Is SECR mandatory?

The short answer — yes, for qualifying entities

SECR is mandatory for qualifying UK entities under the Companies (Directors\' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 20181 (SI 2018/1155), effective from 1 April 2019. The regulations amend Companies Act 2006 sections 416-4195 and the LLP Regulations 200810 to insert energy and carbon disclosure requirements into the Directors\' Report (for companies) and the Energy and Carbon Report (for LLPs).

Three entity types are in mandatory SECR scope1:

• Quoted UK companies as defined in Companies Act 2006 section 385 [3] — regardless of size
• Large UK unquoted companies meeting two of three thresholds under Companies Act 2006 section 465 [2] — turnover > £36m, balance sheet > £18m, employees > 250
• Large UK LLPs meeting the same two-of-three test, applied via LLP Regulations 2008 [10]

"Mandatory" for SECR means enforcement through the Companies Act 20065 framework — not a separate civil sanctions regime as exists for ESOS13. The enforcement mechanisms work through the Directors\' Report duty rather than via a standalone penalty structure.

Quoted companies — mandatory regardless of size

All UK incorporated quoted companies are in SECR scope regardless of size1. There is no minimum threshold for quoted companies — even small quoted companies must comply with SECR disclosure requirements.

The Companies Act 2006 section 3853 definition of "quoted company" covers:

• UK Main Market listing (UKLR-listed entities)
• EEA regulated market listing
• New York Stock Exchange (NYSE)
• NASDAQ stock exchange

Companies admitted to AIM are NOT "quoted" under Companies Act 2006 section 3853. AIM-listed companies may be in SECR scope as large unquoted companies if they meet the two-of-three thresholds, but they are not automatically in scope by virtue of AIM admission alone.

Quoted company SECR disclosure has continuity with the 2013 Mandatory Carbon Reporting regulations1, which applied similar requirements to the same population. SECR consolidated and extended those earlier requirements.

Large unquoted companies — two of three test

Large UK unquoted companies are in SECR scope if they meet two of three thresholds under Companies Act 2006 section 4652:

• Annual turnover above £36 million
• Balance sheet total above £18 million
• Average employees above 250

The two-of-three test catches most large UK private companies, family-owned businesses above thresholds, AIM-listed companies above the unquoted thresholds, UK subsidiaries of overseas parents meeting the test, and holding companies within UK groups. The threshold logic differs fundamentally from ESOS13 qualification, which uses employee 250+ alone OR both financial thresholds (€50m turnover AND €43m balance sheet, both required).

Companies Act 2006 section 467 establishes a two-year qualifying rule — an entity remains in its current size category unless qualifying conditions fail in two consecutive years. One-off threshold fluctuations don\'t change SECR scope; sustained qualification or disqualification does.

Large LLPs — same two-of-three test

UK Limited Liability Partnerships meeting the two-of-three test are in SECR scope via the LLP amendments inserted by SI 2018/11551 into the LLP Regulations 200810. The same £36m / £18m / 250 thresholds apply, with two-of-three required.

LLPs disclose in an "Energy and Carbon Report" parallel to the Directors\' Report for companies. The content requirements are equivalent to those for large unquoted companies. LLPs are common in legal, accounting, financial advisory, asset management, and consulting sectors — large LLPs in these sectors typically fall within SECR scope and have annual SECR reporting obligations.

What "mandatory" means for SECR

The mandatoriness of SECR1 works differently from ESOS13. There is no separate sanctions regime, no Environment Agency notification, no standalone penalty schedule. SECR is mandatory because:

• The Directors' Report must include the energy and carbon information specified in SI 2018/1155 [1]
• Failure to include required content is non-compliance with the Directors' Report duty under Companies Act 2006 sections 415-419 [5]
• Director criminal liability arises under Companies Act 2006 section 418 [4] where directors knowingly or recklessly approve a non-compliant Directors' Report
• Civil penalties under Companies Act 2006 section 453 [7] apply to the entire annual filing if late or rejected for incompleteness
• FRC corporate reporting review [9] may identify SECR non-compliance as a quality issue requiring restatement

This Companies Act 2006 framework provides the enforcement teeth for SECR. The framework is identical to that applying to other Directors\' Report content — corporate governance disclosure, risk factors, employee engagement, principal activities — none of which has a separate sanctions regime either.

