More companies must now disclose their carbon footprint
The government has made it compulsory for more companies to report their carbon emissions each year and to describe any efficiency steps they have taken in that period. Does this include you? And what should you now be doing?
The purpose
Known as “Streamlined Energy and Carbon Reporting (SECR)” this new requirement applies to private businesses and charities alike. It replaces the previous legislation (the Carbon Reduction Commitment or CRC), which only bound companies on the stock exchange. The aim of SECR is to raise awareness paving the way for companies to reduce their carbon emissions to benefit their bottom line, the environment and the economy.
Who is affected?
Your business will fall under SECR if it is a PLC or if you
- employ more than 250 people or
- your sales exceed £36m or
- your assets are greater than £18m.
The public sector is exempt and so are you if you use less than 40MWh of energy a year
When does it start?
You need to collect data for your first financial year ending after 1.4.19.
Simple steps
To meet your obligation is quite straightforward. Most of your data will be available from meter readings and bills. Unlike ESOS (which has a higher threshold in its definition of a “large” company) there is no requirement for an energy audit; all that unquoted companies have to do is disclose their energy used and describe any efficiency improvements you have made in the year.
Calculation
The first step is to report on the main activities from your business which release greenhouse gases. Typically these will include electricity, gas (or other fuel) and transport.
Tip 1: to make sure you capture all your main sources of greenhouse gases there is a simple 6-page guide from Defra to help you
Once you know your consumption you can convert this to equivalent tons of carbon dioxide by using a carbon footprint calculator.
Tip 2: a number of calculators are available free online to convert your kW of energy and litres of fuel into their equivalent mass of carbon dioxide (CO2e) The Carbon Trust, for example, has a simple tool which can help
https://www.carbontrust.com/resources/tools/carbon-footprint-calculator/
The calculation can then help you identify ways to save money.
With your data collected and your improvements identified your next step is to summarise your findings in the Directors’ Report of your annual accounts.
Business advantages
Your business can turn this obligation into an opportunity. The exercise can help you to meet information demands of your customers, highlight risks from volatile energy prices, identify wasteful energy use, give you better control of your costs and boost your green credentials.
Although this might seem another burden on business, it is in fact quite simple to complete and the exercise can give momentum to cost savings and environmental improvements. Even if your company is too small to be affected by SECR, collecting the data would be good for your business and could stand you in good stead in the future.
Sources used in drafting this article:
Defra – Small business user guide: Guidance on how to measure and report your greenhouse gas emissions
Carbon footprint calculator from the Carbon Trust
https://www.carbontrust.com/resources/faqs/services/calculate-carbon-footprint/
Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018
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