UK Streamlined Energy and Carbon Reporting (SECR) explained

Background of Streamlined Energy and Carbon Reporting (SECR)

Since 2019, in compliance with the Streamlined Energy and Carbon Reporting (SECR), large UK companies have been required to publicly report on their energy use and carbon emissions as a part of their Director’s report. From 2020 onwards, companies have been required to disclose their prior year’s figures for comparison. It was assessed, that the regulation made it mandatory for 11 900 companies to make disclosures related to energy consumption and carbon emissions. 

The aim of Streamlined Energy and Carbon Reporting (SECR)

The aim of the reporting requirement is to provide greater transparency to all stakeholders, but also to increase awareness inside organizations concerning energy costs, and to provide them with data about energy efficacy improving measures, thus cutting their negative impacts on climate change. 

Who needs to comply with SECR? 

For the purpose of this reporting, based on the Companies Act 2006, large companies are defined as following: 

• Turnover or gross income of more than 36 million GBP
• Balance sheet assets 18 million GBP or more 
• 250 or more employees 

Additionally, large unlisted companies that have consumed more than 40 000 kWh of energy in the UK during the reporting period are expected to make disclosures on their energy and carbon dioxide information. For assessing whether or not the 40 00 kWh threshold has been met, companies are expected to calculate all of their gas consumption, as well as electricity and transport fuel usage. If the company is otherwise considered large but uses less than the threshold amount of energy, it does not need to report on its energy usage, but it is required to make a disclosure confirming that it is a low energy user in its Director’s report.

The SECR disclosure requirements differ between listed companies, large unlisted companies, and LLPs. For the purposes of this article, we’re mainly discussing requirements for listed companies and all exceptions to that have been separately indicated. 

Complying with SECR disclosure requirement as a group company 

When it comes to group companies, if they are considered large by the standard set above, they are expected to publish a report, even if their foreign-based parent company would have already published a similar report abroad. Groups are allowed to exclude from their disclosure any subsidiaries that wouldn’t be required to report as stand-alone companies, due to not meeting the thresholds that establish the reporting requirement. 

Table of SECR reporting requirements based on company size and type 

	Large listed companies	Large unlisted companies	LLPs
Scope 1 emissions (global)	Yes
Scope 1 emissions (UK)		Yes, from gas & transport fuel	Yes, from gas & transport fuel
Scope 2 emissions (global)	Yes
Scope 2 emissions (UK)		Yes	Yes
Scope 3 emissions	Voluntary	Voluntary	Voluntary
Chosen emission intensity ratio	Yes	Including at least one intensity metric	Including at least one intensity metric
Global energy use	Yes
UK energy use	Yes	Yes, from electricity, gas & transport fuel	Yes, from electricity, gas & transport fuel
Offshore energy use	Yes
Narrative description of energy efficiency measures	Yes	Yes	Yes

Narrative description as a part of the SECR report  

In addition to the relevant figures, the report must contain a narrative description that explains the types of energy efficiency measures the company has taken during the reporting year. It’s recommended by the authorities, that the company discloses those actions that have had a direct impact on energy consumption and, where possible, the concrete amount of energy saved as a result of the action in question. In case the company has not taken any energy efficiency-related actions during the reporting year, then that should be clearly stated in the report. 

What if the company needs to exclude some information from its SECR report? 

If it turns out that there is a situation, where it would be unreasonably impractical to obtain the required information, or, if there exists an extraordinary situation where the disclosure of the information would be “seriously prejudicial” to the reporting company, it is allowed to exclude carbon and energy information on the basis of a “comply or explain” clause. In case the company has excluded some information, they are expected to disclose the list of omissions and make an explanatory statement on why they have been omitted. In this case,  the company is expected to take measures in order to close any material gaps in its future reporting. 

How and where should the SECR disclosure be published? 

As a generic rule, reporting companies are expected to publish their SECR disclosures as a part of their Director’s report. However, in the case where energy use and emissions are of strategic importance to the company, it is possible to make the disclosure in the Strategic report instead. If a company chooses to make the disclosure in its Strategic report, the decision will need to be clearly indicated and explained in the Director’s report. 

In case of a company publishing a Streamlined Energy and Carbon Report voluntarily, it is recommended to make the report available on its website. 

What is the SECR reporting period? 

The SECR disclosures cover the same reporting period as the financial year, and if this is not the case, a separate explanation for the deviation is required. In practice, the SECR report should be published on the reporting company’s website by March 31st each year. 

Voluntary UK carbon reporting under SECR 

Even if a company does not fall under a reporting requirement, it is encouraged to report on a voluntary basis by BEIS, the authority supervising compliance with the reporting requirements. 

External assurance of SECR reports 

Reporting companies are not required to gain external assurance or verification for their disclosure, however, it is recommended as best practice in order to confirm the consistency, completeness, and accuracy of the data.