Companies Act 2006 enforcement framework

SECR enforcement runs through three Companies Act 2006 mechanisms plus FRC oversight:

• Section 418 [4] — criminal liability for directors who knowingly or recklessly approve a non-compliant Directors' Report
• Section 451 [6] — criminal offence for directors who fail to take all reasonable steps to secure timely filing of accounts and reports
• Section 453 [7] — automatic civil penalties for late filing (£150-£7,500 depending on entity type and lateness, doubled for second consecutive late filing)
• FRC corporate reporting review [9] — quality oversight of Strategic and Directors' Reports, may require restatement

An entity might face one, several, or all of these mechanisms depending on the nature and severity of non-compliance. A late filing of an annual report containing SECR content triggers section 4537 civil penalty automatically; a deliberate omission of required SECR content from a Directors\' Report may trigger section 4184 director criminal liability.

Director criminal liability (s.418, s.451)

Companies Act 2006 section 4184 creates criminal liability for directors in respect of the Directors\' Report. Specifically, where the Directors\' Report does not comply with the statutory requirements (including SECR content under SI 2018/11551), every director who knew the report did not comply or who failed to take reasonable steps to secure compliance is guilty of an offence. Maximum penalty on conviction: an unlimited fine.

Section 4516 creates a parallel offence for failure to file. Where an annual report (including the Directors\' Report containing SECR content) is filed late, directors who fail to take reasonable steps to secure timely filing are guilty of an offence.

In practice9:

• Criminal prosecutions for SECR non-compliance are rare — the Companies Act framework prefers civil penalties for late filing as the primary enforcement mechanism
• Director disqualification under the Company Directors Disqualification Act 1986 is possible in cases of persistent default
• The personal liability under s.418 [4] is significant — unlimited fine on conviction, plus criminal record and reputational consequences
• Audit committees should treat SECR compliance as a director-level personal obligation, particularly for quoted companies and large entities

Civil penalties for late filing (s.453)

Companies Act 2006 section 4537 imposes automatic civil penalties for late filing of the annual report and accounts containing SECR content. The penalty scale (already covered in detail at SECR Filing Deadline):

• Private company / LLP — £150 (up to 1 month late) to £1,500 (over 6 months late) [7]
• Public company / PLC — £750 (up to 1 month late) to £7,500 (over 6 months late) [7]
• Doubled if the company files late in two consecutive financial years

The penalties apply to the entire annual filing — they are not specific to SECR content. But because SECR content forms part of the Directors\' Report, late filing of the annual report is also late filing of the SECR disclosure. There is no separate SECR penalty schedule.

FRC oversight of disclosure quality

The Financial Reporting Council reviews annual reports for compliance with statutory requirements, including SECR disclosure quality. The FRC\'s Corporate Reporting Review9 programme identifies entities where disclosures may not meet expectations and engages with them to seek improvement.

FRC interventions can include:

• Findings letters identifying areas of concern in published disclosures
• Requests for restatement of incorrect or incomplete information
• Public commentary in the FRC's Annual Review of Corporate Reporting [9]
• Referral for further regulatory action where statutory non-compliance is identified

The FRC\'s 2025 thematic review of climate-related financial disclosures by AIM and large private companies9 indicates ongoing scrutiny of energy and emissions content in annual reports, including SECR disclosure quality. SECR compliance is therefore both a statutory obligation and a quality-reviewed disclosure subject to FRC oversight.

Exemptions and reliefs

Even within the mandatory SECR scope, several exemptions and reliefs apply1:

Subsidiary exemption

UK subsidiaries of UK parents that prepare consolidated Group Directors\' Reports including SECR disclosure for the group are typically exempt from separate SECR disclosure in their own Directors\' Report1. The subsidiary must still file its own annual accounts, but its own Directors\' Report doesn\'t need separate SECR content.

Low energy user (40,000 kWh)

Entities using 40,000 kWh or less of UK energy in the financial year qualify for simplified disclosure1 — a statement declaring low-energy user status, without full disclosure. They remain in SECR scope; only the disclosure content is reduced.

Smaller entities

Small and medium-sized companies not meeting the two-of-three large threshold test under Companies Act 2006 section 4652 are out of mandatory SECR scope. Quoted companies are an exception — they are in scope regardless of size3.

Out-of-scope entities

Dormant companies (no significant business activity), public sector bodies (separate frameworks), and charities (subject to Statement of Recommended Practice for charities) are out of SECR scope1.

Practicality and seriously prejudicial exemptions

SI 2018/11551 includes two judgement-based exemptions that allow in-scope entities to limit specific disclosures:

Practicality qualification

SECR information is required "only to the extent that it is practical for the company to obtain"1. Where data is not practical to obtain — for example, where a recently acquired subsidiary has no historical energy consumption records, or where Scope 3 data from suppliers is unavailable — the entity should state this fact, explain what is omitted, and describe steps being taken to acquire the information in future periods.

