Carbon reporting has evolved from CRC to SECR
The requirements for GHG reporting have changed with the arrival of the Streamlined Energy and Carbon Reporting (SECR).
The purpose of SECR is to:
- Reduce administrative burden on businesses
- Simplify the policy landscape
- Increase transparency for investors
- Raise awareness of energy costs
- Reduce energy use and to develop a market for energy efficiency projects
For those who are new to GHG reporting, it may be a powerful way of getting the subject in front of Directors. If organisations simply follow the rulebook only, SECR will likely be a cost. Instead, use this as an opportunity to make positive change within your business.
For those already reporting, it is unlikely that meeting the requirements of SECR will be a challenge. Be aware however that there is another possible and more substantial mandatory requirement on the horizon for which you may wish to prepare: the Task-force-for-climate-related Financial Disclsure (TCFD) recommendations. The Green Finance Strategy sets an expectation for all listed companies and large asset owners to disclose in line with TCFD recommendations by 2022. Find out more about TCFD here.
Who will need to report under SECR?
- All UK quoted companies
- Large unquoted companies incorporated into the UK
- Large limited liability partnerships incorporated in the UK
It is likely that the majority of costs will be in initial legal scoping to confirm qualification. When we conduct CRC audits for the Environment Agency, we find that most material errors are a result of organisations incorrectly analysing qualification.
What needs to be reported under SECR?
- Scope 1 and 2 emissions
- Associated energy use
- A comparison with previous years' data
- At least one intensity ratio
- Calculation methodology, e.g GHG Protocol, GRI
- Narrative description of energy efficiency actions during the financial year and where possible, resulting energy savings
- Energy audit recommendations from ESOS can be used to invorm energy efficiency actions.
For most organisations, there should not be a significant increase in reporting scope from existing energy and carbon reporting. However, this can vary significantly depending on the complexity of your organisation.
How you should report SECR:
Within the Directors’ Report as part of the annual filing. There is no prescribed reporting format and no requirement for independent assurance. You should be aware that Companies House may not accept accounts that do not meet the requirements.
When you need to report:
SECR applies to financial years starting on or after 1st April 2019. This means that organisations will not have to file their new reports until 2020 at the earliest.
Verco recommends that organisations undertake the following tasks:
- Engage with your financial reporting teams; they will need to include SECR reporting in next year’s Directors’ Report
- Determine your material reporting scope and whether you want to go beyond the minimum
- Map your existing emissions sources to understand what data you will need to collect
- Engage with data owners to plan your data collection strategy