New energy report rules for large businesses

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New guidance from government requires all large businesses to report annual energy usage. Our expert Gary Wong explains the new rules and how we can help.

The new Streamlined Energy and Carbon Reporting (SECR) reporting requirements will require all large unquoted companies consuming more than 40,000 kilowatt-hours of energy in the UK a year to document and report that consumption. Reporting should appear in Directors reports starting from the 1 April 2019, meaning the first reports will begin to appear shortly.

Medium sized businesses – and office employing between 50 and 250 people – will typically consume between 30,000 and 50,000 kilowatt-hours of energy a year, although that will vary depending on the age of the building and whether it is air-conditioned or naturally ventilated.

This new requirement has been directed by the Department for Business, Energy and Industrial Strategy (BEIS).

Large companies are defined in sections 465 and 466 of the Companies Act 2006 as companies that meet two or more of the following criteria:

  • turnover (or gross income) of £36 million or more:
  • balance sheet assets of £18 million or more: or
  • 250 employees or more.

These include companies, LLPs and groups. For the first year of reporting, prior year equivalent figures are not mandatory but will be required in subsequent years. A group may, however, exclude any energy and carbon information relating to subsidiaries which would not be obliged to report individually according to the thresholds.

In assessing whether the 40,000 kWh threshold is met, businesses must, as a minimum, consider all the energy from gas, electricity and transport fuel usage in the UK that they are responsible for.

Where a large company does not consume more than 40,000 kWh of energy in a reporting period, it qualifies as a low energy user and is exempt from reporting under these regulations. A statement to this effect should be included in the Directors’ report.

The reporting requirements acknowledge that in some circumstances, an element of the required energy and carbon information may not be practical to calculate. Where this is the case, this fact should be reported, and the business should explain what is omitted and what steps it is taking to acquire this information in future.

What needs to be disclosed in the Directors’ report:

  • The annual UK energy use (in kWh) relating, as a minimum, to gas, purchased electricity and transport fuel and associated greenhouse gas emissions (in tonnes of carbon dioxide equivalent (CO2e)).
  • An emissions intensity ratio. Intensity ratios compare emissions data with an appropriate business metric or financial indicator, to allow comparison over time or with other organisations.
  • The methodologies used to calculate the required information.
  • A narrative of measures taken to improve energy efficiency in the period of the report. If no measures have been taken, this should be stated.

How can we help?

These reporting requirements can be complex and it is advisable to see support in preparing the required statements.  Hillier Hopkins can help by checking the reporting scope within your business to ensure its in line with the guidance and review your processes, controls and data outputs and to ensure these will result in accurate and complete reporting. Contact one of our friendly experts Gary wong on gary.wong@hhllp.co.uk or +44(0)330 024 3200

Do you need extra information?
Gary Wong

Gary has 15 years of audit experience and brings a wealth of experience from his time at Grant Thornton, Deloitte and RSM, working with various industry sectors from owner managed businesses through to large international groups and AIM listed businesses.

Contact Gary at gary.wong@hhllp.co.uk or on 01923 634453