More than 11,700 UK companies are legally required to publish energy and carbon data every year under the Streamlined Energy and Carbon Reporting framework. Most know it exists. Far fewer know whether they are actually caught by it. That gap is expensive.
The answer to whether SECR reporting is mandatory for your business depends on three thresholds, all of which must be met. Miss one and you are exempt. Hit all three and you must report. The problem is that the thresholds are not intuitive, and they reset every financial year.
What SECR Actually Requires
SECR stands for Streamlined Energy and Carbon Reporting. It replaced the older Carbon Reduction Commitment and folded climate disclosure into the directors’ report. The regime came into force for accounting periods starting on or after 1 April 2019.
If you are caught, you must disclose annual energy consumption in kilowatt hours, associated greenhouse gas emissions in tonnes of CO₂ equivalent, and at least one intensity metric that relates emissions to a business activity such as revenue or square metreage. You also need to describe the energy efficiency measures you have taken.
The disclosure goes into your directors’ report, which means it is public and filed at Companies House. It is not a separate return. That simplicity is deliberate, but it also means non-compliance is visible to investors, customers and regulators alike.
The Three Thresholds That Trigger SECR
Your business must meet all three of the following criteria in the relevant financial year. If you fail any single test, you are exempt.
Threshold One: Company Type
You must be a UK-incorporated quoted company, a large unquoted company, or a large limited liability partnership. Quoted means your equity shares are admitted to trading on a UK regulated market, the New York Stock Exchange, Nasdaq, or an EU-regulated market.
For unquoted companies and LLPs, “large” is defined by the Companies Act thresholds. You qualify as large if you meet at least two of these three tests: turnover exceeding £36 million, balance sheet total above £18 million, or more than 250 employees.
Threshold Two: Energy Consumption
Your UK energy use must exceed 40,000 kilowatt hours during the reporting period. That is roughly the annual consumption of three to four average UK homes, or a small office running year-round.
This threshold is surprisingly low. A single retail unit with lighting, heating and refrigeration can hit it. A logistics depot with cold storage will clear it comfortably. Even a modestly sized office with server racks and air conditioning is often over the line.
Threshold Three: Group Structure
If your business is part of a corporate group, the parent undertaking must prepare consolidated accounts. SECR applies at the group level for the consolidated entity, not separately to every subsidiary. Standalone subsidiaries below the size threshold do not report individually if the parent is already disclosing group-wide figures.
However, if your subsidiary qualifies as large in its own right and is not consolidated into a parent’s SECR disclosure, it must report separately. The rules are designed to avoid double-counting but they create edge cases that trip up mid-sized groups.
| Criterion | Quoted Company | Large Unquoted Company / LLP |
|---|---|---|
| Company type | Equity shares traded on a regulated UK, US or EU market | Meets 2 of 3: turnover over £36m, assets over £18m, over 250 employees |
| Energy use | More than 40,000 kWh per year in the UK | More than 40,000 kWh per year in the UK |
| Group structure | Consolidated accounts published | Consolidated accounts published (if applicable) |
Common Misunderstandings About the 40,000 kWh Threshold
The 40,000 kilowatt hour threshold is the one that causes the most confusion. It applies to total UK energy consumption, which includes electricity, gas, and transport fuel used in company-owned vehicles. It does not include employee-owned cars unless the company reimburses fuel directly.
Some businesses assume the threshold applies per site. It does not. If you operate three offices in the UK, each using 20,000 kWh per year, your combined total is 60,000 kWh and you must report. The aggregation happens automatically once you calculate group-wide energy use for Scope 1 and Scope 2 emissions.
Another common error is ignoring overseas energy. SECR only requires disclosure of UK energy consumption, but if your group consolidates accounts globally and you are already measuring energy for other frameworks, you may end up reporting more than the minimum. That is not a breach, but it does raise the bar for your data quality and assurance processes.
What Happens If You Do Not Comply
Non-compliance is not a minor administrative slip. If your business meets the thresholds and fails to include SECR disclosures in the directors’ report, Companies House can reject the filing. If the filing is accepted but the disclosure is incomplete or absent, the company and every officer in default can be prosecuted.
The statutory penalty is a fine. The maximum is unlimited in a magistrates’ court if the offence is tried summarily, and higher still in the Crown Court. In practice, prosecutions are rare, but regulatory scrutiny is increasing. The Financial Reporting Council has flagged poor SECR compliance in multiple thematic reviews, and enforcement action is a stated priority.
Beyond the legal risk, reputational damage is often worse. Investors, lenders and large customers now routinely check SECR disclosures. Missing or incomplete data signals weak internal controls, and that perception sticks. If you are bidding for public sector contracts, poor environmental reporting can disqualify you under the Social Value Act.
If you are not sure whether your business is over the line, we can run the calculation for you and tell you exactly what must be disclosed.
