SECR: the UK carbon reporting legislation, explained

Sustainability

3. Mar 2022

Aron Vallinder, PhD

Research Writer

What the SECR is, who it affects, and when you have to comply by.

Aron Vallinder, PhD

Research Writer

The UK’s Streamlined Energy and Carbon Reporting (SECR) policy requires organizations to share energy use and carbon emissions information in their annual reports.  

The SECR builds on existing reporting requirements that companies may already be subject to. Its purpose is to widen the scope of energy and carbon reporting to a larger number of companies, and to encourage energy efficiency actions.  

Who has to comply with SECR?

Businesses need to comply with SECR if they are:

  • Quoted companies (companies listed on a public exchange)
  • Large unquoted companies
  • Large limited liability partnerships (LLPs)

Under the SECR’s definition, companies and LLPs are considered “large” if they meet two or more of the following criteria:

  • a turnover of £36 million or more
  • a balance sheet of £18 million or more
  • 250 employees or more

External validation is not required, but strongly recommended.

Large unquoted companies and LLPs are exempt from SECR reporting if they can show that their energy use during the reporting period is less than 40 MWh. 

When do you have to comply by?

Companies need to provide SECR-accordant information in their Director’s Report from the financial year starting April 1st, 2019, and every financial year after.

How to comply with SECR

The SECR includes one set of reporting requirements for quoted companies, and another for large unquoted companies and LLPs.

Quoted companies must report:

  • Global scope 1 and 2 GHG emissions. Reporting scope 3 emissions is voluntary, but strongly recommended. 
  • At least one emissions intensity ratio. Intensity ratios compare emissions data with an appropriate business metric or financial indicator, such as sales revenue or square metres of floor space, and allow for comparability.
  • Underlying global energy use for the current reporting year.
  • Previous year’s figures for energy use and GHG
  • Energy efficiency actions, with a narrative description of the main measures taken to increase energy efficiency in the relevant financial year.
  • Methodology used. It is recommended that companies use a widely recognized independent standard, such as: GHG Reporting Protocol (Corporate Standard), International Organisation for Standardization, ISO (ISO 14064-1:2018), Climate Disclosure Standards Board (CDSB), The Global Reporting Initiative Sustainability Reporting Guidelines.

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Large unquoted companies and LLPs must report:

  • UK energy use and associated GHG emissions.
  • Previous year’s figures for energy use and GHG emissions.
  • At least one intensity ratio.
  • Energy efficiency actions. 
  • Methodology used.

“Comply or explain”

The SECR contains a “comply or explain” clause, which allows companies to omit information when it is not feasible to collect it – if they can explain what has been excluded and why. They should also aim to provide complete information in the future, particularly where material aspects are concerned. Since the SECR was created to expand carbon reporting and energy efficiency actions, omitting information is, of course, discouraged.

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