FRC review of emissions reporting identifies areas for improvement
The Financial Reporting Council has published the findings of its review of reporting on emissions, energy consumption and related matters under the Streamlined Energy and Carbon Reporting rules which came into effect for financial years commencing on or after 1 April 2019.
The FRC considered how 27 entities complied with the new SECR requirements. Its sample consisted of 10 FTSE companies, 10 AIM companies, 5 large private companies and 2 limited liability partnerships, drawn from different sectors, with a bias to those expected to generate significant emissions.
Although the entities largely complied with the minimum statutory disclosure requirements, the FRC highlighted the following areas where improvements could be made:
- Reports did not always provide sufficient information about the methodologies used to calculate the emissions and energy use information. It was not always clear which entities were included in groups' SECR disclosures.
- More thought was needed about how to integrate SECR disclosures with narrative reporting on climate change, where relevant, and make them easier for users to navigate. Three reports disclosed an emission-reduction target, but not the corresponding metric.
- It was sometimes unclear whether the ratios selected were the most appropriate for the entities' operations. It was also often not possible to recalculate emissions ratios by reference to other disclosures in the report, for example, emissions per £m revenue.
- The extent of third party assurance obtained over the SECR information was not adequately explained in most cases.
The FRC's findings can be found here.
