Key carbon reporting regulations in the UK

The United Kingdom has committed to an ambitious trajectory toward Net Zero by 2050. To achieve this, the British government has progressively built a regulatory framework centered on carbon reporting and corporate climate transparency.

This article reviews the primary applicable regulations, with a particular focus on SECR (Streamlined Energy and Carbon Reporting), the cornerstone of UK carbon reporting since 2019, and the UK Sustainability Reporting Standards (UK SRS), the next-generation framework adopted in February 2026.

‍

1. The Overarching Framework: The Environment Act 2021

‍

Before detailing specific reporting obligations, it is essential to note the legislative framework in which they operate. The Environment Act 2021 is a foundational piece of British environmental legislation. It enshrines the Net Zero 2050 target and introduces a series of binding environmental targets regarding air quality, biodiversity, and waste management.

To oversee the implementation of these objectives, the Act established the Office for Environmental Protection (OEP), an independent body responsible for investigating and enforcing environmental laws.

Specific corporate carbon reporting obligations sit within this strategic vision.

2. SECR: The Foundation of Carbon Reporting for Large Companies

What is SECR?

‍

Streamlined Energy and Carbon Reporting (SECR) is a UK regulation requiring concerned companies to disclose their energy use and carbon emissions. The reporting framework is designed to encourage the implementation of energy efficiency measures, which offer both economic and environmental benefits.

Introduced by the UK government in April 2019, SECR succeeded the Carbon Reduction Commitment (CRC). The objective is to integrate energy and carbon information into the annual reports of qualifying companies while simplifying reporting, reducing administrative costs, and encouraging the transition to a low-carbon economy.

Who is in scope?

SECR applies to two categories of companies:

• Quoted companies incorporated in the UK, regardless of size.
• Unquoted large companies incorporated in the UK and Large Limited Liability Partnerships (LLPs), defined as "large" if they meet at least two of the following three criteria: a turnover of £36 million or more, a balance sheet total of £18 million or more, or 250 employees or more.

A notable exemption exists: companies using less than 40,000 kWh during the reporting period are exempt from SECR requirements (the low energy user exemption).

‍

What must be disclosed?

‍

Obligations vary based on the nature of the entity.

‍

Quoted companies must include in their annual report:

• Total Scope 1 and Scope 2 GHG emissions.
• Global energy consumption and GHG intensity ratios.
• Energy efficiency actions taken during the year.

‍

For Unquoted large companies and LLPs, requirements are slightly narrower: they cover UK Scope 1 and Scope 2 emissions, UK energy consumption, an intensity ratio, and a description of energy efficiency measures implemented.

‍

In both cases, figures from the previous year must be provided for comparison to track performance trends over time.

Note that Scope 3 (indirect value chain emissions) is not mandatory under SECR. Its inclusion remains recommended but voluntary.

‍

{{newsletter-blog-3}}

Where to publish?

‍

SECR information must be integrated into the company’s official annual report, typically within the Strategic Report or the Directors' Report. It is not a standalone report.

Sanctions for Non-Compliance

‍

SECR is a statutory requirement. In cases of non-compliance, company directors can be held personally liable. Breaches are subject to fines. In practice, Companies House receives the annual reports and may flag failures to comply.

‍

3. UK Sustainability Reporting Standards (UK SRS): The New Reference Framework

On 25 February 2026, the Department for Business and Trade published the final versions of the UK Sustainability Reporting Standards (UK SRS S1 and UK SRS S2), available for voluntary use in the UK.

The UK government's stated objective in endorsing IFRS S1 and S2 is to support high-quality, decision-useful sustainability-related information and to promote international consistency in disclosures.

What are UK SRS S1 and S2?

‍

The UK SRS comprises two complementary standards:

‍

UK SRS S1 — General Requirements establishes the overarching framework for disclosing sustainability-related financial information. It requires entities to disclose material sustainability-related risks and opportunities — not just climate — that could affect their cash flows, access to finance, or cost of capital.

‍

UK SRS S2 — Climate-related Disclosures is the heart of the framework for climate teams. It details specific requirements for climate-related risks and opportunities, structured around four pillars inherited from the TCFD: Governance, Strategy, Risk Management, and Metrics & Targets. Because UK SRS S2 builds directly on the TCFD architecture, many organisations already have the core elements in place. What the UK SRS now requires is a deepening of disclosures — particularly around the quantification of transition actions, anticipated financial effects, and clearer connectivity to financial statements.

‍

A Deep Dive into UK SRS S2: What is Expected from Companies?

‍

1. Governance

Companies must describe their governance processes, controls, and procedures used to monitor, manage, and oversee climate-related risks and opportunities. This includes disclosing the role of the board and senior management in overseeing climate matters and how climate considerations are integrated into remuneration and incentive structures.

2. Strategy

This is where UK SRS S2 goes significantly further than TCFD. Companies must explain how climate-related risks and opportunities affect their business model, value chain, strategy, and financial planning — both in the short, medium, and long term.

