The Streamlined Energy and Carbon Reporting Framework - Is Your Business Ready?

With the Carbon Reduction Commitment (CRC) coming to an end this year, is your business ready for the new Streamlined Energy and Carbon Reporting (SECR) Framework? Deputy Vice President of I&C Supply, Dan Smith looks at the changes and considers what businesses need to do to comply.

The CRC has been in place since 2010, requiring participants to report their gas and electricity supplies on an annual basis. Businesses within the scheme have been required to buy the corresponding carbon allowances for each tonne of carbon emitted, and their carbon emissions would be calculated on this basis. Businesses within scope of the CRC need to continue reporting for the 2018-19 period, despite the CRC coming to an end this year.

Following a decision to scrap the CRC, and recover the receipts that would otherwise be lost from businesses by increasing the Climate Change Levy, the UK Government have decided to implement a more streamlined framework (SECR).

Which businesses will be affected?

All UK quoted companies listed on the main market of the London Stock Exchange; a European Economic Area Market; or whose shares are dealing on either the New York Stock Exchange or the NASDAQ will be affected by the changes.

It will also affect large UK incorporated unquoted companies and large limited liability partnerships which match at least two of the following criteria within a financial year:

• At least 250 employees

• An annual turnover greater than £36m

• An annual balance sheet total greater than £18m

With the inclusion of large UK incorporated unquoted companies, the number of businesses required to report under the SCER is expected to increase from around 1,200 to 11,900.

N.B: Any businesses which match the eligibility criteria, but consume less than 40,000kWh in a 12-month period, will be exempt from the reporting requirements. In addition, subsidiary undertakings which meet the eligibility criteria in their own right, will not be required to report individually if they are covered by a parent company’s group report.

What do I need to report?

UK unquoted companies will be required to, where practical, report:

• Scope 1 & 2 Greenhouse Gas Emissions (GHG)

• An intensity ratio

• Methodologies used in the calculation of disclosures

• The previous year’s figures for energy use and GHG emissions

• UK energy use (electricity, gas and transport as a minimum).

Some large businesses are already measuring their energy use under the Energy Savings Opportunity Scheme (ESOS), so this data may be readily available.

Quoted companies will also need to report their global energy use and emissions, alongside what proportion of these factors apply to the UK.

SECR participants will also need to provide a narrative commentary on energy efficiency actions taken in the appropriate financial year. They may disclose ESOS recommendations and how those have been taken forwards in order to comply with this. However, they are not mandated to do so.

How does my business ensure it adheres to the new reporting requirements?

The mandatory requirements must be covered in the Director’s Report, or within an Annual Report for the appropriate financial year. The first report must apply to financial years beginning on or after 1st April 2019. It will therefore need to be submitted to companies’ house in 2020.

Reporting can be either electronic or paper-based.

With the changes affecting businesses from 1st April this year, now is the time to understand the requirements and learn how to report carbon emissions for the future.

View the full guidance on how to report under the SECR

Find out how SmartestEnergy can help you report zero Scope 2 GHG emissions with Certified Renewable Electricity