CARBON FOOTPRINT - 27.11.2020

New carbon reporting demands

The way companies are being asked to report their carbon emissions has changed a great deal since April 2019. What are the key changes, and what should you be aware of as a small business?

Risks and opportunities

The UK’s carbon reporting regime has been through significant changes, with the CRC Energy Efficiency Scheme (CRC) - the main way of overseeing the way companies report how much carbon they emit - being replaced by the new Streamlined Energy and Carbon Reporting (SECR) regime. The SECR applies to all financial years starting on or after 1 April 2019. All eligible companies must now report their energy and carbon data alongside their annual accounts (see The next step ).

SECR v CRC

The CRC was a standalone tool which forced companies that met a certain threshold level of energy consumption to report their carbon data. It wasn’t really about encouraging the act of reporting. It was more of a tool to financially incentivise companies to be more energy efficient by making them purchase and surrender allowances depending on how much energy they consumed. Now, the two different mechanisms - reporting and financial incentives - have been separated. An increase to the rate offered by the Climate Change Levy (the tax charged on commercial energy consumption) takes care of the financial incentive element. Meanwhile, the SECR has been set up as a reporting regime that sits alongside the existing legal requirement for companies to file their annual company reports.

SECR demands

The SECR asks all qualifying companies to include information about their energy use, greenhouse gas emissions and energy efficiency. The threshold for SECR obligations is lower than that for the CRC, meaning companies that had previously not been required to comply with the CRC will need to report under the SECR.

Note. The new regulations are set to require around 11,900 companies incorporated in the UK to disclose their energy and carbon data - much more than were required to act under the CRC.

The SECR does not replace a number of other existing requirements on carbon, such as mandatory greenhouse gas reporting for quoted companies, the Energy Saving Opportunity Scheme, Climate Change Agreements Scheme, and the EU Emissions Trading Scheme.

Does the SECR affect small businesses?

There are three groups of businesses affected by the new regulations: (1) quoted companies of any size that are already obliged to report under mandatory greenhouse gas reporting regulations; (2) unquoted companies incorporated in the UK that meet the definition of large under the Companies Act 2006 . This applies to registered and unregistered companies; and (3) large limited liability partnerships which will be required to prepare and file an Energy and Carbon Report.

Tip. Even if your business isn’t large enough to be eligible for the new SECR, you should be aware that it exists. Be prepared to provide your customers with information on your carbon emissions as they may require it to include it in their figures (see The next step ).

For a link to guidance on the SECR and for further information on carbon footprints, visit https://www.tips-and-advice.co.uk , Download Zone, year 15, issue 06.

The Streamlined Energy and Carbon Reporting Scheme requires many businesses to report their energy and carbon data alongside their accounts. It’s mainly for large firms, but it could affect smaller ones if their customers are caught up in the reporting requirements. Use an online tool to calculate your carbon footprint.

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