The UK government’s Streamlined Energy and Carbon Reporting (SECR) policy was implemented on 1 April 2019, when the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 came into force.
Businesses who are in the scope of the regulations need to comply for financial years starting on or after 1 April 2019 and therefore need to understand their requirements under SECR.
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The introduction of SECR coincides with the end of the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme. The new regulations require an estimated 11,900 companies incorporated in the UK to disclose their energy and carbon emissions – a far greater number than were required to act under the CRC.
SECR builds on – but does not replace – existing requirements that companies may face, such as mandatory greenhouse gas (GHG) reporting for quoted companies, the Energy Saving Opportunity Scheme (ESOS), Climate Change Agreements (CCA) Scheme, and the EU Emissions Trading Scheme (ETS). SECR extends the reporting requirements for quoted companies and mandates new annual disclosures for large unquoted and limited liability partnerships (LLPs).
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Three groups of businesses are affected by the new regulations.
Companies that fall within the following definitions must comply unless they meet certain exemption criteria:
- Quoted companies of any size that are already obliged to report under mandatory greenhouse gas reporting regulations.
- Unquoted companies incorporated in the UK that meet the definition of ‘large’ under the Companies Act 2006 will have new reporting obligations. This applies to registered and unregistered companies. Note that the criteria for ‘large’ differs from the ESOS Regulations.
- ‘Large’ Limited Liability Partnerships (LLPs) will be required to prepare and file a ‘Energy and Carbon Report’.
- Unquoted companies or LLPs are defined as ‘large’ if they meet at least two of the following three criteria in a reporting year:
- Turnover of £36million or more;
- a balance sheet of £18million or more; or
- 250 employees or more.
Public bodies do not fall under the new regulations, but they are subject to other legislation which requires carbon reporting.
It is worth noting that charities, not-for-profit companies or others undertaking public activities – such as companies owned by universities, academies or NHS Trusts – will need to check whether they meet the above qualifying criteria.
Private sector organisations which fall outside of the scope of the new regulations are encouraged to voluntarily report in a similar manner.