BEIS (the UK Government’s Department for Business, Energy and Industrial Strategy) is currently inviting comments from industry experts regarding the exact wording of the draft guidance that will accompany the SECR Regulations due to come into force from April 1st, 2019. The new guidance is set to replace Chapter 2 in the current Environmental Reporting Guidelines, to reflect the changes in legal requirements for financial years which start on or after 1st April, 2019.
The SECR Regulations will affect:
- Quoted companies;
- Large unquoted companies;
- Large Limited Liability Partnerships (LLP)
Large companies are defined by the Companies Act 2006 as those which have two or more of the following criteria for the reporting period:
- More than 250 employees
- An annual turnover greater than £36m
- An annual balance sheet greater than £18m
Organisations can fall within these three categories even if not for profit or undertaking public activities e.g. universities or NHS Trusts which include companies. The UK Government is extending mandatory carbon reporting requirements to more companies than the outgoing regulations, and encouraging those that aren’t required to report to disclose their sustainability data.
Much like the outgoing Mandatory Greenhouse Gas (MGHG) reporting requirements, quoted companies will be required to report their global greenhouse emissions and an intensity ratio through their annual reports. Additionally, from 1st April 2019 onwards, quoted companies are required to report their total global energy use and information relating to energy efficiency action alongside the methodology used to calculate the data.
To comply with SECR, large unquoted companies and LLPs are required to report their UK energy use and associated greenhouse gas emissions relating to gas, electricity and transport, as well as an intensity ratio, information relating to energy efficiency action, through their annual reports (the definition of “large” is the same for both unquoted companies and LLPs).
All large unquoted, large LLPs, and quoted companies, as defined by the Companies Act 2006, will have to comply with the new energy and carbon reporting framework from April 2019. To reduce the additional burden on reporting companies it is expected that the figures will be published in Annual Reports, alongside financial data.
Companies using 40,000 kWh or less of energy in the 12-month reporting period will be exempt, as will those unquoted companies where ‘it is not practical to obtain information’.
For greenhouse gas emissions, Scopes 1 and 2 will be required, with Scope 3 reporting remaining voluntary. For the GHG calculations, details of the methodology and a suitable carbon intensity metric is also needed.
Energy in the scope of the new SECR legislation includes all UK electricity, gas, and transport (road, rail, air and shipping) energy use.
What does this mean for me?
The impacts of the new legislation will vary depending on your current situation.
If you are already already using the Ecometrica Platform to comply with the current carbon reporting regulations, there is little change – except for the addition of energy use and energy efficiency measures.
If you are reporting and purchasing credits in the CRC EES, then the new SECR regulations will replace these (with much of the direct costs of CRC shifted to the Climate Change Levy).
The largest change will come for those organisations who don’t fall into either scheme. It’s likely that most organisations who have had to submit a return for the Energy Saving Opportunities Scheme (ESOS) will be required to report to the new scheme. This will introduce annual public disclosure of UK energy use and carbon emissions to around 10,000 organisations, up from approximately 1,600 required to report for the outgoing regulations.
The new regulations will present a challenge to many businesses and an opportunity for some larger global businesses not currently reporting to consider applying best practice. As experts in greenhouse gas and sustainability reporting, Ecometrica can work with you to minimise the reporting burden.
To see what we do to help companies reporting to CDP, or if you’d like to chat more, just drop us a line and we’ll contact you to arrange a demonstration of the Ecometrica Platform.