Is SECR mandatory

SECR is mandatory for qualifying UK companies and LLPs under SI 2018/1155, for financial years beginning on or after 1 April 2019.

The Regulations were approved in draft by both Houses before they were made, and they put the duty into the directors’ report for companies and a new energy and carbon report for LLPs.

Three populations are caught, each by a different route, and the table sets them out.

The qualification mechanics — measurement, groups and the year-on-year rule — are on SECR reporting thresholds.

An unquoted company is in scope unless it satisfies two or more of turnover not more than £36 million, balance sheet total not more than £18 million and not more than 250 employees (¶20B).

That catches large private companies, family businesses, UK subsidiaries of overseas groups, holding companies and large AIM companies.

The logic is not the ESOS logic: ESOS takes at least 250 employees alone, or turnover over £44 million and a balance sheet over £38 million together (Sch 1 ¶1).

SECR carries its own year-on-year machinery in paragraph 20B(1): after the first year, a company changes status only when its new position holds for two consecutive years.

ESOS thresholds are on ESOS Phase 4 thresholds, and whether ESOS itself is compulsory on is ESOS mandatory?

Schedule 7 Parts 7 and 7A contain no offence, fine or sanction anywhere (Part 7A).

SECR is mandatory because it is part of the directors’ report, and the directors’ report is mandatory under the Companies Act.

That is the same way the rest of the directors’ report is enforced; none of its contents has a sanctions regime of its own.

The government’s own review says there is “no dedicated civil sanction regime or proactive monitoring specific to SECR”, and describes enforcement as light-touch.

ESOS is the contrast: Part 8 of SI 2014/1643 sets penalties of up to £5,000 for failing to notify and £50,000 for failing to carry out an assessment, each with up to £500 a working day for 80 working days — at most £45,000 and £90,000 — plus publication.

Both regimes are mandatory for those in scope; the consequences are entirely different, as ESOS vs SECR sets out.

Two offences reach SECR through the directors’ report: failing to prepare one at all (s.415(4)), and approving one that does not comply (s.419(3)).

The second requires fault: the director must have known the report did not comply, or been reckless as to whether it did, and failed to take reasonable steps to put it right.

Both are punishable by a fine on indictment, or on summary conviction a fine not exceeding the statutory maximum; the Act sets no SECR-specific amount.

A wrong number is not by itself an offence; the offence is in the approval.

Section 463 is often cited beside these as a further penalty, and it is not one.

It limits liability for false or misleading statements in the reports to liability to the company, and only on knowledge, recklessness or dishonest concealment; nobody else who relied on the report can sue under it.

The Financial Reporting Council has been the body authorised to apply to court for a revised report under section 456 since 6 May 2021 (SI 2021/465).

In practice a company meets the FRC’s Corporate Reporting Review, which reviews annual reports for compliance and writes to companies where it has questions.

The FRC’s operating procedures say it and its predecessors have resolved every case voluntarily, without applying for a court order.

The government’s evaluation puts suspected non-compliance at 14–23% of the in-scope population, concentrated among private companies and LLPs.

The realistic consequence of a defective SECR disclosure is correspondence and a corrected disclosure the following year, not a prosecution.

The statutory auditor gives the ordinary opinion on whether the directors’ report is consistent with the accounts and prepared in accordance with the law (s.496) — not assurance over the emissions.

The FRC’s wider work on annual corporate reporting covers the rest of the report.

SI 2024/1303 raised the Companies Act size limits for financial years beginning on or after 6 April 2025, moving the medium-sized ceiling to £54 million turnover and £27 million balance sheet.

Some companies moved down a size band and lost strategic report duties as a result.

SECR did not move: its thresholds are written into paragraph 20B, which the uplift did not amend.

Check SECR scope on its own test, not from the company’s accounts size.

The same question for the UK standards has its own page, UK SRS thresholds.