What is SECR and why are Academies being asked to report on their Carbon Footprint?

The UK government’s Streamlined Energy and Carbon Reporting (SECR) policy was implemented on 1 April 2019, when the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 came into force. Businesses in scope (including Academy Trusts) need to comply for financial years starting on or after 1 April 2019 and therefore need to understand their requirements under SECR. Hence why for the first time in September 2020 Academy Trusts had to complete a SECR report.

The introduction of SECR coincides with the end of the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme. The new regulations will require an estimated 11,900 organisations incorporated in the UK to disclose their energy and carbon emissions – a far greater number than were required to act under the CRC.

SECR builds on – but does not replace – existing requirements that organisations may face, such as mandatory greenhouse gas (GHG) reporting for quoted companies, the Energy Saving Opportunity Scheme (ESOS), Climate Change Agreements (CCA) Scheme, and the EU Emissions Trading Scheme (ETS). SECR extends the reporting requirements for quoted companies and mandates new annual disclosures for large unquoted and limited liability partnerships (LLPs).

Why has SECR been implemented?

SECR aims to bring the benefits of carbon and energy reporting to more organisations. The reporting framework is intended to encourage the implementation of energy efficiency measures, with both economic and environmental benefits, supporting organisations in cutting costs and improving productivity at the same time as reducing carbon emissions.

Requiring organisations to make disclosures on energy and carbon is also in line with the recommendations of the G20 Financial Stability Board’s Taskforce on Climate-related Financial Disclosures, by providing important information for investors, stakeholders and financial actors to help them navigate the transition to a sustainable, low carbon economy.

Who needs to report?

The ESFA has confirmed with the Department for Business, Energy and Industrial Strategy (BEIS) that academy trusts are within the scope of the legislation. https://www.gov.uk/government/publications/academy-trust-financial-management-good-practice-guides/streamlined-energy-and-carbon-reporting

The 2018 Regulations require large unquoted companies that have consumed (in the UK), more than 40,000 kilowatt-hours (kWh) of energy in the reporting period to include energy and carbon information within their directors’ (trustees’) report, for any period beginning on or after 1 April 2019.

For academy trusts, disclosures are required for the first time in their 2019/20 accounts. In future years, the prior year equivalent figures are also required to be disclosed for comparison.

Large companies, as defined in sections 465 and 466 of the Companies Act 2006, are 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,
  • 250 employees or more.

What does an academy trust need to report on?

An academy trust that meets the thresholds (at aggregate level)_must publish, as a minimum:

  • its annual UK energy use (in kWh), as a minimum relating to gas, purchased electricity and transport fuel and associated
    greenhouse gas emissions (in tonnes of carbon dioxide equivalent (CO2e)),
  • an emissions intensity ratio chosen by the academy trust. Intensity ratios compare emissions data with an appropriate business metric or financial indicator, such as pupil numbers, 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,
  • In future years, the prior year equivalent figures are also required to be disclosed for comparison, but this is not mandatory in the first year.

The ESFA also encourages large academy trusts to reproduce the energy and carbon disclosures from their accounts in a readily accessible format on their website before 31 March each year.

Where a company or Academy Trust is not required to report under the 2018 Regulations, because of its size and/or consumption, BEIS encourages them to do so on a voluntary basis. Academy trusts in this position, which choose to report voluntarily, may do so on their website.

The ESFA is clear that it is not expected that academy trusts will need to engage specialist consultants to support the reporting requirements and they have provided a comprehensive guide including calculation aides to help and support all Academy Trusts with their reporting https://www.gov.uk/government/collections/government-conversion-factors-for-company-reporting

Each Academy Trust’s SECR report must state at least one metric which expresses the academy trust’s annual emissions in relation to a quantifiable factor. For consistency across the sector, academy trusts are encouraged to use tonnes of CO2e per pupil, with pupil numbers based on the Autumn Census data. The same ratio should be used each year for comparability.

So why does SECR matter?

SECR matters because for the first time there will be publicly available data easily available for all stakeholders to hold Academy Trusts to account with regard to their Carbon emissions and Net Zero Strategies. Within other sectors where similar reporting has been required it is this transparent accountability that has caused leaders to act and so as Academy Trust Leaders and Trustees get to grips with SECR and their Communities, Parents and most importantly their Young People wake up to the possibilities of holding their Trusts to account, then the narrative of measures taken to improve energy efficiency each year that Trustees will need to write (and crucially their relative performance with other Trusts) will take on a new importance and hopefully will drive the cultural changes required to take Net Zero seriously.

For information on how enFrame can help you reduce your Trust’s Carbon emissions and plan for a Net Zero future then please click here

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