SECR Reporting Explained: Does Your UK Business Need to Comply?

If your UK company is above any one of three thresholds — 250 employees, £36M turnover, or £18M balance sheet — you almost certainly have a Streamlined Energy and Carbon Reporting (SECR) obligation. It lives inside your Directors' Report, filed alongside your statutory accounts. Miss it and you have breached the Companies Act.

Most UK SMEs fall just below the threshold. Some fall just above without realising it. This guide walks through who is in scope, what the report has to contain, and how SECR relates to the other UK carbon-reporting regimes (ESOS, Carbon Reduction Plans, CDP).

What is SECR?

Streamlined Energy and Carbon Reporting was introduced by The Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 (SI 2018/1155). The regulations amended the Companies Act 2006 to require large UK companies, unquoted groups, and limited liability partnerships (LLPs) to disclose energy and carbon information inside their annual Directors' Report.

The report is filed with Companies House as part of the annual accounts filing and becomes part of the public record.

Unlike ESOS (which requires a four-yearly audit) or CDP (which is voluntary), SECR is an annual mandatory filing sitting inside your statutory reporting cycle.

Does SECR apply to your business?

The primary test is whether your company is a "large" company under the Companies Act 2006 definition. SI 2018/1155 extends that test to energy reporting.

A company is "large" (and therefore in scope of SECR) if it satisfies at least two of these three criteria in a financial year:

Criterion	Threshold
Annual turnover	£36 million or more
Balance sheet total	£18 million or more
Average number of employees	250 or more

There is also a specific energy-use floor inside SECR: a qualifying company or LLP is exempt from SECR if it can confirm its total UK energy use in the reporting year was 40,000 kWh or less (the "low energy user" exemption). This is a genuinely low threshold — most qualifying companies will exceed it.

Different rules apply to quoted companies and certain unquoted holding groups — the disclosure requirements are more extensive (including global energy use, not just UK). The UK government's Environmental Reporting Guidelines document is the canonical reference for which disclosure regime applies to which category of entity.

Who is explicitly out of scope?

Companies that do not meet the "large" threshold (the majority of UK SMEs)
Companies with UK energy use of 40,000 kWh or less in the reporting year
Unincorporated partnerships that are not LLPs
Overseas companies with no UK-registered legal entity

If you fall in scope for the first time because a threshold was crossed this year, the obligation bites from the first financial year in which you qualify — there is no two-year grace period.

What must the SECR report contain?

SI 2018/1155 sets out the mandatory content. For an unquoted large company (the most common SME-adjacent case), the SECR disclosure inside the Directors' Report must include:

1. UK energy use

Total UK energy consumption for the reporting year, covering:

Purchased electricity (kWh from the grid)
Gas (kWh consumed)
Transport (fuel used in company vehicles, business travel in employees' own vehicles where claimed)

Expressed in kWh. Conversion from fuel volume (litres of diesel, m³ of gas) to kWh uses the UK government conversion factors — the 2025 edition is the current default.

2. Associated emissions

The emissions resulting from the UK energy use above, expressed in tonnes of CO₂ equivalent (tCO₂e). The calculation uses the same conversion factors applied to activity data.

In practice this maps to:

Scope 1 emissions (direct, from company-controlled combustion)
Scope 2 emissions (indirect, from purchased electricity) — using the location-based method
A defined Scope 3 subset — business travel in employee-owned vehicles

See our guide on Scope 1 and 2 emissions for how to build these numbers from source data.

3. Methodology

A statement of the calculation methodology used. The UK Government guidelines effectively expect GHG Protocol alignment, using the UK government conversion factors. A one-paragraph statement is acceptable — detailed working papers do not need to be in the Directors' Report itself.

4. Intensity ratio

At least one intensity ratio, expressing emissions in a normalised form. Common choices:

tCO₂e per £ million of turnover
tCO₂e per full-time-equivalent employee
tCO₂e per square metre of floor space

The choice is up to the company, but once chosen, it should be used consistently year on year so trends are comparable.

5. Energy efficiency actions

A narrative description of principal energy efficiency actions taken in the reporting year. "We installed LED lighting at our Leeds warehouse in Q2 2025" is a qualifying action. "We will look at energy efficiency next year" is not.

6. Comparison with prior year

From the second SECR filing onwards, the report must include the prior year's figures for comparison. Companies reporting for the first time do not need a prior year.

SECR vs ESOS: what is the difference?

SECR and ESOS both touch energy and both apply to "large" UK organisations — but they are genuinely different regimes.

Dimension	SECR	ESOS
What it is	Annual disclosure inside the Directors' Report	Four-yearly energy audit
Cadence	Every year	Every four years (phases)
Scope of organisation	Companies Act 2006 "large" test	"Large undertaking" test (>=250 employees OR >=£50M turnover AND >=£43M balance sheet — different thresholds from SECR)
What you produce	A disclosure inside the Directors' Report	A compliance submission to the Environment Agency
Filed with	Companies House (via annual accounts)	Environment Agency (via ESOS Phase portal)
Penalty for non-compliance	Breach of Companies Act — director liability	Civil penalty up to £50,000 + £500/day — ESOS lead assessor records public
Data used	Current year + prior year	12-month reference period during the phase

See our dedicated guide on ESOS Phase 3 for the audit cadence and current deadlines.

The overlap: the energy and emissions data you produce for SECR each year is the same underlying data your ESOS auditor will ask for during the audit. Keeping it in a structured format year-round — not rebuilt from scratch every time a report is due — is the SME time-saver.

