Streamlined Energy and Carbon Reporting (SECR): A Comprehensive Guide for Businesses in the UK

Background

The UK's Streamlined Energy and Carbon Reporting (SECR) framework significantly expanded public energy and carbon reporting requirements for UK businesses when it came into effect in 2019. Carbon reporting frameworks have proliferated in the years since, but the SECR remains a leader in tying carbon reporting to energy efficiency actions and energy cost reduction. 

Here’s what companies in the UK and beyond need to know about the SECR, who needs to report, what data must be disclosed, and the implications of non-compliance.

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Key Takeaways

• The SECR requires eligible UK companies and global companies with UK operations to report their energy use and carbon emissions in annual reports.
• Approximately 10,000+ companies are impacted by this regulation.
• Impacted organizations must report on annual energy use, greenhouse gas (GHG) emissions, an emissions intensity ratio, and energy efficiency actions.
• Companies face potential penalties for non-compliance, including fines.
• The framework aims to drive adoption of energy efficiency measures, lower energy costs, and reduce emissions.

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Impact of the SECR on Businesses

Who Needs to Comply

The SECR affects approximately 10,000+ companies that are based in or have operations in the UK:

• Publicly-listed companies of any size.
• Large private companies, Limited Liability Partnerships (LLPs), and nonprofit organizations that meet at least two of the following criteria:
  
  • Annual revenue of £36 million or more
  • Balance sheet total of £18 million or more
  • 250 employees or more

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Penalties for Non-Compliance

Failure to comply with the SECR can lead to serious consequences:

• Financial penalties: The Financial Reporting Council (FRC), which oversees SECR enforcement, can impose fines and other enforcement actions for non-compliance, which vary depending on the nature and severity of the breach.
• Legal penalties: Directors may face legal action for late filings or inaccurate reporting.

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Exemptions

Companies that meet any of the following criteria are exempt from SECR reporting:

• Organizations that consume less than 40,000 kWh of energy in the reporting year
• Private companies and LLPs for which it is either commercially confidential or infeasible to obtain some or all of the required information (though this requires an accompanying explanation)
• Subsidiaries included in a parent company's group report (under certain conditions)
• Public sector organizations (though they have their own reporting requirements)

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Reporting Requirements Under the SECR

Energy and Carbon Reporting

Companies must include the following information in their annual reports:

• Energy use: Annual energy consumption in the UK (in kWh), including from gas, purchased electricity, and transport fuel. Public companies must also report their global energy use.
• Emissions intensity ratio: At least one emissions intensity ratio that allows for comparison of emissions over time or with other organisations (i.e., emissions per financial or operational metric).
• Greenhouse gas emissions: Associated Scope 1 (direct) and Scope 2 (indirect) emissions in tons of carbon dioxide equivalent (CO2e). Companies are also encouraged to report their Scope 3 emissions, but this is not mandatory.
• Energy efficiency actions: A narrative description of key energy efficiency measures taken during the reporting period.
• Methodologies: Methodologies used to calculate the required information.

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Timeline and Deadlines for Compliance

• SECR reporting is an annual obligation aligned with a company's financial year.
• Reports must be included within the Directors' Report section of the annual report (or equivalent for LLPs).
• There is no separate submission process – SECR data is part of the annual financial reporting to the Companies House.

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How Gravity Can Help You Meet SECR Requirements with Confidence

There are various approaches to ensure compliance with the SECR’s energy and carbon reporting requirements, including managing the process in-house, hiring a consulting firm, or implementing specialized software.

As an integrated energy and carbon management platform, Gravity is uniquely positioned to ensure you meet your SECR requirements. We offer world-class software, personalized support from climate experts, and partnerships with market-leading energy efficiency vendors to reduce energy costs and drive decarbonization. 

Here's how we can support you:

• Automated data collection: Collecting energy use data and calculating Scope 1 and 2 emissions data are often the most time-consuming elements of SECR reporting. Using Gravity's utility bill scanning feature and utility APIs, you can process thousands of documents in seconds – without manual error. The supplier engagement solution and surveys makes it possible to collect data from across your operations and transport activities in record time.
• Simplified reporting: Our platform will automatically format your data to meet the SECR’s disclosure requirements. You can also translate the raw data collected for SECR to other disclosure frameworks you may need to comply with, including the CSRD, TCFD, CDP, and other standards.
• Energy efficiency measures: Gravity leverages energy use and cost data to identify energy efficiency opportunities with positive ROI, and accelerates implementation by connecting customers to a network of trusted vendors. Gravity’s platform allows you to track progress and measure the impact of energy efficiency measures, simplifying energy efficiency action reporting for the SECR.
• Data assurance: Data assurance should be baked into every step of the process to ensure accurate reporting and methodology disclosure for the SECR. Gravity's platform supports viewing data logs, attaches supporting evidence for every data point, and streamlines the verification process by keeping all documentation in one place. 
• Expert assistance: You'll be partnered with an expert Climate Strategist who will help you navigate SECR as it applies to your company, develop appropriate intensity ratios, and ensure you can leverage your reporting to drive action that helps the bottom line.

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Final Thoughts on the UK's SECR

The UK's SECR framework is a key pillar of the country's climate strategy. As mandatory energy and carbon reporting becomes common globally, the SECR positions UK businesses to adapt to an energy-efficient, low-carbon future. Companies that embrace the SECR as an energy efficiency opportunity, rather than just a compliance exercise, can benefit from reduced energy costs and better preparedness for other climate-related regulations, including the European Union’s CSRD and California’s CCDAA in the U.S.

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Frequently Asked Questions

1. When did SECR come into effect?

SECR came into effect on April 1, 2019, replacing the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme.

2. Which companies are required to comply with SECR?

The SECR affects 10,000+ companies that are based in or have operations in the UK. This includes public companies of any size and large private companies, LLPs, and nonprofit organizations that meet at least two of these criteria: annual revenue of at least £36 million, balance sheet total of at least £18 million, or at least 250 employees.

3. What needs to be reported under SECR?

Companies must report their UK energy use, emissions intensity ratio, greenhouse gas emissions (Scopes 1 and 2), energy efficiency actions, and methodology. Public companies must also report their global energy use.

4. Are there exemptions to SECR reporting?

Yes, exemptions include organizations that consume less than 40,000 kWh of energy in the reporting year, private companies and LLPs for which it is either commercially confidential or infeasible to obtain some or all of the required information (though this requires an accompanying explanation), certain subsidiaries included in a parent company's group report, and public sector organizations.

5. How often do companies need to report under SECR?

SECR reporting is an annual requirement, aligned with a company's financial year and included in their annual report.

6. What penalties exist for non-compliance with SECR?

Non-compliance can result in financial penalties under the Companies Act 2006 and potential legal action against company directors.

7. How does SECR relate to other carbon reporting schemes?

SECR replaces and expands upon the CRC Energy Efficiency Scheme in the UK. It exists alongside other UK carbon and energy measurement initiatives such as the Energy Savings Opportunity Scheme (ESOS).

8. Do companies need external verification for their SECR data?

External verification is not legally required, but is recommended as good practice to ensure accuracy and build stakeholder confidence.