SECR comes into force on 1 April 2019. It replaces the mandatory greenhouse gas reporting requirements that have been in place since 2013, and introduces new energy and emissions reporting requirements for large quoted companies and LLPs.
Draft guidance, designed to replace chapter two of the existing environmental reporting guidance once the new rules come into force, was distributed to stakeholders shortly before Christmas, however it has not been widely publicised. The government is seeking views on the wording until 14 January 2019.
Environmental law expert Georgie Messent of Pinsent Masons, the law firm behind Out-Law.com, urged businesses affected by the new requirements to consider responding to the consultation.
"The SECR follows the rather disastrous Carbon Reduction Scheme and the new framework is being introduced in a hurry. In particular, you may wish to consider whether the guidance strikes the correct balance between the need to ensure that meeting the minimum legal obligations introduced by SECR legislation without excessive administrative burden, as well as the need for consistent and transparent disclosures," she said.
"In our view, the document sets out very disappointing guidance on reporting of mobile and temporary emissions, which we think will be very difficult and costly to meet. The guidance also sets out the position around reporting of global emissions, which will impose substantial costs and also reporting by landlords and tenants for consumption of energy – which we can only see working if the energy is properly metered for each sub-tenanted property," she said.
Once in force, SECR will apply to quoted and unquoted companies and LLPs in the UK that consume more than 40,000 kilowatt hours (kWh) – so about a £4,000 energy bill - of energy in a financial reporting year, subject to some exemptions and exclusions. There is no 'de minimis' legal of emissions once a relevant organisation passes the threshold for the scheme, which means that relevant organisations will be required to report on all energy use and emissions, regardless of the level for each individual category.
The draft guidance is designed to clarify which organisations are in scope of the new rules, and the information that they will need to report and disclose annually. The rest of the government's environmental reporting guidance sets out best practice and opportunities for organisations to go beyond what is legally required.
The government is expected to publish final revised chapter two guidance by the end of January.