UK FRC reviews climate reporting under SECR
The UK’s Streamlined Energy and Carbon Reporting (SECR) rules, which came into effect from 1 April 2019, provide an interesting example of mandatory climate reporting and potential insights for other jurisdictions implementing similar regimes. While the use of XBRL is not yet required for SECR, a taxonomy is available to enable voluntary digital climate disclosures to be made alongside financial statements in an integrated fashion.
The Financial Reporting Council (FRC) has published a review of SECR reporting, which deals specifically with emissions, energy consumption and related issues. It looks at how companies have complied with the requirements, identifies examples of emerging good practice, and outlines expectations for the future – highlighting key concerns that companies need to address.
“While the sample of reports largely complied with the minimum statutory disclosure requirements for emissions and energy consumption, more needs to be done to make these disclosures understandable and relevant for users,” says the FRC. “In particular, entities need to explain more clearly how information is calculated, which operations and emissions are included in their reported numbers and the level of third-party assurance obtained over the information. They also need to consider how to integrate these disclosures with other narrative reporting on climate change, especially any emission-reduction targets.”