SECR and Carbon Reduction Plans

If you bid on central government contracts above £5M, you also need a Carbon Reduction Plan under PPN 06/21. The data overlap is almost total:

SECR requires Scope 1 + 2 emissions and a defined Scope 3 subset (business travel)
PPN 06/21 requires Scope 1 + 2 emissions and a defined Scope 3 subset (business travel + commuting + upstream/downstream transport + waste)

Build the SECR numbers once, add the extra Scope 3 categories for PPN 06/21, and you have answered both with one set of source data.

SECR and supplier ESG questionnaires

The third data re-use: every major supplier ESG questionnaire (CDP, EcoVadis, bank sustainability-linked loan questionnaires, PPN 06/21) asks for the same core numbers SECR disclosure produces:

Total annual electricity kWh
Total annual gas kWh
Total annual transport fuel
Total Scope 1 and Scope 2 emissions
Intensity ratio used

If you already do SECR, 60-70% of your answers to CDP, EcoVadis, bank loan questionnaires, and other supply-chain sustainability assessments are already calculated. The problem is usually not availability of data — it is that the Directors' Report format is not the same format the questionnaire asks for. Building a reusable fact vault bridges the two.

Common SECR mistakes

Using non-UK conversion factors — the DEFRA annual conversion factors are the UK default. Using US EPA or IPCC default factors may technically work but is atypical and invites scrutiny.
Reporting electricity using market-based method only — SECR guidance is location-based as the primary method. Market-based (REGO-backed tariffs counted at lower emissions) can be included as a supplementary figure, not the primary.
Forgetting the intensity ratio — a common omission. The report is non-compliant without at least one intensity metric.
Missing transport scope — company vehicle fuel is in scope. Many suppliers include only electricity and gas.
Treating the "low energy user" exemption as optional — if you use the exemption, you must confirm it in the Directors' Report with a statement that UK energy use was 40,000 kWh or less. The exemption is not a silent opt-out.

Step-by-step SECR compliance for UK SMEs (if you are newly in scope)

Confirm scope — run the Companies Act large-company test against the current financial year
Gather 12 months of data — electricity, gas, transport fuel from utility bills, fuel cards, mileage logs
Calculate emissions — apply the UK government conversion factors to each activity. Sum by scope.
Pick an intensity ratio — typically tCO₂e per £M turnover or per FTE
Draft the Directors' Report section — 1-2 pages covering total energy, emissions, methodology, intensity ratio, efficiency actions
Director approval — reviewed and approved as part of the annual accounts approval cycle
File with accounts — the SECR disclosure is part of the Directors' Report, filed with Companies House via the normal accounts filing route

For a first-time filer, budget 2-3 weeks from data gathering to director sign-off. Subsequent years drop to 3-5 days once data flows are in place.

FAQ

What is the SECR threshold? A company is in scope if it meets at least two of: 250+ employees, £36M+ turnover, £18M+ balance sheet. Low energy users (≤40,000 kWh UK energy in the reporting year) are exempt on confirmation.

Is SECR the same as ESOS? No. SECR is annual disclosure inside the Directors' Report. ESOS is a four-yearly audit compliance regime. Both apply to "large" organisations but thresholds and cadence differ.

Where does the SECR report go? Inside the Directors' Report, filed with Companies House as part of the annual accounts. It becomes publicly accessible via the Companies House register.

Does SECR apply to LLPs? Yes. SI 2018/1155 explicitly extends SECR to qualifying LLPs via the LLP Energy and Carbon Report requirement.

What if I miss the SECR deadline? SECR is filed with annual accounts — missing it is a Companies Act breach. The civil and director-level liability framework applies, same as any omitted Directors' Report content.

Does SECR require third-party verification? No. Unlike some voluntary regimes (SBTi, CDP A-list), SECR does not mandate external assurance. Many companies choose to have the emissions figures reviewed, but it is not a statutory requirement.

How much detail does the Scope 3 part need? Only the mandated subset — business travel in employee-owned vehicles. Fuller Scope 3 coverage is voluntary and not required for SECR compliance.

Is SECR affected by the CSRD? No. CSRD is the EU's Corporate Sustainability Reporting Directive and applies to large EU-listed entities and their in-scope subsidiaries. SECR is the UK's domestic statutory regime and has been unchanged by CSRD Omnibus developments.

The takeaway for UK SME directors

If you are close to the 250-employee / £36M / £18M thresholds, check the SECR test every year
The report is inside your Directors' Report — not a separate filing
Use the UK government conversion factors and location-based Scope 2 method
The numbers you produce for SECR are the same numbers your supplier ESG questionnaires keep asking for — store them once
Build in a prior-year comparison from year two onwards

AnswerVault stores your SECR numbers (kWh, tCO₂e, intensity ratio, methodology statement, efficiency actions) as structured facts that pull into every other questionnaire format you will ever face. Start a 14-day free trial to see how.

Sources

The Companies (Directors' Report) and LLPs (Energy and Carbon Report) Regulations 2018 (SI 2018/1155)
Companies Act 2006
UK Government Environmental Reporting Guidelines — mandatory greenhouse gas emissions reporting guidance
UK government greenhouse gas conversion factors
Greenhouse Gas Protocol Corporate Standard
Energy Savings Opportunity Scheme (ESOS)
This article provides general guidance for UK directors and finance teams. It is not legal or accounting advice. Specific application of SECR to your company should be reviewed with your accountant or auditor; the UK government guidelines are the definitive technical reference.