Need to report under the government's SECR (Streamlined Energy and Carbon Reporting) requirements? We've got you covered with our SECR reporting guidance below - covering the what, why and how of everything SECR.

What is the UK's Streamlined Energy and Carbon Reporting Policy (SECR)?

The Streamlined Energy and Carbon Reporting (SECR) framework was introduced in the UK on 1 April 2019 as part of the Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018.

It requires eligible UK companies to disclose their energy consumption, greenhouse gas (GHG) emissions, and energy efficiency measures within their annual reports.

The initiative was established to replace the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme, which was widely criticized for being overly complex and costly for businesses. SECR streamlines reporting requirements and integrates them into financial statements, ensuring that sustainability efforts are considered alongside financial performance.

This approach aligns with the UK's long-term climate change mitigation strategy, providing businesses with both regulatory guidance and opportunities to enhance their sustainability credentials.

Why Are Companies Being Asked to Report on Emissions and Energy Use?

The UK government has made SECR a legal requirement as part of its broader commitment to tackling climate change and achieving net-zero emissions by 2050. The rationale behind mandatory reporting is to encourage businesses to become more energy-efficient while also increasing transparency and accountability regarding their carbon footprints.

By mandating businesses to report their emissions and energy use, SECR aims to:

• Support the UK’s Net-Zero Goals: The government has set ambitious emissions reduction targets, and corporate reporting plays a critical role in tracking national progress toward these objectives.
• Drive Energy Efficiency and Cost Savings: When companies assess and disclose their energy use, they often identify areas where efficiency improvements can be made. This can lead to significant cost savings over time.
• Align UK Reporting with Global Standards: International organizations and investors increasingly expect standardized emissions disclosures. SECR brings UK corporate reporting more in line with global sustainability initiatives, such as CSRD.
• Improve Corporate Transparency: Investors, consumers, and other stakeholders are becoming more conscious of sustainability practices. By making emissions data publicly available, businesses can demonstrate their commitment to sustainability and differentiate themselves in the marketplace.

Who Needs to Report Under SECR?

SECR applies to companies that are quoted (listed on a public stock exchange), or unquoted companies and LLPs defined as "large" for the purposes of the regulation. This covers approximately 11,900 businesses in the UK. The reporting requirements are different depending on whether you are quoted or unquoted.

Quoted Companies

A quoted company is one that is listed on the London Stock Exchange, an EEA-regulated market, or the New York Stock Exchange/NASDAQ. These companies must report on their global energy use and carbon emissions, meaning they must track emissions and energy consumption across all their operations worldwide. The scope of their reporting is broader compared to unquoted companies, as it encompasses their entire global footprint.

Large Unquoted Companies and LLPs

Large unquoted companies and LLPs (Limited Liability Partnerships) are defined as meeting at least two of the following three conditions:

• Turnover of £36m or more
• Balance sheet of £18m or more
• 250+ employees

Unlike quoted companies, they are not required to disclose global emissions and energy, reporting on UK activity only.

However, one key distinction is that unquoted companies and LLPs must also report Scope 3 emissions related to employee-owned vehicles used for business travel, also known as grey fleet emissions. This means businesses that rely heavily on employees using their own vehicles for work-related travel must account for this impact.

How Do You Report on SECR?

SECR reporting must be integrated into a company’s annual financial report, ensuring that emissions and energy use are assessed in conjunction with other key financial and operational performance indicators.

• Quoted companies are required to include their SECR data in the Directors' Report, making it a visible part of their corporate disclosures.
• Unquoted companies and LLPs have the flexibility to include their SECR information either in the Directors' Report or within a separately prepared Energy and Carbon Report accompanying their financial statements.

By embedding emissions reporting into financial disclosures, SECR ensures that sustainability considerations are not seen as separate from business strategy but are instead recognized as an integral part of corporate decision-making.

What Are The SECR Reporting Requirements?

