At ESTA’s IECg “Energy: Changing Times” event, the up and coming Streamlined Energy and Carbon Reporting (SECR) legislation struck up a lively debate when Gary Shanahan (Head of Business and Industry Energy Efficiency, Tax and Reporting, from Business Energy and Industrial Strategy) shared the latest updates on the legislation, which is still in the consultation stage.
SECR is going to replace the Carbon Reduction Commitment (CRC). Draft legislation is now published, and it is planned to take effect in April 2019. The consultation period end in January, though minimal changes are expected.
SECR will require companies affected to complete a report under SECR when sending in financial report to Companies House – and the first SECR report must be submitted for the first financial year that starts on or after the 1st April 2019. This means that at some stage in 2020 your accountant is going to ask for your energy statement for inclusion in the Companies House report!
SECR applies to large UK incorporated unquoted companies, with at least 250 employees, or annual turnover £36M+ and annual balance sheet total £18M+. This also applies to overseas companies with a UK establishment. This means that it will apply to circa 11,800 companies – significantly more than were affected by the Carbon Reduction Commitment (CRC).
Mr Shanahan described about SECR as a “light touch approach in line with the Government’s commitment to simplify the landscape, and the deregulatory thrust of the Business Energy Efficiency Taxation Review which underpinned the decision to close CRC. It also recognises recommendations on the Taskforce on Climate Related Financial Disclosure and the wider context off Industrial and Clean Growth Strategies.” SECR is also focused on being more in line with greenhouse gas (GHG) reporting and directly linking energy efficiency with financial benefits.
Some people in the audience questioned the light touch approach and minimal expectations stated – and that the energy report didn’t have to be audited. This was at the discretion of individual companies. Gary took comments on board and highlighted that the Companies House report is something signed off and validated by company directors.
Something else highlighted in the session is that just because an organisation is in the public sector, doesn’t necessarily mean they are always exempt from SECR. Where they have set up a private sector organisation within their structure which is listed with Companies house – SECR applies.
More guidance is due out in November and the Swan team will be keeping a close eye on this.