New to energy and carbon reporting? Looking for SECR help? Turn to the BEIS guidance for high-level support, but expect to be left with unanswered questions.

The Government documentation outlines the general requirements of SECR (Streamlined Energy and Carbon Reporting) but remains open to interpretation and contradictory on key issues.  Businesses need to start unpacking their SECR obligations early in order to avoid an SECR headache and little time to act.

What needs fixing?

The cornerstone of getting carbon reporting right is establishing clearly which legal entities and what emissions sources should be included where.

The BEIS (Department for Business, Energy and Industrial Strategy) SECR guidance does less than previous environmental documentation (i.e. ESOS (Energy Saving Opportunities Scheme)) to help businesses understand this.

Unanswered questions

Where qualification is concerned – readers are frequently referred back to the underpinning 2018 Regulation. This legislation cites multiple changes to other areas of mainstream financial reporting and proves inaccessible reading material for most.

The guidance generally assumes readers have a single legal entity organisation. This is rarely the case for large organisations. Where prior guidance contained clear diagrams and worked examples to assist businesses interpret their eligibility, such support is sorely missed in the case of SECR. Businesses are left with many unanswered questions, that could have been easily addressed:

  • Group qualification – In a Group structure, should each legal entity or the aggregate Group total be assessed?
  • Complex structures – How should franchises, joint ventures and investments be treated?
  • Timing – When do businesses report if their financial year is changing?
  • Overseas parents – If UK environmental results are already reported within overseas Group publications, can this be signposted rather than reiterated?

Contradictions – missed a few stakeholders?

For some stakeholder groups – the brevity of the regulatory guidance has created contradictions. For example:

  • Private equity – the guidance calls for businesses to include their subsidiaries in disclosures; but also calls for businesses to align their reporting to their consolidated financial results.  This leaves investors in private equity in a boundary dilemma; do they include their investment portfolio or not?
  • Landlord-tenant rule – the guidance is clear that businesses need to report on energy consumed in landlord premises even where not directly responsible for its purchase, or separately metered.  However, the regulation also invites businesses to freely select their reporting methodology (GHG protocol for example); the application of which could result in very different reporting outcomes

Untangling the mess

Our team have been working extensively with clients to overcome gaps in the guidance. As reporting experts, we spotted the problems a long way off; and have designed practical solutions to help your business comply.  With directed efforts to unpack your reporting obligations, and insightful cross-sector experience your reporting can meet the mark in a matter of weeks.

SECR is a big step

Businesses should be prepared for the bar to be raised higher. Possible future developments include: global energy and carbon reporting for all large businesses, more diagnostic intensity metrics and the requirement for more commentary on changes in business performance – good or bad. Expect more, and soon.

Want to talk through your current SECR headache with our team? Book in a free consultation with one of our experts at [email protected]

To understand more about SECR qualification criteria, reporting framework and methodology, download our SECR FAQs guide.

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