SECR: the UK carbon reporting legislation, explained
What the SECR is, who it applies to, and when you need to comply by.
Carbon reporting legislation is expanding around the world.
In the EU, companies are preparing for the CSRD and the CSDDD. Meanwhile, in the US, the SEC has proposed its own climate impact disclosure legislation.
However, for companies based in the UK, one legislation dominates the carbon reporting landscape: the SECR. Here’s what the SECR is, who it applies to, and when you need to comply by.
What is SECR?
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.
Which businesses have to comply with SECR?
- 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 need 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.
SECR-compliant data collection & reporting
Normative enables you to measure your scope 1, 2, and 3 emissions, and share the data in SECR-compliant reports.
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.
Calculate, report, and reduce your company’s carbon emissions
Normative calculates your company emissions and identifies hotspots. Our carbon specialists use this intelligence to create a tailored reduction plan – and a climate investment strategy for what you can’t reduce. Together, we ensure your business stays compliant, competitive, and equipped to reach net zero.
FAQs
Frequently asked questions about SECR
Yes, businesses in the UK that meet the SECR’s conditions will need to comply with its reporting requirements.
SECR is focused on a company’s greenhouse gas emissions, while ESOS is concerned with energy usage.
Quoted companies (companies listed on a public exchange), large unquoted companies, and large limited liability partnerships (LLPs) need to report their climate impact due to SECR’s requirements.
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.
The SECR came into effect in 2018. 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.
Reporting scope 3 emissions is voluntary, but strongly encouraged.
