Navigating UK Business Energy and Carbon Reporting Obligations – A Checklist for Compliance
With the UK government’s ambitious net zero targets, many businesses are required to comply with various energy and carbon reporting obligations designed to reduce energy usage and eliminate carbon emissions. But with all the different schemes having different qualifying criteria, with a mix of mandatory reports and voluntary agreements, how can businesses keep on top of their obligations?
A good place to start is to understand the different obligations and whether your business is legally required to comply. Failure to do so could lead to some hefty fines and being publicly named and shamed – something no business wants! So what reporting and compliance obligations are there?
Streamlined Energy & Carbon Reporting (SECR)
SECR is a mandatory reporting obligation for large UK companies, LLPs, and PLCs. It requires businesses to report on their energy consumption, greenhouse gas emissions, and energy efficiency measures. Qualifying criteria for this include:
- Your company is incorporated in the UK
- It meets two of the following criteria in the financial year: annual turnover of £36 million or more, a balance sheet total of £18 million or more, or 250 or more employees.
Energy Savings Opportunity Scheme (ESOS)
ESOS is a mandatory energy assessment and reporting scheme that requires large UK companies to assess their energy use and identify cost-effective energy-saving measures. Qualifying criteria for this scheme include:
- Your company has 250 or more employees, or
- It has an annual turnover of over £42 million and an annual balance sheet total of over £36 million
- Note that a smaller business also needs to comply if it is part of a corporate group containing a large enterprise.
ESOS is currently in Phase 3 and the deadline is fast approaching. You can find out more about ESOS Phase 3 in a previous EnergyIntel article.
Climate Change Agreement (CCA)
CCA is a voluntary reporting obligation that offers energy-intensive UK industries a discount on their electricity bills in exchange for reducing their carbon emissions. Qualifying criteria for CCA include:
- Your company operates in one of the eligible industries
- It has made a commitment to reduce carbon emissions by signing up to a CCA with the UK government
Mandatory Net Zero Plan
The Mandatory Net Zero Plan is a reporting obligation that requires UK businesses to produce a detailed plan outlining how they will achieve net-zero carbon emissions by 2050. Qualifying criteria for this reporting obligation include:
- Financial institutions, including asset managers, regulated asset owners, or
- Public listed companies
Task Force on Climate-Related Financial Disclosures (TFCD)
TFCD is a voluntary reporting obligation that requires companies to disclose their climate-related risks and opportunities in their annual reports. Qualifying criteria for TCFD include:
- PLC with 500 employees, or,
- Private companies with 500 employees and £500m turnover
UK Emissions Trading Scheme (UK ETS)
The UK ETS is a mandatory reporting obligation that requires participants to report on their carbon emissions and purchase allowances for their emissions. Qualifying criteria for this scheme include:
- Your company operates in one of the sectors covered by the UK ETS
- A business’s carbon costs are 5% or more of its GVA
- Other qualifying businesses include aviation and installations
Steps to making sure you comply
If you’ve identified that your business is eligible and meets the qualification criteria for a reporting obligation, the next step would be to know what the qualification window is for the specific obligation.
This is because some require an annual submission, while others are in four year cycles. Knowing this will allow you to prepare internally and arrange for additional support outside of your business if needed. Having a team of external experts can be very beneficial, taking the pressure off you and filling in any knowledge gaps. If you’re in need of support, take a look at our energy compliance services.
You should also determine what it would mean to your business if you did not comply and what, if any, the ramifications would be.
Before you start the reporting process, there are a couple of basic things you should find out first:
- Reporting frequency – know how often you are required to report, as well as the reporting deadlines, so you don’t miss it!
- What information is needed – understand what data and information is required to complete the reporting obligation.
- Data sources – make sure you have access to all the data sources needed to complete the report.
- Actions – know if you need to complete any actions as part of complying with the obligation.
- Report format – check what format the report needs to be in, the last thing you want is to do all the work to find out your submission isn’t valid because you sent it in the wrong format.
- Where to submit – confirm where you need to send your report so it gets to where it needs to be within the deadline.
These are just simple things you can do to make sure you’re ready to meet your reporting obligations. To help you prepare for your submission, we’ve created a reporting obligations checklist. Just complete a form, and our checklist will be in your inbox in minutes!
But if you are still unsure of where to begin, don’t worry, our team of certified auditors, analysts, and net zero specialists regularly submit compliant reports, whether it’s for a mandatory report or voluntary schemes. So, if you’re looking for support, drop us a message, and we’ll be in touch.
Author: Robyn Miller, Marketing Manager
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