SECR is a legal requirement for all large businesses meeting two out of three criteria, to report on total energy use and associated GHG emissions and any actions taken towards energy efficiency:
- More than 250 employees
- Annual turnover exceeding £36m
- Balance sheet exceeding £18m.
The UK government is formally required to review SECR regulations within 5 years. This takes us to the 1st of April 2024. However, in a response to recent consultation, the government is considering already implementing changes in 2024. Please note that at the introduction of SECR, the UK Government had not yet signed net zero by 2050 as a legal commitment so future SECR is expected to be more stringent to cover this aspect.
Potential changes based on consultation documents are expected to be as follows:
- Requirements to be the same for listed/unlisted large/LLPs: report emissions from all activities (i.e. Scope 3)
- More Scope 3 reporting. At the moment not compulsory for any of the categories but expected that at least some of the 15 categories in Scope 3 to become mandatory. Scope 1 and 2 could potentially be calculated in Excel for light emitters. Scope 3 will require software as it looks at the entire value chain of a business.
- Mandatory third-party assurance if reporting done in house.
- Mandatory use of GHG Protocol
SECR has been designed to give businesses more visibility over their carbon footprint, but it doesn’t require them to reduce their emissions or set reduction targets. More emphasis is expected to be put on meeting targets.
Important to note that ISSB is making Scope 3 disclosure mandatory, therefore when mandated in the UK, it will become the norm.
