Since its introduction in 2018, Streamlined Energy and Carbon Reporting (SECR) has become a key compliance requirement for large UK companies. Designed to enhance transparency around energy consumption and Greenhouse Gas (GHG) emissions, SECR also encourages businesses to adopt energy efficiency measures. If your company meets the SECR compliance criteria, you must include detailed reporting on energy use, GHG emissions (such as CO2 equivalent), and energy efficiency improvement actions in your annual financial reports.
To help businesses navigate the complexities of SECR, we sat down with Dr. Sophie Archer, NFU Energy’s Environmental Compliance Consultant, who answers some frequently asked questions about the scheme and explains how we can help you stay compliant.
SECR Q&A with Dr. Sophie Archer
Q: What is Streamlined Energy and Carbon Reporting (SECR)?
A: SECR is a framework designed to simplify energy and carbon reporting for large businesses. It came into effect in 2018 with companies required to submit for their financial year starting 01 April 2019 and every year thereafter; replacing the Carbon Reduction Commitment (CRC) scheme. While it aims to streamline reporting, SECR has drawn more businesses into taking responsibility for the energy consumption and working towards the Low Carbon Agenda and Net Zero targets. The goal is to increase transparency in energy use and carbon emissions, pushing businesses to take more action toward improving their energy efficiency.
Q: Who needs to comply with SECR?
A: SECR applies to any company that meets at least two of the following criteria:
- More than 250 employees
- An annual turnover exceeding £36 million
- A balance sheet total of more than £18 million
This applies to listed companies, private companies, and Limited Liability Partnerships (LLPs). If your business meets these thresholds, compliance with SECR is legally required. You must include the relevant information in your annual financial report, or you could face penalties.
Q: What does SECR reporting involve?
A: Under SECR, companies need to include details of their energy use, Scope 1 (direct emissions) and Scope 2 (indirect emissions from purchased electricity) which are reported as CO2 equivalent GHG emissions, alongside the previous year’s data. Scope 3 (value chain emissions) are currently voluntary for reporting, which takes into account your supplier’s energy and emissions. An Intensity Ratio (e.g. total annual turnover or a quantity of produce sold) is also used to compare the present and previous years’ data and monitor the company’s performance year on year. Reporting also requires a narrative on actions the company has implemented to reduce its energy consumption and emissions over the reporting year.
Q: When is the first SECR report due?
A: SECR reporting is required annually and must be included in your company’s annual financial report. The reporting should cover the company’s full financial year, with the first year SECR criteria is met being the base year that the next year is to be compared against. Where companies have mergers or acquisitions, this base year should be reset to ensure that a fair and accurate comparison is maintained but your reporting methodology will need to be updated to reflect this.
Q: What are the key steps to prepare for SECR?
A: To prepare, businesses should monitor and record their energy consumption across electricity, gas, bulk fuels and transport. They should also calculate their associated GHG emissions using an appropriate methodology, such as the Greenhouse gas reporting: conversion factors, which are released every Summer by the Department for Energy Security and Net Zero. Any energy efficiency measures the company has implemented over the reporting year should also be included. It’s essential to have a robust process in place for collecting and reporting this data and to ensure evidence is kept for each reporting year’s dataset in the event of an audit.
Q: How can NFU Energy help businesses comply with SECR?
A: At NFU Energy, we assist companies by helping them collate their energy use and calculate the equivalent GHG emissions, as well as ensuring they meet all SECR reporting requirements. Our team can provide expert guidance on monitoring, collecting and reporting your data accurately, and we also advise on energy efficiency measures to reduce your environmental impact. If you’re unsure about your obligations under SECR or need help preparing your report, we’re here to help.
To find out more about how we can support your business with SECR compliance, call us on 024 7669 6512 or email [email protected].