SECR and Environmental Reporting for UK Companies

Streamlined Energy and Carbon Reporting (SECR) requires qualifying UK companies and LLPs to disclose their energy use and carbon emissions in their annual directors’ report . The framework replaced the CRC Energy Efficiency Scheme from April 2019 and now applies to thousands of businesses across the UK.

Environmental reporting is not only a compliance obligation. Measuring and disclosing energy consumption gives businesses the data they need to identify waste, cut costs and demonstrate responsible corporate behaviour to customers, investors and supply chain partners.

Who must report under SECR

SECR applies to quoted companies, large unquoted companies and large LLPs that meet at least two of the following three criteria in the relevant financial year:

Quoted companies (those listed on the Main Market, AIM or an overseas equivalent) must report regardless of size.

Companies that consume 40,000 kWh or less of energy in the reporting period are exempt from SECR and must only state that the low-energy exemption applies.

Group reporting

Parent companies must include energy and emissions data for the entire UK group. Subsidiary companies that are included in a group report do not need to report individually, but they must state where the group report can be found.

What to report

Quoted companies

Quoted companies must disclose:

• Global greenhouse gas (GHG) emissions from activities for which the company is responsible (Scope 1 and Scope 2)
• Global energy consumption in kWh
• At least one intensity ratio (e.g. tonnes of CO2e per £million revenue, or per employee)
• Previous year’s figures for comparison
• The methodology used to calculate emissions
• Any energy efficiency actions taken during the year

Large unquoted companies and LLPs

Large unquoted companies and LLPs must disclose:

• UK energy consumption in kWh (electricity, gas, transport fuel)
• UK greenhouse gas emissions in tonnes of CO2 equivalent (Scope 1 and Scope 2)
• At least one intensity ratio
• Previous year’s figures for comparison
• The methodology used
• Any energy efficiency actions taken

Understanding Scope 1, 2 and 3

SECR requires Scope 1 and Scope 2 reporting. Scope 3 reporting is voluntary but increasingly expected by investors and larger customers conducting supply chain due diligence.

Calculating energy and emissions

Step 1: Gather energy data

Collect consumption data from:

• Electricity bills and meter readings
• Gas bills
• Transport fuel records (fuel cards, mileage logs, fleet management data)

For transport, if you do not have litres of fuel purchased, you can estimate from mileage using HMRC-approved rates and DEFRA conversion factors.

Step 2: Convert to kWh

Most utility bills already show consumption in kWh. For fuels measured in litres or cubic metres, DEFRA publishes conversion factors annually that translate physical quantities into kWh and into tonnes of CO2 equivalent.

Step 3: Calculate emissions

Multiply energy consumption by the relevant emission factor from the DEFRA/BEIS greenhouse gas reporting conversion factors, published each June. These factors are updated annually to reflect changes in the UK electricity grid mix.

Step 4: Choose an intensity ratio

The intensity ratio puts your emissions in context. Common choices include:

• Tonnes of CO2e per £million turnover – useful for comparing across different-sized businesses
• Tonnes of CO2e per employee (full-time equivalent)
• Tonnes of CO2e per square metre of floor space
• kWh per unit of production – sector-specific metrics for manufacturers

Where to disclose

SECR disclosures must appear in the directors’ report within your annual accounts filed at Companies House. They form part of the statutory accounts under the Companies Act 2006 .

For quoted companies, the disclosures are typically included in the strategic report section of the annual report.

Penalties for non-compliance

SECR reporting is part of the directors’ report under the Companies Act 2006. Failure to include the required information means the accounts do not comply with the Act. Consequences include:

• Companies House rejection of accounts that are clearly incomplete
• Criminal offence for directors who approve accounts they know do not comply (section 414 of the Companies Act)
• Reputational risk – investors, customers and supply chain partners increasingly check environmental disclosures

Beyond SECR: other environmental reporting frameworks

SECR is the statutory minimum for UK companies, but it is not the only framework in play:

TCFD is particularly important. From April 2022, over 1,300 of the largest UK-registered companies and financial institutions must disclose climate-related financial information in line with TCFD recommendations.

Practical steps for compliance

1. Determine whether you qualify – check the size thresholds against your latest accounts
2. Identify your energy sources – list every source of energy your UK operations consume
3. Set up data collection – centralise utility bills, fuel records and meter readings
4. Download DEFRA conversion factors for your reporting year
5. Calculate and document your energy use, emissions and intensity ratio
6. Draft your directors’ report disclosure – include all mandatory elements
7. Compare year-on-year – show the trend and explain any significant changes
8. Describe energy efficiency actions – even simple measures such as LED lighting upgrades, smart heating controls or cycle-to-work schemes count
9. Get the numbers reviewed – consider external verification for credibility, though it is not mandatory under SECR
10. File on time – SECR disclosures are part of your statutory accounts, so the same filing deadlines apply