Exemptions and Edge Cases
There are a handful of genuine exemptions. Charitable companies are exempt even if they meet the size thresholds. Low-energy users below 40,000 kWh are also exempt, but you cannot selectively exclude sites to stay under the threshold. The calculation must reflect actual group-wide UK energy use.
Overseas subsidiaries of UK parents are not required to report their own energy under SECR, but if the UK parent consolidates those entities, the overseas consumption can still be voluntarily included. Some groups do this to align with CSRD reporting or investor expectations, but it is not mandated by UK law.
If your business was below the threshold last year but crosses it this year, the obligation starts immediately for the current reporting period. There is no grace period. Conversely, if you drop below the threshold, you are exempt from that year forward, though many businesses continue reporting voluntarily to maintain consistency and credibility.
How SECR Fits Into Wider Climate Reporting
SECR is the baseline. If you are a larger company or quoted on a premium listing, you also face the Task Force on Climate-related Financial Disclosures requirements. If you operate installations covered by the UK Emissions Trading Scheme, you have separate obligations under that regime. If you have significant EU operations, CSRD will shortly mandate far more detailed climate and sustainability reporting than SECR ever required.
The practical consequence is that SECR is rarely the hardest disclosure you will face. Most businesses that meet the thresholds are already collecting energy data for other purposes: utility bills, environmental permits, landlord reporting, or internal carbon accounting. The reporting burden is real but manageable if you have basic data hygiene. Where companies struggle is not the arithmetic but the internal sign-off, the intensity metric choice, and the narrative around energy efficiency actions.
If you are building a net zero roadmap, SECR data becomes the starting point for your baseline. If you are auditing supply chain emissions, the Scope 1 and Scope 2 figures you calculate for SECR feed directly into that exercise. The frameworks stack, which is why getting SECR right early saves time later.
Practical Steps to Determine Your Status
Start with the size test. Pull your most recent accounts and check turnover, total assets and headcount against the £36 million, £18 million and 250-employee thresholds. If you meet two of those three, you are large. If you are quoted, the size test is automatically met.
Next, gather twelve months of UK energy invoices. Include electricity, natural gas, heating oil, and fuel purchased for company vehicles. Convert everything to kilowatt hours using the conversion factors published by the UK government in its environmental reporting guidance. If the total exceeds 40,000 kWh, you are over the energy threshold.
Finally, confirm whether you are required to prepare consolidated group accounts. If yes, and if the group as a whole meets the size and energy tests, SECR applies. If you are a subsidiary within a group that is already reporting, check whether you are included in the parent’s disclosure. If not, you may still need to report individually.
Most finance directors can complete this assessment in under an hour if the data is organised. If it is not, that is the real problem, and it will not go away by ignoring SECR.
Why Voluntary Reporting Can Still Make Sense
If you fall just below the thresholds, you might assume you can forget about SECR entirely. That is technically correct but strategically short-sighted. Many mid-sized businesses are choosing to report voluntarily because customers, investors and supply chain partners are asking for the data anyway.
Voluntary SECR disclosure signals competence. It shows you can measure and manage carbon, and that you are not waiting for regulation to force your hand. It also future-proofs your reporting infrastructure. If you grow past the threshold next year, you will already have a year of baseline data and an established process. Starting from zero when the obligation suddenly kicks in is far more painful.
Some businesses also use voluntary SECR as a stepping stone toward more ambitious frameworks such as Science Based Targets or CDP disclosure. The data requirements overlap significantly, so the marginal cost of producing a SECR-style report when you are not legally required to is often negligible.
If you need help scoping out what SECR compliance looks like for your business, get in touch and we will walk you through it.
Frequently asked questions
Do I need to report SECR if my turnover is just under £36 million?
Only if you meet two of the three size tests. If your turnover is below £36 million but your balance sheet exceeds £18 million and you have more than 250 employees, you still qualify as large and must report if your energy use is above 40,000 kilowatt hours. The thresholds work together, not in isolation.
Does the 40,000 kWh threshold include electricity used by tenants in buildings I own?
No. SECR applies to energy you consume, not energy consumed by tenants unless you are responsible for the supply and the cost. If tenants have their own meters and contracts, their consumption does not count toward your SECR threshold. Landlord supplies in common areas do count.
What happens if I cross the threshold mid-year?
The obligation applies for the full financial year in which you cross the threshold. SECR does not prorate. If your year-end energy total exceeds 40,000 kWh and you meet the size tests, you must report for that entire period even if you were under the threshold for part of it.
Can I be exempt from SECR if I already report under the UK ETS?
No. SECR and the UK Emissions Trading Scheme are separate regimes with different disclosure requirements. Participation in the UK ETS does not exempt you from SECR, although the underlying emissions data will overlap significantly. Many businesses report under both.
