Sustainable business

Spotlight on energy and carbon reporting

In 2016, the UK Government announced that the Carbon Reduction Commitment (CRC) scheme would close at the end of the current phase, March 2019. The scheme was a challenge at times for a large percentage of the c. 5,000 businesses obligated to take part, hence the name of the new provisions perhaps – the Streamlined Energy and Carbon Reporting (SECR) regulations. These will go some way towards reducing the burden of the current suite of reporting requirements while further incentivising energy efficiency and reducing carbon emissions.

What’s new?

  • The draft SECR regulations are currently before Parliament and, once final approval has been granted, organisations will need to disclose greater breadth and depth regarding their energy usage and carbon disclosure.
  • The draft SECR requirements will have effect in respect of a qualifying organisation’s financial year which ends on or after 1 April 2019 and will help the UK Government to meet its goal ‘to enable businesses and industry to improve energy efficiency by at least 20 per cent by 2030’.
  • The amended scope will capture a much greater number of UK organisations, including large organisations and Limited Liability Partnerships (LLPs) not listed on the London Stock Exchange, increasing the total number of UK organisations included in the expanded scope from c. 1,000 to c. 12,000.

Whom will the SECR regulations impact?

  • All large UK-registered quoted companies – these PLCs will continue to report their global greenhouse gas emissions and an intensity metric in their annual reports. The SECR regulations will also require these PLCs to report their total energy usage and to outline what action has been taken in the last reporting period to tackle energy efficiency.
  • LLPs and ‘large’ companies – as defined by the Companies Act 2006 definition of ‘large’ – whereby they fulfil at least two of the following criteria in the financial year:
    • At least 250 employees
    • Annual turnover greater than £36 million
    • An annual balance sheet total greater than £18 million.

What next steps should be taken by a qualifying organisation?

  • The new SECR provisions will require organisations to revisit their arrangements regarding energy data collection.
  • It would be prudent for a qualifying organisation to ensure it has good management systems in place to track and report energy usage.
  • Furthermore, a qualifying organisation will need to calculate carbon emissions and present appropriate KPIs – accounting for and disclosing scope 1 and scope 2 carbon emissions is the minimum (direct use of energy/electricity).
  • Organisations should commence recording and summarising, and be prepared to communicate energy efficiency actions adopted in the current reporting period.

The Luminous view

Reporting doesn’t stand still – and that includes carbon matters. At Luminous we welcome the changes on the horizon to help companies better disclose and readers better understand how the nature of carbon and climate change will affect their business now and in the future.

If you would like to know more about how your organisation can best communicate its sustainability credentials to stakeholders, please get in touch.

[email protected]

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