Exploring the Gray Areas: Beyond SECR for Comprehensive Emissions Reporting

The Streamlined Energy and Carbon Reporting (SECR) regulations, implemented by the UK government in 2019, marked a significant step towards promoting transparency in business energy use and carbon emissions. However, it’s only a preliminary stride in a race with no finish line. By predominantly focusing on Scope 1 and 2 emissions, the regulations cast a shadow on Scope 3 emissions, which, paradoxically, account for the majority of corporate emissions. The COVID-19 pandemic has further revealed the limitations of the SECR framework and has highlighted possible loopholes for greenwashing.

Beyond the Obvious: Unmasking Scope 3 Emissions

The Greenhouse Gas (GHG) Protocol classifies a company’s carbon emissions into three scopes.

Scope 1 involves direct emissions from owned or controlled sources.

Scope 2 encompasses indirect emissions from the generation of purchased energy.

Scope 3 covers all other indirect emissions occurring along the company’s value chain, such as business travel, product use, and outsourced activities.

Although SECR does include Scope 3 emissions, it does so on a voluntary basis and only for select areas. This lack of robust Scope 3 reporting requirements creates blind spots and potential opportunities for businesses to underreport their full environmental impact. It’s important to note that, according to a study by the Carbon Disclosure Project (CDP), Scope 3 emissions are up to four times higher than combined Scope 1 and 2 emissions for the average company. Thus, businesses willing to demonstrate genuine climate leadership are going beyond SECR by committing to comprehensive Scope 3 emissions reporting.

The SECR Under a Pandemic: A Double-Edged Sword

The COVID-19 pandemic has served as a litmus test for the efficacy of SECR regulations. With employees working from home and business travel drastically reduced, many companies reported impressive reductions in their emissions. But does this truly reflect a transition towards sustainability?

Regrettably, it might not. The sudden shift to teleworking does not necessarily result in a net decrease in carbon emissions. Energy consumption, which would have been categorised under Scope 2 emissions in the office setting, is now transferred to employee homes, thus entering the overlooked realm of Scope 3 emissions. But, in their SECR reports, many businesses failed to account for this significant change, causing a distortion in their emission figures.

This oversight does not just understate emissions, but it also veils the opportunity to accelerate sustainable practices in home working. Without accurate reporting, companies are missing the chance to provide employees with energy-efficient equipment, offer renewable energy tariffs, or implement other sustainable home working practices.

What seems on the surface to be an environmental triumph may be concealing more complex undercurrents, inadvertently fuelling greenwashing accusations. By presenting an incomplete picture of their emissions, companies risk being perceived as manipulating the crisis to project a misleading image of environmental stewardship.

Signalling Genuine Commitment: The Path Beyond

Despite the SECR regulations’ shortcomings, it is up to businesses to take up the mantle and lead the transition towards comprehensive carbon emissions reporting. By adopting life-cycle assessment methodologies and engaging with supply chain partners, businesses can uncover and manage their Scope 3 emissions effectively. Moreover, by supporting their employees in creating sustainable home offices, companies can seize the opportunity the pandemic has unveiled.

Furthermore, it’s crucial for businesses to communicate their efforts transparently. As stakeholders, from investors to consumers, become increasingly conscious of corporate environmental performance, businesses that candidly report their Scope 3 emissions will stand out as authentic climate leaders.

Unveiling the Full Picture: Uncovering Truths and Setting Standards

In conclusion, while the SECR has nudged companies towards greater transparency, it’s clear that its limited focus on Scope 3 emissions has implications for businesses’ true environmental footprint. The pandemic has cast light on these flaws, possibly facilitating unintentional greenwashing.

Yet, the future need not be a tale of missed opportunities and manipulated figures. Companies can go beyond SECR by integrating comprehensive Scope 3 reporting and encouraging sustainable teleworking. As we move towards a new era of corporate sustainability, those willing to reveal the full picture of their environmental impact will lead the way, setting new standards in transparency and integrity.

Kiril Petrovski

Kiril Petrovski, is a lawyer and a sustainability consultant at ESG PRO. He obtained his master’s degree in corporate law, which he passed with distinctions and is currently in the final stages of acquiring a PhD in the field of Public Health. He has accumulated experience in the field of administrative management through work in several public bodies. His specialty is on social matters and corporate governance. Kiril believes that every challenge must be approached from every direction with the aim to create long lasting, all-encompassing and practical systematic solutions.

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