...if not, you might be required to start.
As the need to increase energy efficiency and reduce carbon emissions becomes global issue, the UK Governments most recent energy legislation puts the emphasis on the individual business owner/ manager to publicly evidence their efforts to achieve the necessary reductions.
This new legislation, known as Streamlined Energy and Carbon Reporting (SECR), requires businesses to disclose energy consumption and greenhouse gas emissions (GHG) as part of their Annual Directors Report.
Why streamlined Energy and Carbon reporting?
SECR is one of the many energy-focused initiatives which has followed from the Paris Climate Agreement and the UK’s initial commitment to reducing carbon emissions by 80% by 2050. The legislation is designed to make energy efficiency a focal point for businesses, to reduce the complexity associated with collecting, measuring and reporting on carbon emissions.
The new regulation will present an opportunity for larger businesses to consider applying best energy efficiency practices and will force them to report on their energy usage and subsequent carbon emissions as part of their Annual Directors Report. The legislation replaces Carbon Reduction Commitment (CRC) which will come to an end on 31st March 2019 and will apply if you are currently required to adhere to ESOS legislation. The main difference is that SECR requires action on an annual basis as opposed to the four-yearly cycle of ESOS and if eligible, your business will need to adhere to both legislations going forward.
Is your company affected by the regulation?
This regulation will affect large companies where two or more of the following criteria apply to a company within a financial year:
- An annual balance sheet of £18m+
- An annual turnover of £36m+
- Over 250 employees
Companies, where the following criteria apply, will be exempt from the regulation:
- Companies that use 40,000 kWh or less of energy in the 12-month reporting period
- Unquoted companies where ‘it is not practical to obtain information’
When does SECR go live?
This regulation is effective from 1st April 2019, however, the point at which your accountants will require data and you may need to start reporting will vary depending on when your business’ financial year starts.
For financial years beginning on or after 1st April 2019 e.g. if your company’s financial year runs from 01/04/2019 - 31/03/2020, the first time it would need to comply with SECR would be in your first set of accounts following this period in 2020.
What are the requirements of the legislation?
All eligible companies will be required to report on emissions relating to their use of electricity, natural gas and transport as well as intensity metrics such as total CO2 emissions per number of employees.
The mandatory reporting requirements cover the following:
- Direct emissions - GHG emissions released into the atmosphere from activities owned or controlled by your organisation
- Indirect energy emissions - emissions released into the atmosphere associated with your business consumption of purchased electricity, heat, steam and cooling
- Emissions that are a consequence of your business’ actions - occurring at sources which they do not own or control, e.g. emissions from business travel by means not owned or controlled by you.
- Other indirect emissions - from activities which you own or control including combustion of fuel & operation of facilities
- The energy consumption figure used to calculate emissions
- Intensity metrics
- You are also required to include a methodology section in your report
What are the next steps?
1. Check whether or not your business fits the definition of a large company and if the legislation applies to you
2. Analyse current reporting versus detail required by the legislation and agree a way forward. You will need to consider current data collection and reporting processes including report scope, as well as reviewing current energy efficiency if historic data is available
3. Agree how data collection is going to be carried out and how this is going to be collated and stored ready for calculation
4. You will need to carry out the necessary calculations in line with SECR guidance and latest GHG reporting standards. You will need to maintain records of any assumptions or emission factors used to be included in the methodology section of the report
5. Lastly, agree a sign off process with your accountant. Once the report has been collated and incorporated into the rest of your Annual Report it will need to be submitted to the relevant executives within your organisation for sign off and then passed to your accountant for final signature and authorisation.
How we can help
The team of energy experts at our sister company, BCR-ECS, are able to produce the necessary reports on your behalf and help with any energy measuring and monitoring that you may require.