#190 Understanding ESG Reporting - Streamlined Energy and Carbon Reporting (SECR)

As the urgency to address the climate emergency heightens, businesses are coming under increasing pressure to monitor, report and reduce their energy use and carbon emissions to meet net zero targets.

As a result, there is an increase in regulations to ensure that companies are taking the climate emergency seriously and not pay lip service to climate action.

During September, we’ll be taking a look at a few of the latest regulations that may affect your organisation, including:

·      SECR – Streamlined Energy and Carbon Reporting

·      ISSB S2 - International Sustainability Standards Board Climate related disclosures

·      CSRD - Corporate Sustainability Reporting Directive

·      CSDDD - Corporate Sustainability Due Diligence Directive

In this episode, Mel Blackmore breaks down what Streamlined Energy and Carbon Reporting (SECR) is, its reporting requirements, it’s qualifiers and how it can work in tandem with other carbon management initiatives.

You’ll learn

·      How do these regulations relate to ESG reporting?

·      What is Streamlined Energy and Carbon Reporting?

·      What are the SECR Emissions Reporting Requirements?

·      Who qualifies for SECR?

·      How can SECR work with other carbon management initiatives?

 

Resources

·      Carbonology

·      SECR

 

 

In this episode, we talk about:

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[02:10] Episode summary: Over the course of September, Mel will be exploring the latest climate change regulations that may affect your organisation. In this episode she dives into Streamlined Energy and Carbon Reporting (SECR).

[03:20] How do these regulations relate to ESG reporting? – ESG requirements include a commitment to sustainability, and reducing your overall impact. All of these regulations contribute towards an organisations ESG reporting requirements, as they require tangible proof to back up your ESG claims.

They will require you to provide comprehensive emissions reporting, the level of detail of which will depend on the specific applicable regulation.

[04:05] Future content to look forward to: During September Mel will look at involuntary emissions reporting schemes, but in October she will be looking into the voluntary schemes that many are already adopting as part of their Stakeholder requirements.

This will include:

·      CDP (Carbon Disclosure Project)

·      EcoVardis

[05:50] What are the SECR Emissions Reporting Requirements?: SECR has been around since April 2019, and was originally introduced to replace the Carbon Reduction Commitment Scheme.

This is a mandatory scheme, so it is a legal requirement for those that meet it’s criteria. For those that are familiar with ESOS (The Energy Savings Opportunity Scheme), it functions in a very similar way.

This scheme isn’t solely focused on reporting energy usage and carbon emissions, it’s also looking for organisations to report on efficiency measures that are undertaken on an annual basis. Which is reflected in the financial reporting that you will also have to submit.

It’s important to note that SECR has specific requirements for the disclosure of greenhouse gas (GHG) emissions and energy consumption. Emission reporting requirements vary slightly between quoted companies and large unquoted companies and LLPs.

For quoted Companies:

·      Global Scope 1 and 2 GHG emissions must be reported. Scope 3 emissions reporting is strongly recommended but voluntary.

For large unquoted companies and LLPs:

·      UK based Scope 1 and Scope 2 emissions and associated energy consumption. Scope 3 emissions from the combustion of fuel in vehicles or equipment not owned by the company.

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[12:05] Who qualifies for SECR?:  All UK Quoted Companies: Any company that has shares listed on the UK Stock Exchange is required to comply with SECR.

Large Unquoted Companies and Large LLPs: These are companies and Limited Liability Partnerships (LLPs) that are not listed on the UK Stock Exchange but meet two or more of the following criteria:

·      Turnover: More than £36 million per annum.

·      Balance Sheet Total: More than £18 million.

·      Number of Employees: 250 or more employees.

These criteria ensure that SECR framework targets large organisations that have a significant impact on the UK’s energy consumption and carbon emissions. By complying with SECR, these organisations can contribute significantly to the UK’s sustainability goals.

[14:10] When is the SECR disclosure made? SECR reporting must occur alongside financial reporting, being included within annual reports and Directors’ Reports, which are then filed with Companies House.

[14:30] The importance of Accurate SECR Reporting and Carbon Reduction -  The reporting process can unlock valuable insights and opportunities for operational improvements, leading to enhanced energy efficiency and reduced carbon emissions over time.

Demonstrating your organisation’s commitment to energy efficiency and carbon reduction can enhance brand perception and foster positive relationships with stakeholders, including investors, clients, and regulators.

[16:05] Integrating SECR Reporting with Other Carbon Management Initiatives -  You are missing a trick if you’re keeping your SECR reporting separate from the rest of your business activities. It should be included as a part of your sustainability umbrella, and can be invaluable if you’re going for other reporting requirements such as EcoVardis and CSRD.

There’s no need to reinvent the wheel if you already have something like an Environmental Management System in place, simply weave the additional requirements in with your usual annual maintenance. Established systems will already be adhered to across the business, meaning any new requirements will soon become business as usual.

You could incorporate this as part of your Net Zero strategy, or Carbon Reduction Plan if PPN 06/21 is one of your reporting requirements. You could also incorporate this into your supply chain emissions reporting.

If you would like some help with SECR, please get in touch with Carbonology.

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