Understand SECR reporting thresholds, ensure compliance, and enhance sustainability with expert guidance from ESG Pro Limited. Learn key steps for accurate carbon reporting.
SECR Reporting Threshold: Understanding your Obligations and Ensuring Compliance
Navigating the regulatory landscape of carbon reporting can be daunting for many businesses. The Streamlined Energy and Carbon Reporting (SECR) framework plays a pivotal role in guiding organisations toward more transparent energy use and emissions disclosure. However, understanding whether your organisation falls within the SECR reporting threshold is essential to ensure compliance and avoid potential penalties.
What is SECR?
The Streamlined Energy and Carbon Reporting (SECR) initiative was introduced by the UK Government in April 2019. This framework is designed to enhance the visibility of energy consumption and carbon emissions among large businesses in the UK. By mandating these disclosures, SECR aims to drive energy efficiency improvements and reduce greenhouse gas emissions across various sectors.
Materiality, ESG, and Sustainability are closely linked to the SECR framework, offering a holistic view of a company’s environmental impact and commitment to sustainable practices.
Who Falls Within the SECR Reporting Threshold?
The SECR framework applies primarily to large companies in the UK, but the specific criteria for determining whether your organisation falls within the reporting threshold are as follows:
Quoted Companies: Companies listed on the main market of the London Stock Exchange, a European Economic Area (EEA) market, or other similar exchanges. These companies are required to disclose their global energy use and carbon emissions as part of their annual reporting.
Large Unquoted Companies and LLPs: The SECR also applies to large unquoted companies and large Limited Liability Partnerships (LLPs) that meet two or more of the following criteria:
An annual turnover exceeding £36 million.
A balance sheet total greater than £18 million.
More than 250 employees.
Organisations meeting these criteria must include their UK energy use, associated carbon emissions, and energy efficiency actions in their annual directors’ report.
The Importance of Accurate SECR Reporting
Falling within the SECR threshold means your organisation has a legal obligation to report energy and carbon data accurately. Failure to do so can result in fines, reputational damage, and missed opportunities to improve energy efficiency.
An accurate and thorough SECR report not only ensures compliance but also provides a clear picture of your organisation’s energy use. This transparency is increasingly valued by stakeholders, including investors, customers, and regulators, who are keen to see genuine commitments to reducing carbon emissions.
Incorporating a Supply Chain Audit into your SECR reporting process can further enhance the credibility of your emissions data, ensuring that your entire value chain is accounted for.
Key Components of an SECR Report
To meet SECR requirements, your organisation’s report should include the following components:
Energy Consumption Data
This includes energy consumed by gas, electricity, and transport within the UK.
Associated GHG Emissions
You must report the greenhouse gas (GHG) emissions associated with your energy consumption, typically expressed in tonnes of CO2e.
Energy Efficiency Actions
A description of the energy efficiency measures taken during the reporting period.
Intensity Ratio
This is a measure of emissions per unit of activity, such as tonnes of CO2e per £1 million turnover. This ratio helps contextualise your emissions data and allows for comparisons over time or against industry benchmarks.
The Role of Materiality Assessments in SECR
A Materiality Assessment plays a critical role in ensuring that your SECR report focuses on the most significant aspects of your energy consumption and emissions. By identifying the key areas where your business has the greatest environmental impact, you can prioritise efforts to reduce energy use and emissions in a way that delivers the most value.
This approach not only helps in meeting regulatory requirements but also aligns with broader ESG goals, ensuring that your organisation is taking meaningful action on climate change.
The Risks of Falling Below the SECR Threshold
While the SECR framework sets specific thresholds for mandatory reporting, it is important to recognise that even organisations that fall below these thresholds can benefit from voluntary reporting. By proactively disclosing energy use and carbon emissions, smaller companies can demonstrate leadership in sustainability, enhance their reputation, and prepare for potential future regulatory changes.
Moreover, the principles of SECR align closely with the goals of becoming a B Corp, a certification that recognises companies meeting high standards of social and environmental performance. Integrating SECR reporting practices can strengthen your case for B Corp certification, further solidifying your commitment to sustainability.
Download Your Free Guide to ESG
To navigate the complexities of SECR and enhance your organisation’s overall ESG strategy, download our comprehensive 255-page book titled A Comprehensive Guide to ESG. This resource provides in-depth insights into ESG frameworks, including SECR, and offers practical advice on how to integrate these principles into your business operations. Download it here.
SECR Consultants: ESG Pro Limited
Understanding whether your organisation falls within the SECR reporting threshold is the first step in ensuring compliance. However, the real challenge lies in producing a report that not only meets regulatory requirements but also reflects a genuine commitment to sustainability. This is where ESG Pro Limited can make a significant difference.
Expert Guidance: Our team of experienced consultants will help you determine if your organisation meets the SECR threshold and guide you through the reporting process.
Customised Reporting Solutions: We provide tailored solutions that align with your specific needs, ensuring that your SECR report is both compliant and meaningful.
Ongoing Support: ESG Pro Limited offers continuous support to help you navigate the evolving regulatory landscape and maintain your commitment to sustainability.
Choose ESG Pro Limited to ensure your SECR compliance is handled with the expertise and precision it deserves. Our comprehensive approach will help you avoid common pitfalls and position your organisation as a leader in sustainability.
Proven Expertise: We have a track record of helping businesses successfully navigate SECR reporting.
Comprehensive Services: From materiality assessments to full ESG reporting, we offer a wide range of services.
Commitment to Excellence: We are dedicated to helping you achieve compliance while enhancing your overall sustainability strategy.
For more information, visit our website at www.esgpro.co.uk.