to your organisation. To examine the process, understand the requirements and to demonstrate a climate commitment that gives you an energy efficient edge, talk to one of Optimised Energy's energy engineers. We’ll help you meet your obligations under SECR.