SECR Reporting: A Practical Guide for UK Companies

Key Takeaways

• SECR applies to UK-incorporated companies meeting two of three size thresholds: £36m turnover, £18m balance sheet, or 250 employees
• Disclosures must appear in the Directors’ Report: UK energy use (kWh), Scope 1 and 2 emissions (tCO2e), intensity ratio, methodology, and year-on-year comparison
• Using the wrong year’s DEFRA conversion factors is one of the most common errors — always verify against the current release
• SECR data should be structured as if it will be audited — with UK SRS from January 2027, it very likely will be
• Companies qualifying for SECR should begin preparing for UK SRS now, as the transition gap is narrower than most assume

What Is SECR?

Streamlined Energy and Carbon Reporting (SECR) is the UK’s mandatory energy and carbon disclosure framework for qualifying companies. Introduced by The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, SECR requires organisations to report their UK energy consumption and associated greenhouse gas emissions as part of their annual Directors’ Report.

SECR replaced the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme and expanded the reporting population beyond quoted companies to include large unquoted companies and large LLPs. It is designed to increase transparency around corporate energy use and emissions, providing investors and stakeholders with comparable data on an organisation’s carbon footprint.

Who Must Report

SECR applies to UK-incorporated companies that meet at least two of the following three criteria in a financial year:

• Annual turnover of £36 million or more
• Balance sheet total of £18 million or more
• 250 employees or more

This captures three categories of reporting entity:

• Quoted companies — all companies listed on the Main Market of the London Stock Exchange, a European Economic Area market, or the New York Stock Exchange or NASDAQ. These have the most extensive obligations, including global energy and emissions data.
• Large unquoted companies — private companies meeting the size thresholds. Must report UK energy use and Scope 1/2 emissions only.
• Large LLPs — limited liability partnerships meeting the size thresholds, reporting in their annual energy and carbon report.

Companies that consume 40,000 kWh or less of energy in the UK during the reporting period are exempt from the detailed disclosure requirements, though they must still include a statement confirming this in their Directors’ Report.

What Must Be Disclosed

Qualifying organisations must include the following in their Directors’ Report:

1. UK energy use — total energy consumption in kilowatt-hours (kWh), covering electricity, gas, and transport fuel. Quoted companies must also disclose global energy use.
2. Scope 1 emissions — direct emissions from sources owned or controlled by the company (e.g., on-site combustion, fleet vehicles, fugitive emissions), expressed in tonnes of CO2e.
3. Scope 2 emissions — indirect emissions from purchased electricity, expressed in tonnes of CO2e using the location-based method.
4. An intensity ratio — emissions normalised per unit of activity, such as tCO2e per £m revenue, tCO2e per full-time equivalent employee, or tCO2e per unit of production.
5. Methodology description — a statement identifying the calculation approach used (the GHG Protocol Corporate Standard is most commonly cited).
6. Previous year comparison — figures for the preceding year to enable year-on-year trend analysis.
7. Energy efficiency actions — a narrative describing any energy efficiency measures taken during the reporting period.

Step-by-Step Data Collection

1. Define Your Organisational Boundary

Decide whether to use the operational control or financial control approach. Operational control is most common for SECR and includes all facilities where the company has the authority to introduce and implement operating policies. Document this choice — it must be applied consistently year on year.

2. Identify All Energy Sources

Map every energy source within your boundary: electricity (metered and estimated), natural gas, transport fuel (company-owned vehicles, grey fleet where applicable), LPG, diesel, gas oil, and any on-site renewable generation consumed. Missing a source is a common audit finding.

3. Collect Activity Data

Gather consumption data from utility bills, meter readings, fuel card statements, and fleet management systems. Prioritise metered data over estimated data. Where estimation is necessary (e.g., a site without separate metering), document the estimation methodology and the basis for the estimate.

4. Apply Emission Factors

Use the DEFRA/BEIS Greenhouse Gas Conversion Factors for the year corresponding to your reporting period. These are published annually, typically in June, and include factors for electricity, gas, transport fuels, and other energy sources. Using the wrong year’s factors is one of the most common errors in SECR submissions.

5. Calculate and Verify

Multiply activity data by the relevant emission factor to derive emissions in kgCO2e, then convert to tonnes. Cross-check totals against prior year data and investigate any variance greater than 10% — significant changes should be explainable by operational factors (site openings/closures, production changes, weather).

Choosing Your Intensity Ratio

The intensity ratio normalises your emissions against a measure of business activity. The choice of denominator matters because it must be meaningful, consistent, and comparable year on year. Common options include:

• tCO2e per £m revenue — widely used, easy to calculate, but susceptible to inflation and currency effects
• tCO2e per FTE employee — useful for service businesses with relatively homogeneous operations
• tCO2e per unit of production — most meaningful for manufacturers, but difficult if the product portfolio is diverse
• tCO2e per m² of floor area — relevant for property companies or organisations with significant building portfolios

Whichever denominator you choose, it must remain consistent across reporting periods. Changing the denominator breaks comparability and will be flagged by auditors.

Common Pitfalls and Audit Findings

1. Boundary errors — failing to include all UK operations under the chosen boundary approach, particularly leased premises, co-located sites, or recently acquired subsidiaries
2. Emission factor version — using outdated DEFRA conversion factors instead of the factors corresponding to the reporting year
3. Missing transport fuel — omitting business travel in company vehicles, grey fleet mileage, or refrigerant top-ups in transport
4. No methodology statement — the Companies Act requires disclosure of the calculation methodology; omitting this is a compliance gap
5. Inconsistent intensity ratio — changing the denominator between years without restating prior year data
6. Incomplete energy data — reporting emissions without the underlying energy consumption in kWh, which is a separate mandatory disclosure
7. Rounding errors — applying emission factors to rounded energy data rather than raw figures, introducing cumulative error

SECR vs UK SRS: Understanding the Transition

UK Sustainability Reporting Standards (UK SRS) become mandatory for approximately 515 UK-listed companies for accounting periods beginning on or after 1 January 2027. UK SRS is significantly broader than SECR:

• SECR covers energy and Scope 1/2 emissions. UK SRS requires Scope 3 (comply-or-explain), climate risk and opportunity analysis, transition plans, and governance disclosures.
• SECR requires no forward-looking information. UK SRS S2 requires climate scenario analysis, resilience assessment, and transition planning aligned with the TPT Framework.
• SECR is not currently subject to mandatory assurance. UK SRS disclosures will be subject to assurance requirements as they develop.

Companies currently reporting under SECR should view their existing processes as a foundation for UK SRS, not a separate exercise. Building robust data collection, evidence trails, and internal controls now will significantly reduce the cost and complexity of UK SRS implementation.

Building a Defensible SECR Submission

A defensible SECR process requires four elements:

• Documented data collection procedures — who collects what data, from which source, on what schedule
• Evidence-traceable emission factors — the version, source, and date of every factor used, linked to the specific activity data it was applied to
• Clear boundary definitions — a documented list of all entities and facilities included in the reporting boundary, with the control approach specified
• Internal review before filing — a structured sign-off process where the data is reviewed by someone other than the person who compiled it

The data should be structured as if it will be audited. With the trajectory toward mandatory assurance of sustainability data under UK SRS and broader regulatory evolution, most qualifying SECR companies will face external scrutiny of their emissions data within the next two to three years.

RSustain advisory: Use the Carbon Diagnostic for a free Scope 1-3 screening, or engage our advisory team for SECR-ready carbon accounting and evidence architecture.