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28 Mar 2019  |   Pentana Disclose

Increased requirements for energy and carbon reporting in financial statements

Previously, reporting on greenhouse gas emissions in the director’s report was only a requirement for quoted companies. For accounting periods beginning on or after 1st April 2019, the streamlined energy and carbon reporting (SECR) requirements now come into effect.

Previously, reporting on greenhouse gas emissions in the director’s report was only a requirement for quoted companies. For accounting periods beginning on or after 1st April 2019, the streamlined energy and carbon reporting (SECR) requirements now come into effect.  These new requirements not only increase the disclosure requirements, but compliance is now also required by all large companies and LLP’s with some limited exceptions, although the government does encourage all other companies consider reporting on these issues.

The relevant entities are required to disclose greenhouse gas emissions, energy consumption, energy efficiency and actions taken with regards to energy efficiency.  Whilst this put an additional reporting burden and admin cost on many more entities, the aim is to ensure entities improve their energy efficiency, ensuring that entities are more environmentally friendly and can also reduce energy costs.

Entities are exempt if their energy consumption is 40,000 KWh or less.  This amount still needs to be calculated to ensure the exemption can be taken, so it may be worthwhile for an exempt company to consider making the disclosures on a voluntary basis as they have incurred the cost to calculate.

These disclosure requirements are included in both the FRS 102 and the IFRS UK checklists.