Richard Tarboton, Director of Strategic Services at Carbon Credentials, spoke to Lawyer Monthly for their April issue about how changing environmental regulations, particularly SECR, will impact large businesses and law firms this year.
The impact of climate change will be felt in ways not just related to changing temperatures and more frequent extreme weather events. The UK Government is changing the way that UK companies report their emissions, ditching the unpopular CRC scheme and replacing it with the Streamlined Energy and Carbon Reporting (SECR) framework, which came in effect on April 1st 2019.
Richard lent his expertise to Lawyer Monthly about what the introduction of SECR will mean for many UK companies going forward.
“The new Streamlined Energy and Carbon Reporting framework (SECR) comes into force from 1 April replacing CRC (Carbon Reduction Commitment) and will be a big disruptor to large businesses and law firms this year. The framework was included in the latest Environmental Reporting Guidelines from the Department of Business Energy and Industrial Strategy (BEIS) published on 31 January 2019.”
“Compared to CRC which affected around 2,500 UK businesses, SECR is estimated to impact an estimated 11,900 UK companies including LLPs, quoted and large unquoted companies with more than 250 staff or an annual turnover of more than £36m and an annual balance sheet of more than £18m (so not SMEs unless they report voluntarily). These companies will be required to record and report within their annual reports to Companies House their carbon emissions, energy use and energy efficiency actions taken during the reporting year with the first reports due 1st April 2020, for those businesses whose financial year ends in April 2020. In addition to reporting on carbon emissions, business will need to report their underlying energy and transport use under Scope 1 and 2 Emissions. Scope 1 are greenhouse gas emissions released directly into the atmosphere – ie: from an organisation’s site or from their vehicles. Scope 2 is purchased electricity, heat and steam.”
Richard goes on to highlight the specific impact SECR will have on law firms but also the opportunity this presents to differentiate from peers.
“These new regulations mean that a number of law firms will have to start collecting and reporting their emissions figures for the first time. What’s more, these figures will be publicly reported and can be used to form league tables and compare who is performing at the best level of carbon improvement across the legal sector. It will be an opportunity to show your leadership and differentiate your firm.
As part of this regulation, business including law firms will be required to not only report their total carbon footprint but also to state the actions that that they taken over the last 12 months to reduce this footprint. It will be clear from this whether your firm is taking climate change seriously or simply doing a tick box exercise. ”
If any law firms were still in doubt as to whether they should embrace this change Richard concludes by reminding them that this wave of change to business, caused by climate change, is coming whether companies want it to or not. So the best course of action is to be prepared and maximise the benefits of SECR beyond reporting.
“Recording and collecting data on various scope emissions to meet the new legal requirements, is also a real opportunity for businesses to show their leadership and commitment towards building a lower carbon economy. Companies need to accept that the world economy will be going through a rapid transformation over the next 30 years to one that is zero-carbon and more equitable so SECR will be the chance to create real competitive advantage for example, by reducing energy costs, improving reputation and the well-being and productivity of staff. These businesses will also improve customer loyalty and investor confidence, opening up new opportunities for investment. Pressure to improve sustainability isn’t just coming from regulation, but more so from end clients seeking ways to cut emissions throughout their own supply chain (their Scope 3 emissions) and this means working only with like minded, environmentally committed suppliers and partners.”
If you want to learn more about how your business may be affected by the ending of CRC and introduction of SECR