In the Spring of 2020, the first public disclosures of energy and carbon reporting will be released by all relevant businesses in line with Streamlined Energy and Carbon Reporting (SECR) regulations.
If you run a medium or large business in the UK then it is likely this will is the first time you will have had to report your emissions. However, SECR regulations have been designed by the government to simplify and consolidate the existing regulations on energy and carbon compliance.
Do I need to comply?
If your business is already obliged to report under Mandatory Greenhouse Gas Reporting regulations, then it will also be required to comply with SECR.
One of the key features of SECR is a more substantive approach towards which companies are ‘large’ enough to comply. Indeed, SECR will implement mandatory reporting on both quoted and unquoted ‘large’ companies.
A quoted company refers to a company that has shares listed on the stock exchange. An unquoted company is a publicly-traded company that was previously traded on the stock exchange but is no longer.
The definition of ‘large’ used by the government in these regulations has been taken from the 2006 Companies Act. A business is ‘large’ if two of the following three requirements are met:
- It has more than 250 employees;
- It has an annual turnover of more than £36 million.
- It has an annual balance sheet total of more than £18 million.
Subsidiary companies registered with Companies House in the UK will have to comply with SECR if they are a ‘large’ company. However, they will not have to comply if their information is included in the report of their parent company.
SECR, as it stands now, only applies to the private sector (it is worth noting, however, that it will also apply to private ventures or activities undertaken by universities, academies or NHS trusts as well as not-for-profit or otherwise public ventures pursued by registered companies). However, companies in the public sector will already have their own carbon and energy reporting regulations.
Complying with the government’s new SECR framework is required by law. Non-compliance, for the businesses that meet the requirements, is no longer an option.
Although this is an extremely compelling reason to comply, there are also many reasons why a business should voluntarily comply:
- Carbon and energy reporting can lead to the development of healthy business attitudes. SECR is concerned deeply with efficiency and businesses could benefit from data-tracking and understanding their entire business process.
- According to Ashby Monk, the Executive Director and Research Director of Stanford University’s Global Project’s Centre, there may be an economic benefit from going green. Ashby’s report – which you can access here – concluded that, regardless of government incentives, there is a high profitability to investing in carbon-efficient firms.
- Climate change is not going away. Companies that stride forward and voluntarily display their emissions in an attempt to reduce them will benefit from a strong public perception.
The government’s new SECR framework is an overwhelmingly positive move towards a more sustainable approach to business. Large businesses have a responsibility to be transparent about their emissions.
Transparency is the first step towards lasting change and, this spring, will be an important moment in the fight against climate change.