SECR compliance: step-by-step obligations guide
Step 1: Qualification Assessment
Assess whether your organisation meets SECR's two-of-three test: £36m+ annual turnover, £18m+ balance sheet total, or 250+ employees 10. UK quoted companies are automatically in scope regardless of size. Large unquoted companies and LLPs must meet two of the three thresholds to qualify 10.
Size is assessed on an accounting period basis, so changes during the year don't affect qualification. If you fail the test for two consecutive periods, you exit the regime. Parent-subsidiary relationships may affect qualification through group rules 10.
Steps 2-3: Energy Data and Emissions Calculation
Collect all energy consumption data in kWh for the reporting period. Quoted companies report global consumption; large unquoted companies and LLPs report UK consumption plus grey fleet emissions from employee-owned vehicles used for business 10. Cover electricity, natural gas, heating oil, transport fuel, and any other energy sources 10.
Convert energy consumption to Scope 1 and 2 emissions using DESNZ emission factors. Scope 1 covers direct emissions from owned/controlled sources; Scope 2 covers indirect emissions from purchased electricity using location-based method. SECR does not require Scope 3 value-chain emissions 10. Most companies in scope automate this with carbon reporting software.
Steps 4-6: Metrics, Comparisons and Narrative
Calculate at least one intensity metric relevant to your business — per £m turnover, per employee, per m² floor area, or per unit production. The metric should enable meaningful tracking of energy efficiency over time 10. Include prior-year figures for both absolute consumption/emissions and intensity metrics to show trends 10.
Provide a narrative describing energy efficiency actions taken during the period. This should cover specific measures like LED upgrades, heating controls, building improvements, fleet efficiency programmes, or behaviour change initiatives. If no actions were taken, state this explicitly 10.
Two-of-three size test
£36m+ turnover, £18m+ balance sheet, or 250+ employees
Global energy consumption
All energy in kWh for quoted companies
Scope 1 & 2 emissions
Using DESNZ conversion factors
Intensity metrics
At least one relevant metric per business
Energy efficiency narrative
Actions taken or explicit statement of none
Directors' Report disclosure
Statutory filing with annual accounts
Steps 7-8: Statutory Disclosure and Enforcement
Include SECR information in the Directors' Report as part of annual statutory filings. This makes the data publicly available through Companies House and subject to audit as part of annual accounts processes 10. The disclosure must be clear, complete, and comply with the prescribed format 10.
The Financial Reporting Council's Conduct Committee enforces SECR through civil sanctions including director disqualification and financial penalties. All enforcement actions are published, creating significant reputational risk alongside financial consequences 10. For comprehensive coverage of all ESG reporting requirements UK including how SECR fits with UK SRS and ESOS, see our integrated guide.
Annual compliance pathway
Qualification Test
- Apply two-of-three test
- Check group rules
- Document status
Data Collection
- Energy consumption tracking
- Transport fuel data
- Grey fleet mileage
Calculations
- Apply DESNZ factors
- Calculate Scope 1/2
- Intensity metrics
Disclosure
- Directors' Report
- Narrative section
- Prior year comparison
SECR IMPLEMENTATION · PRACTICAL GUIDANCE
SECR implementation in practice
For organisations in SECR scope, successful compliance requires systematic energy data collection, accurate emissions calculation, and strategic integration with broader sustainability reporting.
The eight-step compliance process is straightforward in theory but requires careful attention to data quality, methodological consistency, and disclosure completeness. Energy data infrastructure developed for SECR often supports broader sustainability reporting initiatives.
Most organisations find that establishing robust energy data collection processes for SECR creates a foundation for subsequent UK SRS, ESOS, and other sustainability compliance requirements.
FRC enforcement activity has increased significantly, with civil sanctions applied for incomplete or inaccurate SECR disclosures. Investment in proper systems and processes provides both compliance security and operational value.
| Aspect | SECR | ESOS | UK SRS S2 |
|---|---|---|---|
| Scope test | Two-of-three | Either/or | Listed companies |
| Frequency | Annual | Four-yearly | Annual |
| Emissions | Scope 1 & 2 | Energy audit | Scope 1, 2, 3 |
| Assurance | Not required | Lead assessor | Not mandatory |
| Disclosure | Directors' Report | Compliance notification | Annual report |
| Enforcement | FRC | Environment Agency | FCA |
How do I know if my organisation must comply with SECR?
Apply the two-of-three test: if your organisation meets two of these three thresholds — £36m+ annual turnover, £18m+ balance sheet total, or 250+ employees — then you're caught. This applies to UK quoted companies automatically, plus large unquoted companies and LLPs meeting the size test.
What energy data must I collect for SECR?
Quoted companies must collect global energy consumption in kWh across all sources. Large unquoted companies and LLPs collect UK energy consumption plus "grey fleet" emissions from employee-owned vehicles used for business travel. All must track electricity, gas, transport fuel, and other energy sources.
How do I calculate Scope 1 and 2 emissions for SECR?
Apply DESNZ emission factors to your energy consumption data. Scope 1 covers direct emissions from owned/controlled sources (gas, fleet fuel). Scope 2 covers indirect emissions from purchased electricity using location-based method. Use the latest published conversion factors.
What intensity metrics are acceptable for SECR?
Choose metrics relevant to your business — per £m turnover, per employee, per m² floor area, per unit production. You must include at least one intensity metric and explain your choice. The metric should be meaningful for tracking efficiency over time.
What must the SECR narrative section cover?
Describe energy efficiency actions taken during the period — LED upgrades, heating controls, building improvements, fleet efficiency, behaviour change programmes. If no actions were taken, state this explicitly. The narrative should be specific and quantified where possible.
Where in the annual report does SECR disclosure appear?
SECR information must appear in the Directors' Report (Companies Act requirement). It becomes part of statutory filings and is publicly available through Companies House. Some organisations also include the data in sustainability reports for broader disclosure.
What happens if we don't comply with SECR obligations?
The Financial Reporting Council's Conduct Committee enforces SECR through civil sanctions. This can include director disqualification, financial penalties, and mandatory correction of accounts. All enforcement actions are published, creating reputational risk.
Can we claim the de minimis exemption for SECR?
Only if total energy consumption was below 40 MWh in the reporting period. You must still state in the Directors' Report that you qualify for and are claiming this exemption. This provides relief for very low energy users while maintaining transparency.
Key SECR compliance points
Universal application
All UK quoted companies regardless of size, plus large unquoted companies and LLPs meeting the two-of-three test.
Energy focus
kWh consumption tracking across all sources - electricity, gas, transport fuel, other energy.
Public disclosure
Published in Directors' Report as part of statutory accounts filed at Companies House.
FRC enforcement
Civil sanctions for non-compliance including director disqualification and financial penalties.
Continue reading
Related guides & references
UK Sustainability Reporting Standards — complete guide
The complete reference covering UK SRS S1 and S2, the FCA CP26/5 listed-company regime, and the full UK ESG reporting landscape.
SECR Explained: How It Relates to ESOS and UK SRS
Comprehensive reference guide to SECR, its relationship to other UK energy regimes
ESOS Compliance Obligations
Energy auditing obligations that run alongside SECR reporting requirements
UK SRS S2: Climate-related Disclosures
How SECR energy data feeds into broader UK sustainability reporting requirements
SECR Templates & Calculation Tools (secr.quest)
Detailed templates, worked examples and calculation tools for SECR implementation