With new legislation coming into effect next April, we answer some of the common questions you may have about the Streamlined Energy and Carbon Reduction (SECR) framework and how best to measure and reduce carbon footprint with solutions like our CEMARS product.

Who needs to comply with the SECR framework?

The legislation is going to be new for large unquoted companies and large limited liability partnerships (LLPs). The criteria is in a year, if two or more of the following requirements are met:

• Turnover £36 million or more
• Balance sheet total £18 million or more
• Number of employees 250 or more

Large companies quoted on the stock exchange (PLCs) already have to comply with reporting their greenhouse gas emissions.

Companies that are currently reporting to CRC Energy Efficiency Scheme or Energy Savings Opportunity Scheme (ESOS) will typically now have to comply with this new legislation.

Are there any exemptions?

If your company uses less than 40MWh during a reporting period you are exempt. This amount of energy is effectively “domestic” level, so it’s unlikely to apply in most cases.

The reporting applies to UK energy use only, so if you have sites outside the UK, these are exempt. Equally if your company is not registered in the UK you will be exempt.

If you meet the criteria for SECR but are a subsidiary of a larger group of companies, you are excluded from reporting individually if your figures are consolidated in the parent company.

If the information is accepted as of strategic importance, then it may not have to be published externally.

What will companies need to report and what are the requirements?

Companies will need to publish their UK greenhouse gas emission for energy use. As a minimum it will include purchased electricity, gas and transport. For these you need to report on:

• Associated greenhouse gas emissions
• At least one intensity ratio
• Previous year’s figures for energy use and greenhouse gas emissions (except in the first year).
• Information about energy efficiency action taken in the company’s financial year
• Methodologies used in calculation of disclosures.

What are the timeframes for reporting?

You must publish this information in your first annual report after 1^st April 2019, so for most companies from early 2020 onward.

However, this implies you need to have a way to capture and measure data in place this year to be sure that the relevant information will be readily available next year.

Are there penalties?

It is a legal requirement to comply with this legislation. Civil penalties apply and action can be taken against Directors or members of an LLP.

How should companies report?

You will need to include the greenhouse gas emissions and associated energy information in your Directors report. There are no mandatory formats you must use, but it would be advisable to choose a format that you will use each year and will help to monitor progress.

My company is a subsidiary, am I exempt?

Only if you fall below the criteria for SECR:

• Turnover £36 million or more
• Balance sheet total £18 million or more
• Number of employees 250 or more

Will SECR replace ESOS?

No you still have to comply with ESOS for 2019.

What do I have to measure?

You will have to measure activities involving the combustion of gas, or consumption of fuel for the purposes of transport; and the purchase of electricity by the company for its own use, including for the purposes of transport. This will need to be reported in CO₂ and kWh.

Transport typically will include all vehicle fleet both car and commercial. It also includes business mileage in private cars.

What are the government targets that we are trying to reach?

The legislation mandates companies to report on their greenhouse gas emission and energy but it is hoped that this will encourage companies to then set targets and reduce these, so helping the country meet its overall target. Under the Climate Change Act 2008 the aim is to reduce greenhouse gas emissions by 80% by 2050 (against a 1990 baseline).

Will Brexit impact SECR?

Highly unlikely, it is UK legislation in nature, not European.

Will the CRC be changing?

CRC ends this year and SECR will replace it.

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