The SECR explained: How it affects you and your business

Replacing the Carbon Reduction Commitment (CRC), the UK government’s Streamlined Energy and Carbon Reporting (SECR) – implemented on 1 April 2019 – puts more responsibility on organisations to choose how they measure and report their emissions.

By extending the reporting requirements for quoted companies and mandating new annual disclosures for large unquoted and limited liability partnerships, the SECR builds on, rather than replaces, the existing requirements that companies may also face.

Here, we’ll detail what exactly the SECR entails, how to comply and whether or not your business is exempt from it.

What is SECR?

The SECR is a piece of legislation that makes it mandatory for large businesses, including charitable organisations, to report their energy and carbon emissions, as well as efficiency measures taken throughout the year, on an annual basis.

The legislation aims to bring the benefits of carbon and energy reporting to more businesses, including:

  • Identifying low-cost or no-cost efficiency opportunities
  • Boosting green and sustainability credentials
  • Tracking environmental KPIs year on year
  • Highlighting risks from volatile energy and commodity prices
  • Delivering improved environmental disclosures

Who must comply with the SECR framework?

Over 11,900 UK organisations need to comply with SECR regulations. The regulations affect three groups of businesses which fall within the following definitions:

  • Quoted companies of any size that are already obliged to report under mandatory greenhouse gas reporting regulations.
  • Unquoted companies incorporated in the UK, meeting the definition of ‘large’ under the Companies Act 2006, whether they’re registered and unregistered companies.
  • ‘Large’ Limited Liability Partnerships (LLPs).

Unsure whether or not your company qualifies as ‘large’? Do you meet at least two of these criteria?

  • You have more than 250 employees
  • You have a turnover greater than £36m
  • Your balance sheet totals more than £18m

Public bodies do not fall under the new regulations, although they are subject to other legislation which requires carbon reporting. Charities, not-for-profit companies or others undertaking public activities such as universities, academies or NHS Trusts, will have to check whether they meet the above criteria.

Private sector organisations falling outside of the new regulations are encouraged to voluntarily report in a similar manner.

Are there any exemptions?

There is a statutory de minimis exemption which applies to quoted or large unquoted companies and LLPs that can confirm their energy use is 40MWh or less over the reporting period. Exempt companies will still need to include a statement in their report confirming that they’re a low energy user. When preparing a group report, the low energy user threshold applies to the energy consumption of the parent group and its subsidiaries.