New Carbon Reporting Regulations in force

As of 1 April 2019, the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme will be abolished and replaced by the Streamlined Energy and Carbon Reporting (SECR) Regulations.

Why does it matter?

Environmental, sustainability and social issues are becoming ever more pressing for retailers in the wake of recent government consultations/inquiries. Retailers in the fashion industry known for “Fast Fashion” are particularly under the spotlight. For example, the investigations of the Environmental Audit Committee (EAC) in relation to Sustainability of the Fashion Industry launched in June 2018. In November 2018, online retailers including Asos, Boohoo and Missguided appeared before the EAC to give evidence as a part of this.

Pressure is greater than ever to improve efficiency and reduce social environmental impacts related to over-production and consumption. This includes greater verification to ensure fair wages within UK and global supply chains. Product care (including the issue of micro-fibre release), recycling and disposal are also key areas. Retailers are being urged to increase consumer awareness and engagement and lead the way to encourage circular consumption.

Carbon reporting is closely connected to the above. Under the SECR Regulations, reporting obligations are expected to grow to require businesses to disclose various details in their directors’ reports, including:

• annual quantity of energy consumed
• measures deployed to increase energy efficiency
• various emissions reports.

Exemptions to the above will apply where:

• annual energy consumption is less than 40,000kWh for the year
• it would be “seriously prejudicial” to disclose the information, or
• if a subsidiary, the information is in the parent company’s report.

Failure to comply with the SECR Regulations will be an offence. Further guidance on reporting and monitoring is expected in January 2019.