Navigating the new world of Streamlined Energy & Carbon Reporting

On 18 July 2018, the government announced the outcome of the public consultation on SECR.  Organisations were seeking clarity on what to do and what to expect, as a result, we held a live webinar.

SECR is part of a package of changes announced by the government which aims to reduce the burden of the current suite of reporting requirements while further incentivising energy efficiency and reducing carbon emissions. If your organisation is a UK registered quoted or large unquoted company or LLP, SECR will apply to you.

If you would like to know when reporting will need to be done, who will qualify and how this should be done, we have a recording of the webinar and the accompanying slides available on this page here.

A large number of good questions came out of the discussion and we were not able to answer all of them during the webinar, so we have responded to them below. If you still have questions and would like to speak to us, do not hesitate to get in touch.

If a University isn’t required to partake in ESOS does this mean that they’re exempt from SECR?

  • All organisations (including universities) which meet the SECR qualification criteria will have to comply.
  • The SECR qualification criteria are not the same as ESOS qualification criteria. ESOS is unaffected by SECR. They are separate regulations and you may qualify for one and not the other. If you qualify for both, you must comply with both, but you may use information collected for ESOS to inform any energy efficiency action reported for SECR.

If reporting is through the Directors’ report in the Annual Report – how will BEIS monitor reporting? (We don’t report to Companies House).

  • SECR reporting will be through Annual Reports submitted to Companies House, but organisations which do not submit annual reports to Companies House can report voluntarily. Company reporting is regulated by Companies House and FRC.

 We are an HE organisation. Presumably be required to comply with SECR. Questions: 1) will the CCL rate be fixed year in year out or will it vary, 2) If we have no energy efficiency actions for a particular year would there be a penalty for inaction?

  • I) The annual CCL rates are not fixed and are published by HMT on their website. In April 2019 rate for electricity will be 0.00847 £/kWh and for gas 0.00339 £/kWh
  • 2) Company reporting is enforced by Companies House and FRC. However, there will be more about enforcement in the SECR guidance due to be published in January 2019. No penalty for inaction although there may be reputational impact.

Could you expand on what you mean by verified energy use for quoted companies?

  • Expert verification of energy data is not mandated in SECR, but it assures accuracy of published information. We will offer a SECR verification service. It will be similar to CRC internal audits in some respects but will reflect the SECR requirements.

Do you have to stick with the same intensity metric year on year?

  • There will be more on intensity metrics in the guidance to be published in January 2019, but the intention is that companies can choose the most appropriate metrics, as is the case with mandatory GHG reporting. companies will need to publish their previous year’s figure from the second year of exporting.

What are the UK energy use Scope 1 and Scope 2 emissions, where are they defined and can you explain further what you mean by reporting underlying energy use?

  • Scope 1 and 2 are defined in the GHG Protocol. In summary, Scope 1 emissions are greenhouse gas emissions released on an organisation’s site or from their vehicles. For example emissions generated by gas boilers and vehicles. Scope 2 is purchased electricity, heat and steam.
  • Large unquoted companies and LLPs are required to report UK energy use and associated Scope 1 and 2 emissions. As a minimum, energy use in scope will be gas, electricity and transport. Quoted companies already report global emissions and will now be required to report their global energy use. There will be more detail in the guidance.

Do we report location or market based emissions, or both?

  • There will be more detail in the guidance. Mandatory GHG reporting currently requires dual reporting.

Will complex Groups be able to nominate one legal entity to report on behalf of other group members, even if they are not related as parent-subsidiary or have different overseas parents, as is the case currently in the CRC.

  • SECR information will be in the relevant company’s directors’ report or the parent’s group report if it is included here. The details around reporting will be covered in the guidance and the draft regulations might be helpful in the meantime (see below for link).

Can you say when the reporting timeframe is? Firstly what does the first report needs to refer to (eg Jan 17 to Jan 18). So if my company fy runs 31 jan to 31 jan, is the report for the 19/20 year (out early 2020) is the first one due?

  • The first report will start for reporting years commencing on or after April 2019. So if your FY runs from 1 Feb, the first year will be 1 Feb 2020 to 31 Jan 2021.

Will there be any specific guidance relating to Private Equity (LLP) firms? e.g. will they be expected to report against each fund?

  • The draft regulations make provision specifically for companies and LLPs rather than funds. There will be more on this in the guidance and in the meantime, the draft regulations will be helpful.

Smaller companies not versed with the DEFRA conversion factors will struggle with interpreting the needs. Can the DEFRA data be made more user friendly for SMEs – perhaps with linked guidance for the SECR?

  • SECR will only apply to quoted companies and large unquoted companies and LLPs. So SMEs are not affected by SECR, unless reporting on a voluntary basis. To qualify as a large company, see the Companies Act definition.

In terms of the UK energy use, does the electricity element of electric vehicles go into the transport section or the overall electricity consumption?

  • In the draft regulations, consumption of fuel used for the purpose of transport includes purchase of electricity. There will be more detail about reporting on transport in the guidance

CRC was a revenue generator – where is this revenue going to captured instead?

  • The revenue is captured by increases in CCL from April 2019.

In CRC, suppliers have an obligation to provide annual supplier statements.  Will this requirement be retained for SECR?

  • No decision at present, it’s a supply licence condition.

The draft regulations, The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, are published here: https://www.legislation.gov.uk/ukdsi/2018/9780111171356/contents

Further reading: Have a look at our blogs on the topic of SECR

UK Government announcement means energy & carbon reporting for many more companies in 2019.

The new energy and carbon reporting framework: will your company be affected?