Asset owners are required to report on their own operations (if eligible), and to state which of their invested companies are obligated, and which aren’t. Eligible companies within a fund are responsible for making their own disclosure.
Streamlined Energy and Carbon Reporting (SECR) is a scheme that requires qualifying UK companies to prepare and file energy and carbon information in their Directors’ Report.
SECR came into effect in April 2019 under The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018.
SECR replaces the existing Carbon Reduction Commitment “CRC” scheme, which was scrapped by the end of the 2018/19 compliance year, reducing the administrative burden on non-energy intensive companies, and streamlining, and as a result, simplifying emissions reporting requirements. The increased climate change levy (CCL) alongside SECR, aims to simplify payments for energy-intensive companies, and reduces the time and financial resources required in comparison with CRC.
SECR’s requirement for companies to calculate and report their greenhouse gas (GHG) emissions in their financial filings will bring both greater internal awareness and external transparency, mirroring a global trend most notably championed by the Task Force for Climate Related Financial Disclosures (the “TCFD”).
A UK company must comply with SECR if they are a quoted company, “large” unquoted company or Limited Liability Partnership (LLP).
A “large” unquoted company or LLP is defined as one which satisfies two or more of the following requirements:
- An annual turnover of £36 million or more
- A balance sheet total of £18 million or more
- 250 or more employees
Companies who consume 40MWh or less during the reporting period do not need to disclose, however, they are required to state why it is not being disclosed.
A company should include in its assessment of whether it qualifies, the turnover, balance sheet and employee headcount of its overseas subsidiaries or operations but would not need to report on their energy use and GHG emissions if obligated.
The Requirement for Asset Owners and Managers
All companies that meet the eligibility requirements for SECR are responsible for making their own energy and carbon disclosures in their annual report.
Asset owners are required to report on their own operations (if obligated), and to state which of their invested companies are obligated, and which aren’t. Unlike ESOS, there is no “one in, all in” arrangements whereby all subsidiaries are obligated if one entity within the fund meets the criteria. Eligible companies within a fund are responsible for making their own disclosure.
When determining where the regulations are applicable, it is advised that a downward analysis of the group structure is carried out from the highest UK parent as requirements will vary for each investment depending on the eligibility criteria.
Data reporting aligns with the company’s financial year. Due to the regulations coming into effect in April 2019, the first financial year for which SECR applies is that starting on or after the 1st April 2019 with the disclosure made in the subsequent annual filings.
To find out more about SECR and our approach to supporting asset owners, download our short guide:
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