A key requirement is climate scenario analysis: companies must assess the resilience of their strategy under different climate scenarios. Notably, UK SRS S2 does not specify particular scenarios for companies to use.

This contrasts with the previous TCFD rules, which required considering a 2-degree or lower scenario, giving companies more methodological flexibility but also more responsibility in justifying their choices.

On transition planning, UK SRS S2 only requires disclosure of a transition plan where one exists. It does, however, require disclosure of how a company "has responded to, and plans to respond to, climate-related risks and opportunities in its strategy and decision-making."

In other words, companies without a formal transition plan are not in breach, but they must still articulate their strategic response to climate change.

3. Risk Management

Companies must describe how they identify, assess, prioritize, and monitor climate-related risks. UK SRS S2 requires companies to consider climate-related opportunities as well as risks — a notable extension compared to the TCFD rules, which only required consideration of risks.

4. Metrics & Targets

This pillar contains the most technically demanding requirements. Companies must disclose:

• Scope 1 and 2 GHG emissions — mandatory under both current FCA proposals and full UK SRS S2 requirements.
  
  
• Scope 3 emissions — UK SRS S2 formally requires Scope 3 reporting, but entities reporting voluntarily may opt out, provided they disclose that they are doing so.
  
  The FCA has proposed replacing its TCFD-aligned rules with rules implementing Scope 3 emissions reporting under UK SRS S2 on a "comply or explain" basis, with specific requirements where a company chooses the "explain route": identifying the specific paragraphs of UK SRS S2 where it has not produced Scope 3 disclosures, and explaining the reasons for not making these disclosures.
  
  
• Climate-related targets: companies must disclose the targets they use to manage climate risks and opportunities, the metrics used to measure progress, and the base year from which progress is tracked.
  
  
• UK SRS S2 requires the usage of the latest IPCC assessment reports where possible when measuring GHG emissions — a methodology requirement absent from the TCFD framework.
  
  

For financial institutions specifically, the UK SRS adds financed emissions explanation requirements: entities must explain where they have not been able to comply with the financed emissions disclosure requirements, if they have determined that it is impracticable to estimate them reliably.

The explanation should detail the measurement approach taken and the plans to meet the full requirements in the future.
‍

Who is Affected and When?

‍

At this stage, UK SRS is available for voluntary adoption. However, the path toward mandatory reporting is clearly defined:

• January 2026: The FCA (Financial Conduct Authority) published a consultation (CP26/5) proposing amendments to the UK Listing Rules to mandate reporting against UK SRS for certain listed companies, with a phased approach starting January 1, 2027. This consultation closed on March 20, 2026.
  
  
• Future: The government has indicated it will consult on introducing provisions into the Companies Act 2006 to mandate UK SRS reporting for private companies as part of a broader program to modernize corporate reporting.

‍

Summary Timeline:

• Now: Voluntary use open to all entities.
• Autumn 2026: Publication of final FCA rules.
• January 1, 2027: Likely effective date for in-scope listed companies.
• TBD: Consultation on extension to private companies.
  ‍

{{newsletter-blog-3}}

‍

Relationship between UK SRS and TCFD

‍

Since UK SRS S2 is built directly on the TCFD architecture, many organizations already have the core elements in place. What UK SRS now requires is a "deep dive" into disclosures, particularly around the quantification of transition actions, anticipated financial effects, and better connectivity with financial statements.

‍

UK SRS vs. CSRD

For companies operating in both the UK and the EU, the interaction between UK SRS and CSRD (Corporate Sustainability Reporting Directive) is central. The frameworks differ on a fundamental point: the EU's CSRD uses a double materiality approach (impact on the company + impact on people/planet). The UK SRS adopts a financial materiality approach, aligned with the ISSB philosophy, focusing on information useful for investor decision-making.

‍

International Convergence

‍

By endorsing the ISSB standards, the UK joins a growing group of countries that have adopted sustainability reporting standards aligned with the ISSB, including Australia, Japan, Hong Kong, Canada, and Singapore. This global alignment enhances comparability across jurisdictions and reduces the risk of regulatory fragmentation.

‍

4. What Companies Should Do Now

‍

Whether you are already subject to SECR or anticipating UK SRS, several concrete actions are necessary:

‍

1. Gap Analysis: For companies already under SECR, evaluate the gap between current disclosures and future UK SRS requirements, specifically regarding Scope 3, scenario analysis, and transition plans.
   
   
2. Monitor Regulation: For listed companies, the FCA's final rules will define the definitive requirements.
   
   
3. Early Adoption: Companies that voluntarily adopt UK SRS in 2026 will be ahead of their peers and can strengthen the trust of investors and commercial partners before requirements become mandatory.

‍

SECR laid the foundations for transparency regarding energy use and direct emissions. The UK SRS raises the bar toward comprehensive, comparable, and financially relevant disclosure aligned with international standards. For CSR and Climate teams, the time for waiting has passed, the time for anticipation is now.

‍