But what is it and what does it mean for your business? Let’s take a look.
SECR is a framework introduced by the UK government in April 2019. It requires both registered and unregistered companies to report on their energy use and carbon emissions.
Creating a framework for measuring UK energy use:
It provides a standardised framework for reporting energy consumption and carbon emissions across all sectors and industries. Businesses can compare performance against similar companies and identify opportunities for improvement and best practice.
Operational cost savings:
SECR provides companies with a range of tools and resources to help them boost their energy efficiency and reduce emissions. This includes guidance on implementing energy management systems, conducting energy audits and identifying opportunities to lower energy costs.
Transparency for stakeholders:
With more transparency and accountability around a company’s energy use and carbon emissions, stakeholders can now make more informed decisions about the companies they invest in, do business with or partner with.
Energy efficient action:
SECR also helps drive innovation and competitiveness within industries. Companies are encouraged to find new and innovative ways to reduce their energy use and carbon emissions. Ultimately this can lead to cost savings, increased efficiency and improved competitiveness for businesses. All while reducing their environmental impact.
The following types of businesses must comply with SECR:
- Quoted companies (companies listed on a public exchange)
- Large unquoted companies
- Large limited liability partnerships (LLPs)
According to the SECR, companies and LLPs are considered “large” if they meet two or more of the following criteria:
- A turnover of £36 million or more
- A balance sheet of £18 million or more
- 250 employees or more
If large unquoted companies and LLPs can show that their energy use during the reporting period is less than 40 MWh, they will be exempt from SECR reporting.
Scope 1 and 2 greenhouse gas (GHG) emissions globally: Businesses must track, compute and report their greenhouse gas (GHG) emissions from direct operations. Reporting scope 3 emissions is voluntary, but recommended.
A GHG emissions intensity ratio: This is a way of comparing the GHG emissions data against key business metrics or financial indicators. It could be per employee or per unit of revenue for example.
Underlying global energy use: How a business uses energy that underlines their carbon calculations.
Energy and GHG data from the previous year: This enables a year-on-year comparison.
Projects to enhance energy efficiency and reduce emissions: Businesses need to describe their key activities and initiatives in place to boost efficiency or reduce energy consumption.
Reporting methodology: It’s suggested that businesses use widely recognised independent sustainability reporting standards. These include GHG Reporting Protocol, ISO 14064-1:2018, or GRI (Global Reporting Initiative) guidelines.
Domestic scope 1 and 2 GHG emissions: Companies must calculate and disclose their country-specific GHG emissions from direct operations. Again scope 3 emissions are voluntary.
A domestic intensity metric: Comparing GHG emissions against an appropriate business metric or financial indicator.
Domestic energy usage: Energy use and consumption within their country that underlines the carbon calculations.
Previous year emissions and energy data: For a year-on-year comparison.
Energy efficiency and emissions reduction projects: The main initiatives and projects in the last year undertaken to improve energy efficiency or reduce energy use.
Reporting methodology: SECR recommends GHG Reporting Protocol, or GRI Global Reporting Initiative (GRI) guidelines.
Under SECR there is a “comply or explain” clause. This means you can leave out information, but only if it’s not possible to obtain it. You have to include a explanation covering what has been excluded and why.
Yes, under SECR you can volunteer to provide additional information as part of your report.
- Forward looking financial risks and opportunities related to climate change
- Scope 3 emissions
Companies are also encouraged to set science-based emissions reduction targets that go beyond the previous year, as well as look at the materiality of emissions to better understand their environmental impact.
The regulations have been in place since April 2019, so if you fall within one of the categories above you will need to report on your emissions. The key things you need to do are:
- Identify what you need to report in line with the reporting boundaries detailed above
- Collect data on your energy consumption, GHG and other metrics in a clear and transparency way
- Calculate and report your emissions in line with SECR