Practicality is judgement-based and audit-reviewable. Auditors and FRC9 may challenge whether the entity has applied the practicality qualification reasonably. The qualification is intended for genuinely impractical data, not as a general exemption from disclosure rigour.

Seriously prejudicial exemption

Directors may decline to disclose specific energy and carbon information where they consider that disclosure would be seriously prejudicial to the interests of the organisation1. Common cases:

• Commercially sensitive operational data that would reveal business strategy
• Information that would identify specific sites or activities in a manner harmful to security or commercial position
• Disclosure that would breach contractual confidentiality with customers or suppliers

Where the exemption is applied, the report must state that the information is not disclosed for that reason1. The exemption requires director judgement and is challengeable — if the FRC9 or other stakeholders consider the exemption was not genuinely warranted, restatement may be required.

April 2025 size threshold changes — no SECR impact

SI 2024/130311 amended Companies Act 2006 size thresholds with effect from 6 April 2025, raising the thresholds at which an entity qualifies as "large" under the broader Companies Act framework. Some entities moved down a size category — from large to medium, or medium to small — and became exempt from certain Strategic Report requirements.

SECR thresholds were NOT amended at the same time1. Practical consequence:

• Entities moving down a CA 2006 size category may have lost Strategic Report obligations but remain in SECR scope
• The SI 2018/1155 [1] SECR thresholds continue to apply: £36m turnover, £18m balance sheet, 250 employees (two of three)
• Entities should not assume a CA 2006 size category change affects SECR scope
• DBT may align SECR thresholds with the updated CA 2006 thresholds in future amendments — no proposal published as of May 2026

This is operationally important for entities near the threshold. An entity below the new CA 2006 "large" threshold for Strategic Report purposes may still meet the SECR thresholds and need to continue SECR disclosure.

Voluntary participation

Entities below mandatory SECR thresholds may voluntarily provide SECR-style disclosure1. The DBT Environmental Reporting Guidelines8 explicitly encourage voluntary disclosure for smaller entities, recognising that:

• Value-chain transparency — large customers (subject to mandatory SECR) increasingly request supplier energy and emissions data
• Procurement requirements — public sector and regulated sector tenders may ask about energy disclosure
• MCR Strand 2 preparation — entities anticipating future UK SRS S2 [12] application benefit from building SECR-style data capability now
• Stakeholder credibility — staff, customers, and community stakeholders may value transparency

Voluntary disclosure may follow the SECR format or use a related framework. Academy trusts, charities (subject to Charities SORP), and smaller private companies sometimes voluntarily provide SECR-format disclosure even where not in mandatory scope. The DBT Environmental Reporting Guidelines8 provide methodology guidance applicable to both mandatory and voluntary disclosure.

SECR mandatoriness vs ESOS and UK SRS

The three UK regulatory regimes covering energy and emissions disclosure have different mandatoriness frameworks:

SECR mandatoriness1

• Yes, for three entity types — quoted (any size), large unquoted, large LLPs
• Enforcement via Companies Act 2006 framework [4] [6] [7] — not separate sanctions regime
• Director criminal liability under s.418 [4]; civil penalties under s.453 [7]; FRC quality oversight [9]
• Annual cycle aligned with annual report filing

ESOS mandatoriness13

• Yes, for qualifying UK groups (250+ employees OR €50m turnover AND €43m balance sheet)
• Enforcement via separate civil sanctions regime under SI 2014/1643 — Environment Agency administered
• Statutory maximum penalties: £45,000 (notification failure) or £90,000 (audit failure) + publication on EA register
• Four-yearly cycle; Phase 4 compliance deadline 5 December 2027

UK SRS S2 mandatoriness12

• Yes for listed companies in UKLR 6/14/15/16/22 from 1 January 2027 under FCA CP26/5
• Enforcement via FCA supervisory and disciplinary powers
• Companies Act 2006 s.414CB(2A) designation eliminates parallel CA 2006 climate disclosure under s.414CB(1)-(5) for UK SRS adopters
• Voluntary for any UK entity since 25 February 2026; MCR Strand 2 consultation may extend mandatoriness to private entities

An entity might face all three enforcement mechanisms — ESOS13 civil penalty for notification failure (up to £45,000 + EA publication), SECR4 director criminal liability for Directors\' Report non-compliance (unlimited fine on conviction), and UK SRS12 FCA supervisory action for listed company non-compliance — for separate failures across the three regimes. The data infrastructure overlap is substantial; the enforcement consequences are distinct.

Frequently asked questions