As Europe aims to achieve an economy with net-zero greenhouse gas emissions by 2050, two mandatory reporting requirements have emerged: SECR (Streamlined Energy and Carbon Reporting) and CSRD (Corporate Sustainability Reporting Directive).
While both aim to enhance business transparency, they have distinct focuses and implications. SECR is dedicated to the detailed measurement and reporting of greenhouse gas emissions and energy consumption.
However, CSRD takes a broader approach by incorporating a wider range of sustainability factors, including environmental, social, and governance impacts.
Navigating these new reporting requirements can be challenging for businesses, with the implications of these requirements putting pressure on companies to modify their strategies and practices. That’s why understanding the differences between SECR and CSRD is crucial for effective compliance and leveraging these agendas to drive sustainability schemes.
Whatever the size or nature of your business, it is essential to be mindful of your carbon footprint and actively monitor your emissions. Tracking these emissions provides meaningful data that is essential for success, especially as governments, companies and their employees increasingly prioritise sustainability initiatives.
Businesses are increasingly becoming concerned about sustainability and have begun to recognise the importance of having robust systems. Mark Corbett, Founder and Director of Thrust Carbon, argued that 93% of businesses risk failing to meet their emission goals without substantial efforts to improve their carbon reduction initiatives. This apprehension is echoed throughout the business world, which is why companies, large or small, need to stay informed about SECR and CSRD.
Now, let's delve into SECR and CSRD and how they came into play…
SECR (Streamlined Energy and Carbon Reporting) was introduced by the UK government on 1 April 2019 as an extension of the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme to encourage transparency within businesses. However, SECR impacts 11,900 businesses, a much greater number than those affected by CRC. Businesses that met the qualification began complying for the financial year starting on or after 1 April 2019.
Whereas, CSRD (Corporate Sustainability Reporting Directive) was introduced more recently, on 21 April 2021. It is an extension of a previous scheme that requires businesses to report their impact on ESG (Environmental, Social, and Governance) factors. The CSRD was introduced as a directive supporting the European Green Deal, which aims to make Europe a climate-neutral continent.
Still confused about the difference between SECR and CSRD? Here it is in brief terms…
What are the Streamlined Energy and Carbon Reporting (SECR) requirements and will it affect my business?
The Streamlined Energy and Carbon Reporting requirements require organisations to disclose their energy use and carbon emission information alongside their annual reporting, primarily focusing on greenhouse gas emissions.
This aims to widen the scope of energy and carbon reporting to a significant number of companies and encourage energy-efficient measures in businesses.
It currently impacts companies which have two or more of the below requirements...
Under the SECR, companies must report their scope 1 & 2 GHG (Greenhouse gas) emissions. In short, Scope 1 is emissions that the business directly makes, whereas Scope 2 is emissions indirectly produced by the business. Although sharing Scope 3 data is optional, transparency with this data is also recommended to help future-proof your businesses.
What does this require your business to share?
- annual UK energy use(in kWh) and associated greenhouse gas emissions (CO2e)
- emissions intensity ratiochosen by the academy trust
- the methodologiesused to calculate the required information
- a narrative of measures taken to improve energy efficiencyin the period of the report
- the prior year's equivalent figuresare also required to be disclosed
How does this affect your business?
Creates more focus and structure for businesses on environmental issues.
With greenhouse gas emissions declining by 5.4% in 2023, because of sustainable practices, we must continue this momentum. The introduction of these new policies ensures businesses are focusing their attention on environmental issues. As previous Energy and Clean Growth Minister Claire Perry stated, if you don’t measure it, you can’t manage it. Therefore, having a focused framework will positively impact the inner workings of the business and the structure as they will be more aware, matching SECR's main aim of increasing awareness around energy costs in organisations.
Competitive Edge
A rise in competition also may impact your industry, as the publication of greenhouse gas emissions can negatively impact those businesses not complying. Becoming the business that favours and prioritises these new regulations, will benefit you as companies making the shift to a sustainable business model now have a chance to mark themselves out as leaders in the field, rather than risk being left behind.
Cost-saving benefits for businesses
We know what you are thinking, sustainable practices are normally much more expensive, however, this will not last forever. As outlined by Jason Geall, Executive Vice President Global SME at AMEX GBT, “the cost curve for sustainable products will reduce in the same way they did with solar panels, it is just a matter of time”. However, there are many ways you can also reduce costs throughout the business. SECR has many cost-saving benefits, as it allows businesses to identify areas of continuous energy waste, potentially saving on energy bills and reducing operating costs. As well as this, you are avoiding a costly fine by complying with SECR, as late filing penalties can range from £150 up to £7,500 depending on the type of company.
We asked our experts…
'Why is it important in the corporate travel sector and for SilverDoor'
“CSRD and SECR are vital in the corporate travel sector and for SilverDoor, as corporate travel is essential to business success. It is important to ensure that business travellers can continue to have those all-important face-to-face interactions while also tracking and maintaining sustainable business travel practices. For SilverDoor, prioritising our clients’ preferences and assisting them on their sustainability journey, with tools like the Carbon Calculator, is essential.”
Al Butler, Senior Client Programme Manager
What is the Corporate Sustainability Reporting Directive (CSRD) Mandates and does it affect my business?
The CSRD mandate necessitates all large and listed companies to publish regular reports of the social and environmental impact they risk facing, helping investors, civil society organisations, consumers and other stakeholders to evaluate the sustainability performance of companies. CSRD is a current extension of a previous regulation introduced in 2018, however, the CSRD is a significantly stricter reporting directive as it impacts up to 49,000 businesses as opposed to 11,700.
So why does this matter? Well, around 76% of individuals believe that the addition of CSRD will lead to company leadership considering sustainability in decision-making to a greater extent. Therefore, getting clued up on all things CSRD is essential.
How does this affect businesses?
More comprehensive reporting required
With the Introduction of CSRD, businesses are forced to make more comprehensive and descriptive analyses of their ESG (Environmental, Social and Governance) impact - allowing for more accurate data and knowledge to be shared and limiting fraudulent behaviour in environmental claims.
"CSRD means that companies are no longer able to make spurious offsetting claims anymore".
Enhanced risk management
The CSRD not only helps you stay on top of reporting requirements but also enables you to quickly identify relevant risks that could harm your business. By addressing these risks early, you can protect your reputation and avoid potentially costly issues.
We asked our experts…
What advice would you give businesses not currently affected by these mandates?
“Although these directives currently target larger businesses, SMEs are also affected by the need to measure, record, and report on sustainability and ESG data. Since every business is part of a larger supply chain, pressure to provide such data will inevitably reach businesses of all sizes. Therefore, I encourage all businesses to start this process immediately.”
Ryan Jackson, Quality Assurance & Compliance Manager
SilverDoor’s Recommendations:
We know that this can all seem overwhelming, and you may feel like you don’t know how to start your SECR or CSRD journey. Here are a few tips from SilverDoor on how to best adapt your practices.
For SECR, we recommend…
- Ensure you have established and reportable systems in place, so your data is structured and detailed when shared.
- Reporting on Scope 1 and 2 data is essential but including Scope 3 data would also be beneficial. This ensures you are fully aware of your business's impact and demonstrates competency within the business structure.
For CSRD, we recommend…
- Make sure your travel program meets your sustainability and ESG goals by considering sustainable practices when travelling, such as reduced housekeeping services.
- Take advantage of SilverDoor’s sustainability initiatives when booking your business travel, such as utilising the Carbon Calculator on each of your bookings. This helps you clearly understand your environmental impact.
