Arial winding mountain road
ComplianceESGFebruary 17, 2023

The UK’s Streamlined Energy and Carbon Reporting framework

As everyone focuses on the need for cutting back emissions, another requirement becomes apparent: the need for carbon disclosures.

Nethra Rajendran tackles this trend in his article, “Carbon Disclosure Becomes Mandatory,” published in the GreenBiz State of Green Business 2023 report.

“Carbon disclosure is being spotlighted on the international stage, with Belgium, Canada, Chile, France, Japan, New Zealand, Sweden and the United Kingdom among those requiring financial disclosures aligned with the Task Force on Climate-Related Financial Disclosure (TCFD),” he writes. The United States is soon to follow suit with the Securities and Exchange Commission’s proposed rule, the Enhancement and Standardization of Climate-Related Disclosures for Investors.

“Disclosure is a critical first step,” said Steven Rothstein, managing director at Ceres. “We cannot solve this problem without having people and systems in place to measure it.”

The UK’s solution: SECR

One such program is the UK's Streamlined Energy and Carbon Reporting (SECR) framework. This sustainability reporting system looks at both greenhouse gas emissions and efforts taken to improve energy efficiency; the methodology used; and the intensity ratio (comparing emissions data with a business model).

Authors of the framework hope this will promote transparency for stakeholders, while encouraging cost savings and emission reductions.

All large organizations in the UK are required to comply. This includes quoted and large unquoted companies as well as large Limited Liability Partnerships (LLPs).

The type of organization determines what you have to report.

A quoted company, for example, must report:

  1. Annual global emissions from activities for which that company is responsible including the combustion of fuel and the operation of any facility; together with the annual emissions from the purchase of electricity, heat, steam or cooling by the company for its own use, or Global GHG Protocol Scope 1 and Scope 2 emissions.
  2. At least one intensity ratio.
  3. Previous year’s figures for energy use and GHG emissions.
  4. Methodologies used in calculation of disclosures.
  5. Underlying global energy use that is used to calculate GHG emissions, including previous year’s figure.
  6. Information about energy efficiency action taken in the organization’s financial year.
  7. And finally, what proportion of a company’s energy consumption and their emissions are related to emissions and energy consumption in the UK (including offshore area).

It should be noted that all sizes of quoted companies must continue to report their GHG emissions and intensity ratio through their annual reports, in addition to these new parameters.

An unquoted company has similar reporting obligations:

  • UK energy use (includes purchased electricity, gas, and transport).
  • Associated greenhouse gas emissions.
  • At least one intensity ratio.
  • Previous year’s figures for energy use and GHG emissions.
  • Information about energy efficiency action taken in the organization’s financial year.
  • Methodologies used in calculation of disclosures.

A low energy user (an organization which has consumed 40MWh or less during the period in which a Director’s Report is prepared) is not required to make the detailed disclosures of energy and carbon information.

Companies that fall under this legislation will need to include their energy and carbon information in their Directors’ Report as part of their annual filing obligations.

Scope 3

Scope 3 is not covered— yet. Significant gaps in Scope 3 disclosure remain. However, Pankaj Bhatia, the World Resources Institute’s GHG protocol global director, told Rajendran in the GreenBiz report, “We can expect to see Scope 3 emission accountability and disclosure skyrocket in the coming years because of the magnitude of their impacts.”

The need for accurate measuring, reporting and verification (MRV) of carbon disclosure data is also creating a new job sector. Many companies are hiring professionals and seeking technologies in support of MRV to keep up with the demand by regulators, investors, and customers.

Look for more disclosure regulations, parameters, and discussions to come as the need to address climate changes continues.

Back To Top