The Streamlined Energy and Carbon Reporting scheme made it clear to large businesses that the government wants them to report on their emissions. However, due to the complexity of the calculations and a general sense of ambivalence around the initiative, many businesses failed to meet SECR guidelines in the allotted time frame.
You should have filed SECR reports in your end of year accounts if your business met at least 2 of the following requirements:
- More than 250 employees
- An annual turnover exceeding £36m
- A balance sheet exceeding £18m
However, we know from conversations with clients that not all companies have decided to include SECR statistics in their accounts.
Not only does this put you in a tricky legal situation, it is also entirely solvable with a little bit of support from a company like ours. Let’s take a look at the common reasons people ignored SECR – and why you should get in touch with us quickly to rectify it.
Reason 1: “There’s no fine.”
Failing to meet SECR does not currently result in fines for businesses. However, other energy schemes aimed at decarbonisation have introduced strict fines for businesses which fail to meet them. ESOS, for example, can hit businesses with £50k fines if not taken care of.
If SECR is ignored, the likelihood of fines being introduced is high. If you’re reading this and thinking “well, we’ll just get SECR done after there’s a fine” you’re missing out on a key opportunity…
Reason 2: “There’s no point.”
The point of SECR is to encourage businesses to track their current carbon emissions and then outline a narrative of how they will effectively decarbonise. As we just mentioned above, while there are no existing fines for non-compliance, getting to grips with SECR early offers some key advantages:
- You’ll be able to comply with all future SECR requirements more easily. SECR will become standard at each end of year report – so investing now future proofs your business. Even though your emissions will change each year, understanding the process and reporting template at an early stage is vital.
- Carbon reporting is becoming an expectation. As we discussed in this article, businesses are falling under more government pressure to report on and reduce their emissions. SECR will give your company a measurement of its footprint – a critical step in decarbonisation and one that could potentially help you win certain government contracts or private work with businesses that demand carbon-neutral strategies in their supply chain.
- Many changes that begin as a result of SECR reporting can actually increase cost efficiency by preventing the need for heavy carbon offsetting.
Reason 3: “We are going to offset anyway”
Many large businesses who have no clear route to Net Zero will instead pay to offset their emissions. Unfortunately, many companies are guilty of assuming that offsetting is the easier route.
Even if you DO plan to offset your emissions, you will still need to outline your footprint through SECR guidelines if your business meets the criteria. However, we also want to point out that relying solely on offsetting will lead to heavy expenses.
The UK emissions trading scheme, which replaced the EU ETS scheme in January 2021, currently offers businesses a way to offset emissions, with each tonne of CO2e costing roughly £50.
Why pay more for offsetting if you could simply increase energy efficiency and reduce long-term costs?
Missed SECR? Take action
Whatever your reasoning – it’s clear that SECR has more benefits than just ‘ticking the box’. While it may seem like an additional chore for your finance team, you can simply outsource your SECR requirements to Integral Energy and let us take care of the rest. We’ll calculate your carbon footprint and create the correct, compliant SECR report for inclusion in your accounts. Our MD, Peter Cassidy, is a financial director by profession so we can quickly and seamlessly integrate with your finance department where needed.
Considering the cost of offsetting and the increased pressure on decarbonising from all areas of both public sector and private work, understanding your carbon footprint NOW is a vital step towards building a net-zero strategy.