Unprecedented inflows into sustainable investment funds, the looming threat of climate change, and societal pressure for businesses to better align their activities to public interests are all driving an agenda towards better disclosure of non-financial information.
Ultimately, the “alphabet soup” of ESG reporting acronyms and frameworks exists today because different people want different things from ESG reporting and that leads to a lot of confusion.
What about SECR specifically?
The Streamlined Energy and Carbon Reporting (‘SECR’) rules set out certain required statutory disclosures about emissions and energy use. From 1 April 2019, the rules expanded the existing emissions disclosure requirements for quoted companies and required emissions reporting for the first time for large unquoted companies and limited liability partnerships (‘LLPs’).
The Financial Reporting Council (FRC) have released a Thematic Review on Streamlined Energy and Carbon Reporting this month considering how a sample of companies have complied with the new SECR requirements, highlighting where they saw examples of emerging good practice, and setting out expectations for reporting in future periods.
Whilst the FRC saw many examples of good disclosure in their sample review, they noted scope for improvement across many of the reports.
What does this mean for my company?
Below, we highlight some of the key takeaways that companies should be looking to incorporate in their SECR reporting process:
- Present all the required information in a format which is clear, understandable, and easy for users to navigate.
- Provide an adequate explanation of the methodologies used to calculate emissions and energy use and also the scope of the disclosure.
- Describe the extent of any due diligence or assurance over emissions and energy use metrics, including explain the level of assurance given and scope of coverage. Avoid implying a higher level of assurance than has been given, for instance by using terms such as ‘audited’ or ‘verified’ inappropriately.
- Provide an adequate description of energy efficiency initiatives in the current and comparative period.
- Consider whether disclosure of additional information, such as scope 3 emissions, would be helpful to investors or other users.
- Provide clear explanations which help users to understand and compare major commitments, such as ‘net zero emissions’ targets or ‘Paris-aligned’ strategies.
How we can help
The SECR was intended to not be overly cumbersome, however specialist advice can navigate your compliance effortlessly. Starting with your business fundamentals, your assets, your people and your culture, the team at EVORA helps to work through the strategic decisions needed to deliver a business-oriented ESG strategy, and to service all your reporting, investment, data and communications needs. Email firstname.lastname@example.org to speak to a member of our team.