SECR reporting requirements differ depending whether you are an quoted or unquoted company - the former are required to report slightly more extensively. The table below outlines the key reporting elements for quoted and unquoted businesses:

And here's a more detailed breakdown of the emission reporting requirements specifically:

What are Scope 1, 2 and 3 emissions?

The Scopes are basically just categories of emission, as set out in the GHG Protocol Corporate Standard - the gold standard for carbon accounting globally.

1. Scope 1 emissions are those arising directly from assets that the business controls or operates, such as a gas boiler in an office, or the combustion engine of a vehicle you own.
2. Scope 2 emissions are the emissions generated to provide energy for your operations, such as electricity in your office or for your electric vehicles.
3. Scope 3 emissions are everything else! It's a really broad bucket that covers emissions across your entire value chain - your suppliers, employees and customers.

You can read our detailed guide to the Scopes here.

Are all Scope 1 and 2 energy usage and emissions required for SECR?

For quoted companies, all Scope 1 and 2 activity globally must be reported on. This would include any form of fuel combustion (e.g. chemicals used in production processes).

However, for large unquoted companies, only UK activity related to gas combustion, electricity and fuel consumed for transport is required. Additional reporting is recommended.

Which Scope 3 categories are mandatory for SECR?

Scope 3 emissions are not mandatory under SECR, with one exception. Unquoted companies and LLPs must report grey fleet emissions: business travel in which the company does not own the vehicle, but is paying directly for the fuel. This includes employees using their own vehicles for business travel (and submitting mileage claims) and rental cars. However, it excludes commuting and business travel on public transport or flights.

Beyond this, Scope 3 is not required. The primary reason for this is the complexity of data collection, as Scope 3 emissions involve indirect emissions from sources such as supply chains, purchased goods, waste disposal, and employee commuting, which can be challenging to track accurately. Additionally, requiring full Scope 3 reporting would impose a significant administrative burden on businesses, especially those with extensive operations and multiple suppliers.

However, SECR strongly encourages companies to report on material Scope 3 emissions voluntarily. Doing so can help businesses enhance transparency, align with investor expectations, and identify emissions hotspots to improve sustainability performance. Many large corporations, particularly those with net-zero commitments, choose to include Scope 3 data in their disclosures to demonstrate environmental leadership.

What methodology should I follow?

A robust and well-recognised standard for emissions reporting should be used to ensure accuracy, comparability, and compliance. The most commonly used methodology is GHG Protocol Corporate Standard - the global gold-standard for emission reporting - alongside DEFRA's emission conversion factors to make sure that the calculations are accurate and specific to UK energy usage.

Can I use estimates for SECR data?

You should try wherever possible to use primary data for your SECR report to make sure it's as accurate as possible. However, if you're simply unable to gather the energy data needed, you can rely on estimates in lieu. Some examples:

• You occupy a co-working space and do not have access to the specific bills for your space from the landlord.
• Due to switching energy provider, you only have access to energy usage data for a portion of the year.
• You disposed of some of your fleet and do not have comprehensive mileage data for those vehicles.

In any cases such as these, the following estimate methods are acceptable:

• Direct comparison. For example, you take a comparable time period in the past for which data does exist, and use that.
• Pro-rata extrapolation. For example, using 9 months of energy data to estimate energy usage for the remaining 3 months of the year.
• Benchmarking. Using one asset or activity to estimate the energy used by another, similar asset or activity. For example, using the energy of one retail outlet to estimate the energy of another retail outlet for which data is unavailable.
• Average-data estimates. Using averages to estimate energy consumption. For example, relying on expenditure on fuel (based on averages for liters of fuel per £ spent), or m2 of floor space occupied (based on averages for kWh energy used per m2 of floor space).

Can I exclude anything if I can't get the data?

There is a "comply and explain" clause within the regulation which allows businesses to exclude an activity, if collecting the data would be impractical or "seriously prejudicial" to the interests of the business. If this is the case, a full explanation is required, including any steps taking to acquire the relevant data.

Does my SECR report need to be independently assured?

