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The countdown is now on for the first reporng deadline for the mandatory Streamlined Energy and Carbon Reporng (SECR) scheme, and some businesses will already be six months into their first SECR reporng period. Emma Hird, client opmisaon manager at Inspired Energy, provides advice on how businesses can go ‘beyond compliance’, when it comes to SECR, and really see it as an opportunity, rather than a burden
gainst a backdrop of ‘Net Zero’ and increasing climate activism, reducing carbon emissions and energy efficiency should now firmly be on the boardroom agenda.
SECR, which is designed to replace the reporting elements of the Carbon Reduction Commitment scheme (CRC) and make energy reporting a simpler process, also allows shareholders and investors to hold companies to account if they are not doing enough to reduce emissions.
However, although mandatory, we are hearing from some of our clients that they are struggling to get buy-in from the top when it comes to SECR compliance.
What we have seen with previous schemes is that they can be often seen as an additional administrative burden when time and cost pressures on a business are already high. This is particularly true today, in the current uncertain economic and political climate. And, while the SECR box will be ticked, there isn’t much appetite, or available resource, to do much more than that. Firstly, it may be worth recapping who qualifies for SECR. It requires quoted companies, large unquoted companies and large limited liability partnerships (LLPs) to disclose carbon emissions and energy use from electricity, gas and transport as a minimum. This currently accounts for around 11,900 businesses. These organisations must also record energy efficiency actions and report against at least one intensity ratio, and this information must be published as part of annual financial filing obligations.
The framework objectives of SECR are to:
uReduce the overall administrative burden on participants.
uImprove incentives to save energy by improving energy efficiency.
uDrive behaviour changes by raising awareness of energy efficiency with decision makers.
uBoost the importance of energy efficiency in relation to organisational reputation, and increase transparency for investors so that companies can be held to account. Now, for a significant proportion of qualifying businesses, managing energy consumption is not a new phenomenon – many will already be part of the Energy Savings Opportunity Scheme (ESOS), and many have announced, or are developing, innovative and ambitious plans on how they will contribute to the UK’s net zero goal. However, there are a considerable number of businesses that will be new to environmental reporting, and those responsible internally for managing the SECR reporting process will be facing pressures to ensure the right time and resource is dedicated to compliance. What businesses will need to provide to achieve compliance will vary depending on the organisation type.
ENERGY MANAGEMENT How to get savvy about SECR
Quoted companies need to report their global scope 1 and 2 greenhouse gas (GHG) emissions, alongside an appropriate emissions intensity ratio in their director’s report. They will also need to report on their underlying global energy use for the current reporting year, splitting this between UK and offshore operations.
Large unquoted companies or LLPs will need to report on UK energy use from gas, electricity and transport fuel, as well as associated GHG emissions and at least one intensity metric. All companies in scope of SECR must also outline the measures they have taken to improve their businesses’ energy efficiency within the current reporting year. Although it isn’t mandatory to include any energy savings made as a result of these measures, it’s good from a corporate social responsibility (CSR) perspective if it has made a difference.
So, what is the business case for going beyond ‘just’ complying? It really is a change in mindset, i.e. rather than seeing it as something that ‘has’ to be done, savvy organisations are seeing it as an opportunity to take control of their energy consumption and promote their sustainability credentials. At a time when businesses are under increasing pressure to demonstrate they are doing all they can to reduce their impact on the environment, this is a compelling reason to treat SECR seriously.
Therefore, arguably, those organisations that take a proactive and progressive approach to SECR will be the ones that see the biggest benefits. CSR is a bedrock for many businesses, and their SECR report is a real opportunity to shout about sustainability, but only if action is taken to improve energy efficiency throughout the year. For example, although businesses are required to include any energy efficiency projects that they
have carried out within the reporting year, they aren’t actually required to implement any energy efficiency measures at all. However, if an organisation doesn’t implement any efficiency projects, this will need to be stated in the report. At a time when customers are increasingly expecting businesses to be demonstrating a serious commitment to sustainability, what would be best, publishing a report that is full of proactive efficiency projects, or one that shows no real action to improve sustainability at all? As the SECR report is in the public domain, failing to implement any energy efficiency measures could result in both financial and reputational damage. However, reputational impact isn’t the only benefit of adopting efficiency projects, improving energy efficiency is the only guaranteed way to ensure that a business isn’t paying more than they should for their energy. In fact, increasing energy efficiency through implementing physical and behavioural projects can result in an organisation ultimately making savings on its energy spend. In today’s volatile energy market, many businesses are seeing significant increases in their energy bills, so it’s financially prudent to ensure energy isn’t being wasted.
We are now on countdown to the first round of SECR reporting. It will be interesting to see which organisations will have seen SECR as an opportunity to affect real change in how they approach the management of their energy consumption. What is clear is that, as we transition into a low-carbon world, businesses will play a crucial role in the UK’s net zero future – and schemes like SECR should be seen as a means to achieve this, rather than another box to tick.
www.inspired-secr.co.uk
22 BUILDING SERVICES & ENVIRONMENTAL ENGINEER NOVEMBER 2019
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