It could be easy to dismiss it as yet another compliance box you need to tick as a business owner. However, the truth is that it plays a vital role in the country’s push to reduce carbon emissions and improve energy transparency.
But what happens if you overlook your obligations or get something wrong? From rejected accounts to financial penalties, SECR fines can cause serious disruption for your business.
In this article, we’ll break down what SECR is, the consequences of non-compliance and the practical steps you can take to stay on the right side of the rules.
The SECR framework was launched in 2019. It requires eligible companies to assess and report their energy use and associated carbon emissions. The end goal being to make them more aware of their contribution, in turn encouraging them to reduce it.
SECR applies to UK-registered companies and LLPs that meet certain criteria, regardless of sector or industry. This includes manufacturers, logistics providers, retailers and firms in the construction and service sectors. Even if your energy usage seems relatively low, you may still fall under the scope based on size or revenue.
If your business is eligible, information should be submitted in your annual Directors’ Report at the end of each financial year. It must include the use of electricity, gas and transport fuel, as well as the greenhouse gas emissions which arise from them.
That needs to be accompanied by one or more intensity metrics, which define energy use relative to the size of the company. Finally, your company needs to explain how it’s taken steps to improve energy efficiency each year.
Beyond simple compliance, SECR plays a strategic role in helping businesses manage energy more efficiently. It provides a clear framework to identify high-usage areas and target reductions, potentially saving your business thousands over time.
But just as importantly, it supports Environmental, Social and Governance (ESG) goals. With growing pressure from investors, customers and employees to act sustainably, a strong ECR report reflects transparency and commitment to environmental impact – something that can improve your business’s reputation and give it a competitive edge.
The SECR framework has been introduced with a view to cutting energy use and slashing emissions over time. But failure to do so doesn’t just impact your company’s green credentials. The Conduct Committee of the Financial Reporting Council, who are in charge of enforcing SECR, can also impose fines.
On top of that, Companies House can reject your annual accounts if inadequate information is provided. This could lead to SECR fines in the form of late deadline penalties when your accounts are resubmitted. Late filing penalties range from £150 up to £7,500 depending on the type of company and how late the accounts are submitted.
In some cases, businesses may also be required to restate their financial accounts, and repeated breaches could lead to reputational damage or closer scrutiny in future submissions. Directors can also be held accountable for persistent non-compliance.
Even businesses that understand the SECR framework can still make mistakes when it comes to compiling their reports. Some of the most common errors include:
Being aware of these pitfalls is the first step to avoiding them. Getting advice early can mean that your report is robust, accurate and compliant.
SECR applies to all quoted companies whose shares are traded on the stock exchange, along with unquoted companies and LLPs that meet any two of the following criteria:
If you fall within the criteria above, you’ll need to make sure you submit your annual accounts on time each year with all of the required information. To avoid SECR fines, it’s best to seek expert assistance if you’re unsure or unclear about any of the requirements.
In addition, it’s smart to establish internal systems that track energy usage continuously throughout the year. Keeping records of meter readings, vehicle fuel logs and invoices in one central location can make year-end reporting far easier.
And don’t forget to record efficiency actions as they happen – whether that’s replacing old lighting systems, upgrading to low-energy equipment or implementing staff training on energy awareness. These proactive steps show that your business is committed to continual improvement.
Volta Compliance helps businesses throughout Yorkshire with their SECR obligations – and we’re ready to help you too. After an initial consultation to guide you through the process, we’ll deploy a bespoke cloud-based solution to gather all your energy data for you.
Once that’s complete, you’ll get a full consumption report to submit with your annual accounts. We can also use your report to recommend changes that will reduce your energy consumption. As well as staying compliant and avoiding SECR fines, it could save you money on your energy bills going forward.
With Volta Compliance, you won’t just tick the compliance box. You’ll gain meaningful insights that can shape your long-term energy strategy. From data collection and reporting to advice on cost-saving upgrades, we’re here to support your business every step of the way.
Contact us today on 0113 436 0402 or info@voltacompliance.com to get the ball rolling.
