What is SECR?
SECR (Streamlined Energy and Carbon Reporting)is a UK government initiative requiring large organisations to report their energy use and greenhouse gas emissions annually. The SECR framework builds upon the previously existing Carbon Reduction Commitment (CRC) Energy Efficiency Scheme, expanding the scope of reporting requirements. Companies must also include detailed energy and carbon information in their reports to ensure compliance with the regulations. This helps businesses understand their environmental impact and encourages them to reduce it.
Why has SECR been implemented? The SECR framework aims to increase transparency and accountability in corporate environmental reporting. By requiring companies to disclose their energy use and greenhouse gas emissions in terms of carbon dioxide equivalent, it ensures that businesses are aware of their environmental impact and are encouraged to take steps to reduce it.
SECR Reporting Requirements Companies must report their annual quantity of Greenhouse Gas (GHG) emissions, including carbon report, against a defined reporting period. The SECR framework builds upon the previously existing Carbon Reduction Commitment (CRC) Energy Efficiency Scheme, expanding the scope of reporting requirements. Companies must also include detailed energy and carbon information in their reports to ensure compliance with the regulations. This information must be included in the directors’ report or energy and carbon report. The regulations apply to quoted companies, large unquoted companies, and large limited liability partnerships. Additionally, companies must report on their energy efficiency measures, including the emissions intensity ratio, to provide a comprehensive view of their environmental impact.
Why has SECR been implemented?
The UK government introduced the Streamlined Energy and Carbon Reporting (SECR) policy to extend the advantages of carbon reporting to a broader range of businesses. This initiative aims to encourage the adoption of energy efficiency measures, which offer both economic and environmental benefits. By mandating disclosures on energy and carbon, SECR helps companies cut costs and boost productivity while reducing carbon emissions. This aligns with the G20 Financial Stability Board’s Taskforce on Climate-related Financial Disclosures recommendations. Additionally, SECR provides crucial information for investors and financial actors, aiding them in navigating the transition to a sustainable, low-carbon economy.
SECR Reporting Requirements
SECR reporting requirements vary based on a company’s category. UK incorporated quoted companies must report the annual quantity of Greenhouse Gas (GHG) emissions and energy consumed from their purchase of energy (gas, electricity) for their own use. Large UK incorporated unquoted companies are required to report the annual quantity of GHG emissions and energy consumed in the UK from activities related to the combustion of fuel for transport or gas. Large UK incorporated LLPs must prepare a report equivalent to the directors’ report for each financial year, including figures on energy consumption and energy efficiency measures.
What is ESOS?
ESOS (Energy Savings Opportunity Scheme) is another UK scheme, designed to help large organisations identify energy-saving opportunities through regular audits.
Who Needs to Comply?
Large UK organisations must comply if they meet two out of three of the following:
- Annual turnover of £36 million or more.
- Balance sheet total of £18 million or more.
- 250 or more employees.
What does SECR Involve in Carbon Emissions?
Organisations must include the following in their annual reports:
Energy Use: Total energy consumption (electricity, gas, and transport).
Emissions: Emissions reported under the following “Scopes”:
- Scope 1: Direct emissions from activities you control (e.g., fuel burned in company vehicles or boilers).
- Scope 2: Indirect emissions from purchased electricity, heat, or steam.
- Scope 3 (optional): Other indirect emissions (e.g., business travel, supply chain).
Energy Efficiency Measures: Actions taken to reduce energy use.
Intensity Metrics: Data normalised by a business activity (e.g., emissions per employee or per £1 million turnover).
Organisations may also need to obtain display energy certificates to demonstrate compliance with energy assessment standards.
How Does ESOS Work with Energy Efficiency Measures?
- Organisations must carry out energy audits every four years.
- The ESOS framework is part of a broader energy efficiency scheme aimed at improving energy consumption reporting and reducing overall energy use.
- Audits analyse energy use across buildings, processes, and transport to identify cost-effective savings.
- Compliance is submitted to the Environment Agency.
Energy Efficiency Action
The SECR report must include a narrative description of the principal measures taken to increase energy efficiency in the relevant year. It is recommended that the actions reported are those which have had a direct impact on energy efficiency. If possible, the resulting energy savings from these actions should also be stated. Companies are encouraged to go beyond the minimum requirements and voluntarily include any other significant sources of energy use or GHG emissions outside these boundaries, as well as reporting on scope 3 emissions.
SECR Scopes vs. ESOS Phases
SECR Scopes: Categorise emissions into Scope 1 (direct), Scope 2 (indirect), and Scope 3 (optional)for annual reporting. Both SECR and ESOS require detailed reporting of UK energy use to ensure compliance with national regulations.
ESOS Phases: Compliance periods every four years. For example:
- Phase 1: 2015
- Phase 2: 2019
- Phase 3: 2023
Benefits of SECR and ESOS
The Streamlined Energy and Carbon Reporting(SECR) and the Energy Savings Opportunity Scheme (ESOS) are two UK government initiatives designed to help large businesses and public sector organizations reduce energy consumption and costs. By implementing energy efficiency measures, companies can cut costs and improve productivity while reducing carbon emissions. SECR provides a framework for companies to report on their energy and carbon emissions, while ESOS requires companies to conduct regular energy audits to identify energy-saving opportunities. Both schemes aim to help organizations reduce their energy consumption, lower their carbon footprint, and save money on energy bills. By complying with SECR and ESOS, companies can demonstrate their commitment to sustainability and contribute to the UK’s efforts to reduce greenhouse gas emissions.
Why is This Important for Economic and Environmental Benefits?
Both SECR and ESOS aim to:
- Reduce energy consumption.
- Lower greenhouse gas emissions.
- Save money on energy bills.
- Support the UK’s Net Zero targets.
By understanding and complying with these schemes, your organisation can improve its sustainability while staying legally compliant.
Get in touch with us today, and we will connect you with our experts to support your SECR and ESOS compliance.
