SECR (Streamlined Energy and Carbon Reporting) is a mandatory regulatory framework introduced in the UK in 2019 to help businesses report their energy use and carbon emissions more transparently. It affects more than 11,900 organisations across the UK, making it one of the most significant regulatory frameworks for carbon reporting. With 15 different categories for Scope 3 emissions alone, organisations face increasingly complex reporting requirements that demand substantial time and expertise. Although SECR compliance can seem overwhelming, businesses that outsource SECR reporting can save valuable time and ensure the accuracy of their disclosures.
Understanding SECR
The UK's Department for Business, Energy and Industrial Strategy (BEIS) launched SECR in April 2019. This sustainability framework expands on previous carbon and energy reporting requirements, specifically the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme. It also builds on (but doesn't replace) existing requirements like mandatory greenhouse gas reporting for quoted companies, the Energy Saving Opportunity Scheme (ESOS), Climate Change Agreements (CCA) Scheme and the EU Emissions Trading Scheme (ETS).
Who Needs to Report
Large UK-based companies must now share their energy consumption and carbon emissions data in annual reports. SECR specifically applies to:
- Companies listed on major stock exchanges
- Unquoted companies that meet any two of these conditions: £36 million or more in turnover, £18 million or more in balance sheet assets or 250+ employees
- Large Limited Liability Partnerships (LLPs) with similar criteria must also comply
Charities that meet these thresholds need to comply too, while public bodies follow different carbon reporting rules. Parent companies should look at these numbers at the total level for group reporting. The framework works alongside the G20 Financial Stability Board's Taskforce on Climate-related Financial Disclosures and gives investors vital information to navigate towards sustainable, low-carbon economies.
What Should be Included in the Report
Companies need to report:
- Scope 1, 2 and 3 greenhouse gas emissions
- Yearly UK energy use (at least 40,000 kWh) for gas, electricity and transport fuel
- At least one emissions intensity ratio for comparison purposes
- Methodologies used for calculations
- Narrative description of energy efficiency measures
- Last year’s figures for comparison
The rules include a 'comply or explain' option. Companies can skip reporting some information if it's too hard to collect. They must explain why and show how they'll get this data next time. Expert sustainability consultants can guide companies through these complex requirements with professional data collection and advanced analytics. This helps organisations that don't have enough resources or find the technical parts challenging.
Read More: SECR Requirements
Common SECR Reporting Challenges
The SECR framework is designed to simplify energy and carbon reporting, but it still requires businesses to gather and interpret complex data, monitor energy usage, calculate emissions and ensure compliance with ever-evolving regulations. Many companies may find it challenging handling these tasks include difficulties with:
Data Complexities
Data accuracy is one of the biggest worries in SECR reporting. Companies may make crucial errors when they use wrong emissions factors that change each year. Data collection needs to be reliable, especially when you have operations spread across different locations. Companies often run into problems with keeping measurement methods consistent, tracking emissions from complex supply chains and coordinating data between departments. Organisations must also handle complex calculations while making sure their environmental data stays accurate. Any mistakes can derail the whole reporting process, leading to non-compliance and possible financial penalties.
Internal Resource Constraint
The sheer scale of data required for precise SECR reporting often overwhelms internal teams. Data collection from multiple departments and facilities takes too much time and pulls resources away from core business activities. Smaller companies find it especially difficult to allocate resources without affecting their day-to-day operations.
Compliance Risks
Poor SECR reporting creates problems beyond just breaking regulations. The Financial Reporting Council's Conduct Committee can levy hefty fines. Companies House might reject filings with incomplete SECR information, resulting in late penalties from £150 to £7,500, based on company size.
Why Outsource SECR Reporting?
Outsourcing SECR reporting offers a range of benefits, enabling businesses to streamline the process and focus on their core operations.
Save Time and Resources
The SECR reporting process requires meticulous attention to detail. From gathering data on energy use and emissions to preparing accurate calculations, the process can take up significant amounts of time. Outsourcing this responsibility to experts who specialise in SECR compliance means businesses can free up internal resources.
Reduce Stress and Minimise Risks
The process of preparing a SECR report can be complex especially for companies without in-house expertise, or those facing tight deadlines and complex data gathering. These businesses may make mistakes or miss important reporting components. Outsourcing your SECR reporting to trusted sustainability scientists will minimise the risk of errors and ensure that your reports are completed correctly the first time.
Achieve External Verification and Boost Credibility
External verification of your SECR report is a valuable step in establishing credibility and demonstrating your commitment to sustainability. Verified reports signal to investors, customers and other stakeholders that your business is taking tangible steps to address its environmental impact.
Stay Ahead of Regulatory Changes
New regulations and guidelines are often being introduced to corporate sustainability reporting. Likewise, adjustments to previous compliance requirements are being made. For example, the UK government has set ambitious carbon reduction targets, announcing during COP 29 its plans to slash emissions by 81% by 2035 compared to the previous goal of 78%. This changing landscape may result in stricter reporting rules and standards in the coming years, meaning businesses must ensure they stay compliant with the latest requirements.
Leverage Expertise in Carbon Reporting
SECR reporting is just one part of broader sustainability reporting, which often includes carbon reporting, energy efficiency measures and other environmental data. This can be a complex area for businesses that are not familiar with the nuances of carbon emissions calculations and energy management. Outsourcing to a team of specialists enables you to leverage their expertise in carbon reporting, including the most efficient and cost-effective methods for calculating Scope 1, Scope 2 and Scope 3 emissions.
The Bottom Line
Outsourcing your SECR reporting provides numerous advantages that can support your business’s sustainability strategy and help you stay compliant with ever-evolving legislation. If your business is looking to simplify and improve the accuracy of its SECR reporting, Tunley Environmental offers a range of services designed to streamline energy and carbon reporting, ensuring compliance and providing guidance throughout the reporting process.