SECR and UK SRS — How the Two Frameworks Interact

SECR Obligations Remain in Place

The Streamlined Energy and Carbon Reporting regulations, introduced in 2019, require qualifying UK companies and LLPs to disclose their energy consumption and greenhouse gas emissions in their annual directors' report. SECR applies to quoted companies, large unquoted companies, and large LLPs that meet at least two of three size criteria: more than 250 employees, turnover exceeding 36 million pounds, or a balance sheet total exceeding 18 million pounds. The disclosure requirements include total UK energy consumption, Scope 1 and Scope 2 greenhouse gas emissions, an intensity ratio, and a narrative description of energy efficiency measures taken during the reporting period.

UK SRS does not replace SECR. The two frameworks have different legal bases — SECR is mandated through the Companies Act 2006 (Strategic Report) regulations, while UK SRS will be mandated through FCA Listing Rules for listed companies and, in due course, Companies Act amendments for private companies. They have different scopes: SECR captures a broader population of companies, including many large private companies that will not initially be in scope of UK SRS. And they have different disclosure requirements: SECR focuses on energy consumption and basic greenhouse gas emissions, while UK SRS requires comprehensive sustainability-related financial disclosures across governance, strategy, risk management, and metrics and targets.

How the Two Frameworks Interact

For companies that are in scope of both SECR and UK SRS, the interaction between the two frameworks creates a layered reporting obligation. SECR requires disclosure of UK energy consumption and Scope 1 and Scope 2 emissions in the directors' report. UK SRS requires disclosure of Scope 1, Scope 2, and (where material) Scope 3 emissions, along with a wide range of additional disclosures covering governance, strategy, risk management, and targets — either in the annual report or in a separate sustainability report that is cross-referenced from the annual report.

There is overlap in the area of Scope 1 and Scope 2 emissions, but the requirements are not identical. SECR uses a UK-only boundary for energy consumption disclosure, while UK SRS requires global emissions disclosure. SECR requires an intensity ratio but does not prescribe which ratio to use, while UK SRS requires specific metrics aligned with the standards' requirements. Companies must ensure that their disclosures under each framework are internally consistent, even where the scopes and methodologies differ.

The practical risk for companies is fragmentation. If SECR disclosures are prepared by one team using one methodology, and UK SRS disclosures are prepared by another team using a different methodology, the resulting numbers may not reconcile. Investors and analysts will compare the emissions figures disclosed under SECR with those disclosed under UK SRS, and any unexplained discrepancies will undermine confidence in both sets of disclosures. Companies should establish a single source of truth for emissions data and derive both SECR and UK SRS disclosures from the same underlying dataset, with clear reconciliation where the reporting boundaries differ.

The Government's Non-Financial Reporting Review

The Government has been conducting a broader review of non-financial reporting requirements, including SECR, the section 172 statement, and other narrative reporting obligations in the Companies Act. This review is intended to simplify and rationalise the non-financial reporting landscape, reduce duplication, and ensure that reporting requirements are proportionate and decision-useful.

One of the questions under consideration is whether SECR should be retained as a standalone obligation or whether it should be integrated into or superseded by UK SRS for companies that are in scope of both. The argument for integration is compelling: there is limited value in requiring a listed company to disclose its Scope 1 and Scope 2 emissions twice — once under SECR and once under UK SRS — using potentially different scopes and methodologies. Rationalising the two frameworks into a single, comprehensive disclosure obligation would reduce compliance costs and improve the coherence of the information available to investors.

However, the position is complicated by the fact that SECR applies to a much wider population of companies than UK SRS. Many large private companies are subject to SECR but will not initially be in scope of UK SRS. If SECR were simply abolished and replaced by UK SRS, these companies would lose their emissions disclosure obligation entirely — unless the Government simultaneously extended UK SRS to cover the same population, which is a separate and more complex policy decision.

Likely Direction of Travel

Based on the Government's public statements and the direction of the non-financial reporting review, the most likely outcome is a phased approach. For companies that are in scope of both SECR and UK SRS, the Government is expected to either integrate the SECR requirements into the UK SRS framework — so that companies make a single set of emissions disclosures that satisfies both obligations — or to exempt companies from SECR where their UK SRS disclosures provide equivalent or superior information.

For companies that are in scope of SECR but not UK SRS — primarily large private companies — SECR is expected to remain in place as the baseline emissions disclosure obligation. Over time, as UK SRS is extended to private companies, the population of companies subject to SECR but not UK SRS will shrink, and SECR may eventually become redundant for all but the smallest qualifying companies. This transition will likely take several years and will depend on the pace at which the Government extends UK SRS to private companies.

What to Do If You Currently Prepare SECR and Expect to Fall Within UK SRS Scope

Companies that currently prepare SECR disclosures and expect to fall within the scope of UK SRS — either because they are already listed or because they anticipate the extension of UK SRS to private companies — should take a proactive approach to managing the transition. The following steps are recommended.

• Align your emissions methodology now. Review the methodology you use for SECR disclosures and compare it with the requirements of UK SRS S2. Ensure that your emission factors, organisational boundaries, and calculation approaches are consistent with what UK SRS will require. Where possible, adopt the UK SRS methodology for your SECR disclosures so that the transition is seamless.
• Extend your data collection to global operations. SECR focuses on UK energy consumption, but UK SRS requires global Scope 1 and Scope 2 emissions. If your SECR disclosures currently cover only UK operations, begin collecting emissions data from your international operations now. Building global data collection systems takes time, and starting early will reduce the pressure when UK SRS becomes mandatory.
• Begin Scope 3 assessment. SECR does not require Scope 3 disclosure, but UK SRS S2 requires disclosure of material Scope 3 emissions. If you have not previously assessed your Scope 3 footprint, begin with a screening exercise to identify the most material Scope 3 categories for your business. This will inform your data collection strategy and help you prioritise supplier engagement.
• Prepare for the governance and strategy disclosures. SECR is a metrics-focused framework — it requires emissions numbers and an intensity ratio but does not require detailed governance, strategy, or risk management disclosures. UK SRS requires all of these. Companies transitioning from SECR to UK SRS will need to develop new disclosure content in areas where they have not previously reported. Begin by mapping the UK SRS disclosure requirements against your current reporting and identify the gaps.
• Establish a single reporting process. Rather than treating SECR and UK SRS as separate workstreams, establish a single integrated reporting process that produces the data and disclosures required by both frameworks. Use the UK SRS requirements as the primary framework and derive your SECR disclosures from the same underlying data. This approach minimises duplication, reduces the risk of inconsistencies, and positions the company well for the eventual rationalisation of the two frameworks.

Managing Dual Obligations in Practice

For the period during which both SECR and UK SRS apply simultaneously, companies should adopt a structured approach to managing dual obligations. This means maintaining a clear reconciliation between the emissions figures disclosed under each framework, documenting any differences in scope or methodology, and ensuring that the disclosures are reviewed by a single team or process owner who understands both sets of requirements.

Audit committees should be made aware of the dual obligation and should understand the relationship between the two sets of disclosures. External auditors or assurance providers should be briefed on both frameworks so that they can identify any inconsistencies during their review. And the company's investor relations team should be prepared to explain the relationship between the SECR and UK SRS disclosures to analysts and investors who may not be familiar with both frameworks.

The dual obligation period is a transitional inconvenience, not a permanent feature of the reporting landscape. Companies that invest in building a robust, integrated reporting process now will be well positioned when the frameworks are eventually rationalised — and will benefit in the interim from higher-quality, more consistent emissions disclosures that serve both regulatory and investor audiences.