Independent assurance for SECR reporting is not mandatory. However, it is strongly recommended by the guidance to ensure the accuracy of calculations and the robustness of the methodology followed. The GHG Protocol is complex and nuanced and it can be difficult to ensure compliance with this in-house, unless you have a dedicated sustainability team.

How is SECR different from ESOS?

The Energy Savings Opportunity Scheme (ESOS) is a mandatory energy assessment scheme for large UK organisations, designed to identify cost-effective energy efficiency improvements. Unlike SECR, which focuses on annual reporting of energy use and carbon emissions, ESOS requires businesses to conduct a comprehensive energy audit every four years. These audits cover energy consumption in buildings, industrial processes, and transport and must be reviewed by an accredited ESOS Lead Assessor. Unlike SECR, ESOS does not require public disclosure; instead, businesses must notify the Environment Agency of compliance and maintain records internally.

SECR and ESOS serve different purposes but often apply to the same organisations. SECR is an annual requirement integrated into financial reports, increasing transparency around emissions and energy use, while ESOS is focused on identifying and implementing energy-saving opportunities. While SECR measures carbon emissions and energy consumption, ESOS is an in-depth energy efficiency audit aimed at reducing costs. Businesses subject to both schemes can align their compliance efforts by using ESOS audits to inform their SECR reporting, ensuring a more strategic approach to energy management and sustainability.

What's the best process for producing an SECR report?

Producing an SECR report requires careful planning and systematic data collection. The process can be broken down into the following key steps:

1. Define the Boundary

The first step is to determine what scope of activity needs to be included in the SECR report.

Quoted companies must report on global emissions, while unquoted companies focus solely on UK emissions, including grey fleet emissions. Defining these boundaries early helps ensure data accuracy and compliance with SECR regulations.

Within this geographical boundary, you should follow the guidance of standards such as the GHG Protocol to determine which activities should be within scope. Most businesses use an "operational control" approach, which (in short) means that you should count emissions from assets that you directly manage operate - such as the office or factory you occupy.

2. Collect Data

Once the boundary is established, the next step is data collection. Companies must gather information on their electricity, gas, and fuel consumption over the reporting period, in kWh. This will usually come from your energy bills or meters, or fuel receipts. In addition, unquoted businesses must collect data on grey fleet mileage, which requires reviewing employee expense claims and business travel records. Accurate data collection is critical to producing a reliable report.

3. Calculate Emissions

After data is collected, businesses must convert energy usage into CO2e emissions. This is done using DEFRA’s standard emissions conversion factors, which provide a consistent methodology for measuring carbon output. These factors help businesses translate their raw energy data into emissions figures that can be disclosed in the report.

4. Calculate Energy Use (If Needed)

In some cases, businesses may not have direct energy use data, especially for transportation. For example, for vehicles companies usually have data on fuel consumed (in litres), or miles travelled, rather than information about the kWh of fuels used in vehicles. In these cases, data must converted into energy figures using standard conversion methods, also published by DEFRA. This step ensures that all energy consumption is accurately captured and reported.

5. Choose an Intensity Ratio

An intensity ratio helps put emissions data into context by comparing it against a business metric, such as t CO2e per £m or revenue or the number of employees. You can also choose to use a more sector-specific factor, such as t CO2e per delivery (for logistics), passenger mile (for transport), or product manufactured (for manufacturers).

Selecting an appropriate intensity ratio allows businesses to track emissions trends over time and compare performance against industry peers.

6. Commit to energy efficiency measures

Consider what actions you are taking, and could take, as a business to improve your energy efficiency. This could include conducting annual audits of your site, installing solar panels or electric vehicle chargepoints, and making sure your fleet includes fuel efficient vehicles. State these in the report. There are no specific requirements for how

7. Compile and Submit the Report

Finally, the SECR report must be formatted correctly and incorporated into the company’s annual financial statements. Ensuring that all required elements are included will help businesses comply with SECR regulations while also providing stakeholders with meaningful insights into their sustainability performance.

How can I get started?

Seedling's SECR reporting software automates the process of generating compliant reports. Let our experts guide you through the process and make compliance easy!