A Guide to SECR Carbon Reporting

Streamlined Energy and Carbon Reporting (SECR) is a UK government regulation that requires eligible large companies and Limited Liability Partnerships (LLPs) to report their energy use, greenhouse gas (GHG) emissions, and related information in their annual Directors' Report.

The primary goal of SECR is to increase awareness of energy costs within organizations, provide them with data to inform adoption of energy efficiency measures, and help them reduce their impact on climate change. It also aims to create a fairer playing field by ensuring more businesses are transparent about their energy and carbon performance.

SECR applies to UK registered companies and LLPs that meet at least two of the following three criteria in a financial year:

• Turnover: £36 million or more
• Balance sheet total: £18 million or more
• Number of employees: 250 or more

There are some exemptions, for example, if a company consumes 40,000 kWh of energy or less during the reporting period, or if it's impractical to obtain the data. Public bodies and certain other entities are also exempt.

Eligible organizations must report:

• Annual UK energy use (as a minimum, gas, electricity and transport): This includes energy consumed from activities for which the company is responsible.
• Associated greenhouse gas (GHG) emissions: At a minimum, this includes Scope 1 (direct emissions from owned or controlled sources) and Scope 2 (indirect emissions from the generation of purchased energy) emissions. Some organizations may also need to consider relevant Scope 3 emissions (other indirect emissions).
• An emissions intensity ratio: This compares emissions to a business metric relevant to the company (e.g., tCO2e per employee, or tCO2e per £million turnover).
• Previous year's figures for energy use and GHG emissions: For comparison, except for the first year of reporting.
• Methodologies used: Details of the calculation and measurement methodologies used.
• Energy efficiency actions taken: A narrative description of the principal measures taken to improve energy efficiency during the financial year.

While compliance is mandatory, SECR reporting offers several business benefits:

• Cost Savings: Identifying energy inefficiencies can lead to significant cost reductions.
• Enhanced Reputation: Demonstrating environmental responsibility can improve brand image and stakeholder trust.
• Risk Management: Understanding carbon exposure helps in preparing for future regulations and climate-related risks.
• Improved Investor Relations: ESG (Environmental, Social, and Governance) performance is increasingly important to investors.
• Employee Engagement: Many employees are motivated by working for environmentally conscious companies.

Effective preparation is key to smooth SECR reporting:

1. Determine if you qualify: Assess against the size thresholds.
2. Define your reporting boundary: Understand which operations and emissions sources are included.
3. Set up data collection systems: Implement processes to accurately collect energy and emissions data throughout the year.
4. Choose a methodology: Select a recognized methodology for calculating emissions (e.g., GHG Protocol).
5. Calculate your footprint: Perform the necessary calculations for energy use and emissions.
6. Identify an intensity ratio: Choose a metric appropriate for your business.
7. Document energy efficiency actions: Keep records of measures implemented.
8. Prepare the report: Compile the information for inclusion in your annual report.