Streamlined Energy and Carbon Reporting: A Guide for Asset Owners and Managers

February 11, 2020 | Guidance,

Update – COVID-19
If you are unable to meet your company accounts filing deadline due to COVID-19, you may apply for a 3-month extension. Please note that you must apply for the extension before the report is due.
See below for more details

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”).

SECR compliance guide

Eligibility

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

Exemption

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.

Overseas subsidiaries

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.

If obligated, asset owners are required to report on their own operations. We recommend that they also state which of their invested companies are obligated, and which aren’t, but this is not mandatory. Unlike ESOS, there is no “one in, all in” arrangement 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.

Key Dates

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.

Update – COVID-19

If you are unable to meet your company accounts filing deadline due to COVID-19, you may apply for a 3-month extension. Please note that you must apply for the extension before the report is due. Click here for more information.

As you don’t require a site visit for SECR, we can still support you to complete your SECR report on time. However, as the data collection required may take longer to complete in current conditions, and multiple companies seeking an extension may lead to an increase in demand for support, we recommend that you start the SECR process as soon as possible.

We would be delighted to discuss how we can support you to complete your SECR report.

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