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.

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1. The Overarching Framework: The Environment Act 2021

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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?

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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).

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What must be disclosed?

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Obligations vary based on the nature of the entity.

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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.

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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.

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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.

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Where to publish?

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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

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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.

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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. In September 2026, the FCA confirmed in its policy statement PS26/19 that listed companies will report against them under a comply-or-explain approach.

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.

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Find our complete guide to UK SRS here!
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What are UK SRS S1 and S2?

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The UK SRS comprises two complementary standards:

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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.

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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.

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

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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." The FCA adds a further requirement for listed companies: they must state whether they have published a transition plan and where it can be found, or explain why they have not. The FCA does not require a plan to exist, and sets no rules on its content or location.

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 — UK SRS S2 requires absolute gross Scope 1 and 2 emissions. Under the FCA’s final rules, listed companies must comply or explain which requirements they have not met, why, and what steps they are taking or plan to take.

• Scope 3 emissions — UK SRS S2 formally requires Scope 3 reporting, but provides a one-year relief from initial application. Listed companies using the relief must state so in their annual report, but do not need to explain why. Once it ends, Scope 3 falls under the same comply-or-explain approach as the rest of the standard.
  
  
• 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 GHG emissions to be measured in line with the GHG Protocol, using global warming potential values from the latest IPCC assessment report available at the reporting date. These specific methodology requirements add rigour compared with the TCFD framework.
  
  

For financial institutions applying UK SRS, S2 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. Note that asset managers, life insurers and pension providers are not required by the FCA to apply UK SRS, though they may cross-refer to UK SRS disclosures in their TCFD entity reports.

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What the FCA’s Final Rules Require

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The FCA is replacing its TCFD-aligned listing rules with rules based on UK SRS. Listed companies must include in their annual financial report:

• Climate disclosures under UK SRS S2 (including Scope 3), or a statement of the requirements not met, the reasons, and the steps taken or planned.
• Non-climate disclosures under UK SRS S1, or, where risks or opportunities have been identified but not disclosed, a statement listing them, the reasons, and the planned steps. Companies that have identified none must say so.
• Whether a transition plan has been published, and where, or why not.
• Whether third-party assurance has been obtained. If so, they must give the provider, the disclosures covered, the level of assurance, the standards used, and where the report can be found. Assurance itself is not mandatory.

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Disclosures can be placed in whichever section of the annual report the company chooses, with cross-referencing permitted.
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Who is Affected and When?

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The rules cover the same listing categories as the existing TCFD rules: commercial companies, the transition category, non-equity and non-voting equity shares, and now also international companies with a secondary listing and depositary receipt issuers. These last two report against UK SRS on a comply-or-explain basis and can rely on home-jurisdiction reporting where it meets UK SRS outcomes. Investment funds, shell companies and debt securities are out of scope.

UK SRS remains available for voluntary adoption by any entity. For listed companies, the path is now defined:

• January 2026: the FCA published a consultation (CP26/5), which closed on 20 March 2026.
• September 2026: the FCA published its final rules in PS26/19. It chose comply-or-explain across UK SRS rather than mandatory reporting.
• 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.

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The rules apply to accounting periods beginning on or after 1 January 2027, with a phased approach through two transitional reliefs: one year for Scope 3 and two years for non-climate (S1) disclosures. Early adopters can use these reliefs too.

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Summary Timeline (for a calendar-year company):

• Now: Voluntary use open to all entities.
• 28 October 2026: Deadline for feedback on the FCA’s draft guidance on how to comply or explain (Technical Note 803.1).
• 1 January 2027: The rules apply to the first accounting period. First reports are published in 2028.
• 1 January 2028: Scope 3 relief ends; Scope 3 is comply or explain.
• 1 January 2029: S1 relief ends; full comply-or-explain approach.
• TBD: Consultation on extension to private companies.

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What Companies Should Do Now

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1. Gap Analysis: For companies already under SECR or TCFD-aligned reporting, evaluate the gap between current disclosures and UK SRS requirements, specifically regarding Scope 3, scenario analysis, transition plans, and assurance.
2. Monitor Regulation: For listed companies, the FCA’s final rules are now published. Review its draft guidance on complying or explaining (Technical Note 803.1) before the 28 October 2026 feedback deadline.
3. Plan Your Position: Decide in advance what you will disclose, what you will explain, and whether you will use the Scope 3 and S1 reliefs.
4. Early Adoption: Companies that voluntarily adopt UK SRS ahead of 2027 can use the transitional reliefs when the rules start, and will be ahead of their peers in building investor and commercial trust.

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Relationship between UK SRS and TCFD

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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.

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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.

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International Convergence

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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.

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4. What Companies Should Do Now

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

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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.

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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.

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