Carbon reporting: are you ready to disclose your emissions?

6 Dec 2019

R&D Tax Credits

New regulations introduce mandatory requirements for large unquoted companies and limited liability partnerships (LLPs) to disclose their annual energy use and greenhouse gas emissions for the first time. This will significantly increase the number of businesses required to calculate and report their carbon consumption, as reporting was previously limited to quoted companies.

Who needs to report under the new regulations?

The new regulations are the government’s implementation of the Streamlined Energy and Carbon Reporting (SECR) Policy and are effective for accounting periods commencing on or after 1 April 2019. They apply to any entity that qualifies as large in accordance with the Companies Act, ie an entity (LLP or company) that meets any two of the following criteria:

  • Turnover of more than £36 million.
  • Balance sheet total of more than £18 million.
  • More than 250 employees.

There are some scope exemptions, such as if the energy consumed by the business is less than 40,000kWh during the period, or if the disclosure would be seriously prejudicial to the interests of the entity. These reasons would need to be disclosed however. Further, a subsidiary need not report if they are included in the group reporting of a parent that has provided the required information.

What must be reported?

The reporting requirements are for new metrics to be disclosed in the directors’ report (or a new energy and carbon report for an LLP). These include the amount of emissions in tonnes of CO2 relating to its own activities and purchase of electricity, and a figure for energy consumed in kWh for the same purposes. Any measures taken to increase energy efficiencies should also be given and the methodologies used to calculate the information. In addition, at least one ratio should be disclosed which expresses the company’s annual emission in relation to a quantifiable factor associated with the entity’s activities.

The requirements for quoted companies broaden the scope of disclosures that were already introduced in 2013 with the mandatory greenhouse gas (GHG) reporting, but are not covered here.

How to capture the information

Many businesses caught by these regulations may already be preparing similar information as part of their assessment under the Energy Saving Opportunity Scheme (ESOS). This is a mandatory energy assessment scheme for large undertakings (in the UK with 250 employees or greater than £38.5 million turnover). This information must be submitted to the Environment Agency separately.

For those not already reporting under the ESOS scheme, the government has published a guidance document to support businesses through the reporting requirements, available at

Businesses will face challenges in ensuring systems and controls are in place to not only determine whether they are within scope, but also to ensure the accuracy of the disclosures made. It may, however, provide an opportunity to review energy consumption and make efficiencies from both an environmental and financial perspective.

Go back to Business Update December 2019 homepage