As businesses face growing pressure to enhance sustainability practices, regulatory frameworks like the Streamlined Energy and Carbon Reporting (SECR) legislation are becoming increasingly crucial. According to the Carbon Trust, over 50 percent of an organisation’s carbon footprint is tied to energy consumption, making corporate energy reporting essential in driving emission reductions. SECR is designed to enhance corporate sustainability and transparency, promote energy efficiency, and support the UK’s net-zero commitments. Keep reading as we demystify the Streamlined Energy and Carbon Reporting legislation and its requirements.Â
What is the Streamlined Energy and Carbon Reporting (SECR) legislation?Â
The SECR legislation is a UK government framework designed to enhance corporate transparency on energy use and carbon emissions. Introduced in April 2019, it replaced the Carbon Reduction Commitment (CRC) scheme and expanded the scope of energy and carbon reporting obligations for businesses. The legislation requires qualifying organisations to measure, report, and disclose their energy use, greenhouse gas emissions, and energy efficiency actions within their annual reports.Â
Objectives of the SECRÂ
The SECR framework was introduced by the UK government in April 2019 to enhance corporate transparency on energy use and carbon emissions. Its main objectives are:
- Increase corporate accountability: SECR ensures that businesses publicly disclose their energy consumption and carbon footprint, making them more accountable to stakeholders, investors, and consumers.
- Encourage energy efficiency: By requiring organisations to assess and report on their energy usage, SECR encourages businesses to implement energy-saving measures and reduce their carbon footprint.
- Support net-zero goals: SECR aligns with the UK’s net-zero emissions target by 2050, reinforcing national efforts to reduce emissions across industries.
- Standardise reporting across sectors: The framework provides a consistent structure for companies to report energy data, aligning with international sustainability standards and ESG reporting requirements.
- Reduce administrative burden: SECR was designed to replace the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme, simplifying reporting obligations while maintaining robust sustainability disclosure practices.
Develop the expertise and tools to effectively navigate CSRD requirements and improve the accuracy of your reporting
Scope of the SECR
SECR applies to a wide range of businesses, including quoted companies, large unquoted companies, and large limited liability partnerships (LLPs) that meet specific financial or employee size criteria.
Who must comply with SECR?
The regulation applies to UK-based organisations that meet at least two of the following criteria:
- Annual turnover of £36 million or more
- Balance sheet total of £18 million or more
- 250 or more employees
Exemptions:
- Small and medium-sized enterprises (SMEs) fall outside the scope.
- Organisations consuming less than 40,000 kWh of energy per year are exempt from full reporting but must state their exemption in their annual report.
What needs to be reported?
Organisations that fall under the scope must disclose:
- Total energy consumption, including electricity, gas, and transport fuel.
- Scope 1 and Scope 2 greenhouse gas emissions (direct and indirect emissions).
- Scope 3 emissions (optional but encouraged), covering the supply chain and business travel emissions.
- Energy efficiency measures implemented within the reporting year.
- Methodologies used to calculate emissions and energy use.
- Intensity ratios, such as emissions per unit of revenue or production.
Impacts and benefits of the SECRÂ
The Streamlined Energy and Carbon Reporting (SECR) framework has significant implications for businesses, regulators, and stakeholders by driving greater transparency, efficiency, and accountability in corporate sustainability efforts. Below are the key impacts and benefits of SECR:
Impacts of SECR
1. Increased regulatory compliance and reporting burden
While SECR replaced the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme, it still requires large organisations to disclose energy use and carbon emissions publicly.Â
This has led to:
- More robust corporate sustainability reporting, aligning businesses with global ESG and climate disclosure standards.
- Greater scrutiny from investors and regulators, increasing pressure on companies to reduce their carbon footprint.
- A need for improved data collection to meet SECR requirements accurately, encouraging businesses to invest in better energy management systems.
2. Corporate financial and operational impact
- Companies that fail to comply with SECR reporting obligations may face reputational damage, investor concerns, and potential penalties.
- Increased energy costs visibility enables businesses to identify inefficiencies and implement energy-saving strategies.
- The requirement to disclose carbon intensity metrics allows investors and stakeholders to compare businesses on their sustainability performance.
3. Alignment with net-zero goals and climate commitments
- SECR supports the UK’s legally binding net-zero target by 2050, pushing businesses to actively reduce emissions.
- By standardising corporate energy and carbon disclosures, it helps the UK government track national carbon reduction progress.
- Encourages businesses to align with broader sustainability regulations, such as CSRD, TCFD, and ESOS.
Benefits of SECR
1. Enhanced energy efficiency and cost savings
- Identifying energy waste helps businesses implement efficiency measures, leading to lower operational costs.
- Companies that act on SECR insights can reduce long-term energy expenses by investing in sustainable energy solutions.
- SECR promotes the adoption of low-carbon technologies, such as LED lighting, smart meters, and renewable energy.
2. Competitive advantage and stakeholder trust
- Transparent sustainability reporting builds trust with investors, customers, and partners, strengthening corporate reputation.
- Companies that demonstrate strong energy management practices are more likely to attract ESG-focused investors.
- Aligning with SECR enhances a company’s sustainability credentials, differentiating it in the market.
3. Long-term business resilience and risk management
- SECR encourages businesses to mitigate climate-related risks, such as rising energy costs, regulatory changes, and carbon pricing.
- Future-proofing against stricter regulations—companies that proactively manage energy and emissions today will be better prepared for evolving climate policies.
- Encourages data-driven decision-making, enabling businesses to integrate sustainability into core operations.
Conclusion
The SECR framework is a crucial tool in driving business sustainability, improving energy efficiency, and aligning businesses with the UK’s climate goals. By mandating energy reporting and encouraging businesses to adopt energy-saving measures, SECR fosters a culture of transparency and accountability in sustainability efforts. As global sustainability regulations tighten, businesses must be proactive in adapting to evolving disclosure requirements. Ultimately, SECR compliance presents an opportunity to build resilience, reduce costs, and strengthen corporate sustainability commitments.Â
