Overview
Introduced: April 1, 2019
Effective from: Ongoing
Region(s): United Kingdom
About
The UK’s Streamlined Energy and Carbon Reporting (SECR) policy requires companies to include energy use and carbon emissions information in their annual reports. SECR aims to increase transparency and accountability for corporate carbon emissions and to promote energy efficiency. It builds on existing mandatory GHG reporting for quoted companies and extends it to a larger number of unquoted large companies and LLPs. SECR forms part of the UK government’s wider ambition to reduce national carbon emissions and transition to a net-zero economy.
Criteria for compliance
Entities covered
- Large companies and LLPs, defined as those meeting two or more of the following criteria:
- £36 million or more in turnover
- £18 million or more in balance sheet assets
- 250 or more employees
- Companies must also exceed 40,000 kWh of energy use within the reporting period to fall under SECR regulations.
Reporting requirements
Quoted companies
- Global Scope 1 (direct) and Scope 2 (indirect) GHG emissions must be reported, while Scope 3 emissions are voluntary but strongly recommended. Learn more about the difference between Scope 1, 2, and 3 emissions here.
- Companies must provide an emissions intensity ratio, comparing emissions data with business metrics, such as revenue or floor space.
- Previous year’s energy use and emissions must also be included for comparison.
- A narrative outlining energy efficiency actions taken during the reporting year must be provided.
Unquoted companies and LLPs
- Must report UK energy use and associated GHG emissions for gas, electricity, and transport fuels.
- Energy efficiency actions must be disclosed, along with an emissions intensity ratio.
- They must follow a “comply or explain” approach if data is unavailable or incomplete.
Compliance timelines
- April 1, 2019: SECR came into effect, and companies are required to include SECR information in their annual reports from this date onwards.
- Reporting is required annually for each financial year.
Disclosure requirements
- Companies must include their UK energy use (in kWh), GHG emissions (in tonnes of CO2e), an intensity ratio, and actions taken to improve energy efficiency in their annual Director’s (Trustees’) Report.
- Reporting methodologies must be clearly stated, with recognized standards such as the GHG Protocol, ISO 50001, or the Carbon Disclosure Standards Board being recommended.
- Previous year’s data must be reported to provide a comparison for stakeholders.
Third-party auditing
External validation is not mandatory under SECR, but it is strongly recommended. Companies can opt for third-party audits to enhance credibility and stakeholder confidence.
Penalties for non-compliance
Penalties are not imposed directly by SECR; however, noncompliance could lead to reputational risks, especially for large public-facing companies. Companies failing to meet the disclosure requirements may be subject to scrutiny by investors, regulators, and the public.
