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Streamlined Energy & Carbon Reporting – What does it mean for you?

Since its initial announcement in 2016, the Department for Business, Energy, and Industrial Strategy (BEIS) has been working on a new framework to simplify the complicated environmental reporting landscape that exists currently. What they came up with is known as the “Streamlined Energy & Carbon Reporting Framework” (SECR).

Following an extensive consultation process, which EVORA took part in, the Government recently confirmed the details of how the framework will look. Under the new legislation:

  • All quoted companies will be required to report their UK energy use, associated Scope 1 & 2 emissions (in simple terms, covering electricity and gas use), an intensity metric and, where applicable, global energy use in their Annual Reports.
  • All “large” unquoted companies will be required to report their UK energy use, associated scope 1 & 2 emissions, and an intensity metric in their Annual Reports.
  • All “large” LLPs will be required to report similar to Unquoted Companies in their Annual Reports.
  • Unregistered companies required to prepare a Directors’ Report will also need to include similar information to unquoted companies.

The framework will be applied through Companies House, which means there are no requirements for non-UK registered companies. Meanwhile, the Companies House definition of “large” will be applied (i.e. when two or more of the following are true: 250 employees or more, annual turnover of £36mil or more, annual balance sheet of £18mil or more).

The Timescale:

The legislation takes effect on April 1st 2019 and applies to any financial reporting years starting on or after this date. This means the first SECR reports will need to be filed in 2020.

How we can help:

Here at EVORA, we have significant experience in the collation, management, and analysis of ESG data.

Through use of our bespoke ESG data management software, SIERA, and the support of our team of expert consultants we can fully manage the delivery of your annual SECR Report from start to finish, and help you use this information as the basis for a broader ESG strategy that will maximise value from the SECR process and deliver transformative change for your Company.

If you have further questions or are seeking assistance with your environmental reporting, get in touch and our team of experts will be happy to help.

Speak to EVORA today about SECR reporting and an accompanying ESG strategy that will help maximise value from the process

New Guidance on Climate Related Disclosure and Reporting

On December 14th 2016 the Financial Stability Board’s Task Force on Climate Related Disclosure published its long-awaited recommendation report. The report sets out recommendations for helping businesses disclose climate-related financial risks and opportunities.


The report states that the impact that global warming can have on economies is widely recognised.  However, at present, it is difficult for investors to know which companies are vulnerable to climate risks.  It is recognised that without financial disclosure, the financial impacts of climate change may not be effectively priced.  Pricing of risk is an essential function of financial markets.  It it is increasingly important to also understand the governance and risk management context in which financial results are achieved.

At present, it is difficult for investors to know which companies are vulnerable to climate risks.Click To Tweet

The Task Force states that non-financial disclosures should be:

  • Adoptable by all organisations
  • Included in financial filings
  • Designed to solicit decision-useful, forward-looking information on financial impacts
  • Strong focus on risks and opportunities related to transition to lower-carbon economy

The Task Force’s recommendations apply to all financial sector organisations including real estate asset managers and owners. Importantly, it is recognised that large asset owners and asset managers sit at the top of the investment chain and, therefore, have an important role to play in influencing the organisations in which they invest to provide better climate-related financial disclosures.

Recommendations are structured into four categories, as summarised below.

Governance

Organisations should disclose their governance approaches covering climate-related risks and opportunities.

Recommended disclosures:

  • The board’s oversight of climate-related risks and opportunities
  • Management’s role in assessing and managing climate-related risks and opportunities
Organisations should disclose their governance approaches covering climate-related risks and opportunities.Click To Tweet

Strategy

Organisations should disclose actual and potential impacts of climate-related risks and opportunities.

Recommended disclosures:

  • Climate related risks and opportunities the organisation has identified over the short, medium, and long term
  • The impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning
  • The potential impact of different scenarios, including a 2°C scenario, on the organisations businesses, strategy, and financial planning (a clear link to the adoption of science based targets)
Organisations should disclose actual and potential impacts of climate-related risks and opportunities.Click To Tweet

Risk Management

Organisations should disclose how they identify, assesses, and manage climate-related risks.

Recommended disclosures:

  • Processes for identifying and assessing climate-related risks
  • Processes for managing climate-related risks
  • Processes for identifying, assessing, and managing climate- related risks are integrated into the organisation’s overall risk management
Organisations should disclose how they identify, assesses, and manage climate-related risk.Click To Tweet

Metrics and Targets

Organisations should disclose how metrics and targets are used to measure and manage risk.

Recommended disclosures:

  • Metrics used to assess climate risk
  • Scope 1, 2 and if appropriate (3) GHG emissions
  • Targets used to manage climate change risks and opportunities
Organisations should disclose how metrics and targets are used to measure and manage risk.Click To Tweet

To underpin these recommendations, the Task Force also sets out seven principles for effective disclosure.

  1. Disclosures should represent relevant information
  2. Disclosures should be specific and complete
  3. Disclosures should be clear, balanced, and understandable
  4. Disclosures should be consistent over time
  5. Disclosures should be comparable among companies within a sector, industry, or portfolio
  6. Disclosures should be reliable, verifiable, and objective
  7. Disclosures should be provided on a timely basis

The Task Force’s recommendations provide a foundation to improve investors’ and others’ ability to appropriately assess and price climate-related risks and opportunities.   They are wide ranging but also practical in the near term allowing the financial industry to develop and grow capability to report within a structured framework.

For information and if you want to get more involved, a public consultation to solicit views on the Task Force’s recommendations is now open until 12 February 2017 and can be accessed here.


EVORA is uniquely positioned to support commercial real estate organisations in the development and reporting of climate risk strategies through to implementation of management plans and collation and analysis of sustainability data using SIERA – our industry leading sustainability management software.

Please do not hesitate to contact us for more information.

EVORA is uniquely positioned to support commercial real estate organisations in the development and reporting of climate risk strategies.Click To Tweet