SECR for Group Companies: Consolidation and Reporting

Corporate group structures present unique challenges for SECR compliance. Parent companies must navigate complex consolidation rules, subsidiary exemptions, and inter-company transactions while ensuring accurate carbon reporting across the entire group.

If you're a group financial controller or holding company director responsible for SECR compliance, this comprehensive guide clarifies your obligations, explains consolidation principles, and provides practical strategies for multi-entity reporting.

Understanding Group Structures Under SECR

The Streamlined Energy and Carbon Reporting (SECR) framework recognizes that modern businesses operate through complex corporate structures. How SECR applies to your organization depends on whether you're a parent company, subsidiary, or stand-alone entity.

What Qualifies as a "Group"?

Under the Companies Act 2006, a group exists when one company (the parent) controls one or more other companies (subsidiaries).

Control is established when the parent:

• Holds a majority of voting rights in the subsidiary
• Is a member and has the right to appoint or remove a majority of the board
• Has the right to exercise dominant influence through provisions in the subsidiary's articles
• Is a member and controls alone a majority of voting rights through agreement with other shareholders

SECR Group vs. Financial Reporting Group

Critically, SECR reporting boundaries align with financial reporting boundaries under the Companies Act 2006.

Key Principle: If you prepare consolidated financial statements that include a subsidiary, you must include that subsidiary's UK energy consumption in your consolidated SECR report.

This alignment simplifies compliance—you don't need to establish a separate carbon reporting boundary. Your existing financial consolidation structure determines your SECR reporting scope.

Parent Company SECR Obligations

Parent companies at the head of a corporate group face the most comprehensive SECR obligations.

Who Must Report?

A parent company must prepare a group SECR report if it meets the qualification criteria:

Quoted Companies: All quoted companies (listed on London Stock Exchange Main Market, NYSE, NASDAQ, or equivalent) must report, regardless of size.

Large Unquoted Companies and LLPs: Must meet 2 out of 3 criteria for two consecutive financial years:

• More than 250 employees (group-wide)
• Turnover exceeding £36 million (group-wide)
• Balance sheet total exceeding £18 million (group-wide)

Critical Point: Thresholds are assessed on a group basis, not individual company basis. Even if the parent company alone is small, consolidated group figures may trigger obligations.

What Must Be Included?

Parent companies preparing group SECR reports must include:

Geographic Scope: Only UK energy consumption. Emissions from overseas operations are excluded.

Entity Scope: All entities included in the consolidated financial statements, covering:

• The parent company's own UK operations
• All fully consolidated subsidiaries' UK operations
• Proportionate share of jointly controlled entities' UK operations (if using proportionate consolidation in financial statements)

Emission Scope:

• Scope 1: Direct emissions from sources the group owns or controls in the UK
• Scope 2: Indirect emissions from purchased electricity consumed in the UK
• Energy consumption in kWh

Additional Requirements:

• At least one intensity metric (e.g., tonnes CO2e per £million revenue)
• Description of energy efficiency actions taken
• Year-on-year comparison with previous reporting period
• Methodology statement

For a complete view of standard SECR requirements, see our comprehensive SECR guide.

Consolidation Methodology

Parent companies must use the same consolidation approach for SECR as they use for financial reporting.

Financial Control Approach (Most Common)

Definition: You consolidate 100% of emissions from entities where you have financial control—the power to govern financial and operating policies to obtain economic benefits.

Application: If you prepare consolidated accounts including a subsidiary's results at 100%, you include 100% of that subsidiary's UK energy consumption in your group SECR report.

Example:

Parent Co Ltd owns 75% of Subsidiary A Ltd
Financial statements: Consolidate 100% of Subsidiary A's results
SECR reporting: Include 100% of Subsidiary A's UK energy consumption

Equity Share Approach (Less Common)

Definition: You consolidate emissions in proportion to your ownership stake.

Application: Rare for UK financial reporting and therefore rare for SECR. Only used when you apply equity method accounting.

Example:

Parent Co Ltd owns 40% of Associate B Ltd (equity method accounting)
SECR reporting: Include 40% of Associate B's UK energy consumption

The Practical Reality

Since Companies Act 2006 requires most groups to use full consolidation for subsidiaries where they have control, most UK parent companies will include 100% of controlled subsidiaries' UK emissions, regardless of ownership percentage below 100%.

Subsidiary Company Considerations

Subsidiaries within a group structure face different obligations depending on their size and the parent's reporting status.

Exemption Rules for Subsidiaries

A subsidiary company is exempt from preparing its own SECR report if:

1. Its parent prepares group financial statements that include the subsidiary, AND
2. The parent's group SECR report includes the subsidiary's UK energy consumption, AND
3. The parent's group directors' report (or equivalent) is publicly available

Practical Benefit: This exemption prevents double reporting. A subsidiary included in its parent's consolidated SECR report doesn't need to duplicate the disclosure in its own directors' report.

When Subsidiaries Must Report Separately

A subsidiary must prepare its own SECR report if it independently meets the qualification thresholds:

Scenario 1: Large Subsidiary with Small Parent

Parent Co Ltd: 100 employees, £10M turnover
Subsidiary Alpha Ltd: 300 employees, £50M turnover

Result: Parent doesn't meet thresholds (no group report required)
        Subsidiary meets thresholds independently → Must report

Scenario 2: Excluded from Group Report

Parent Co Ltd: Prepares group accounts but excludes Subsidiary Beta
(e.g., held exclusively for resale)

Result: Subsidiary Beta must prepare its own SECR report if it
        independently meets the thresholds

Scenario 3: Parent Doesn't Prepare Group Accounts

Parent Co Ltd: Uses equity method for all subsidiaries (no consolidation)

Result: Each subsidiary meeting thresholds must prepare its own report

Subsidiary-Specific Reporting Challenges

Allocated vs. Direct Energy Consumption

Subsidiaries often occupy shared facilities or receive centrally procured energy:

Shared Office Building:

• Parent and three subsidiaries occupy the same building
• One electricity meter serves the entire building
• How should consumption be allocated for separate subsidiary reports?

Best Practice: Allocate based on a reasonable, documented methodology:

• Floor space occupied (most common)
• Headcount
• Direct measurement via sub-metering (most accurate)

SECR Requirement: Document your allocation methodology clearly. The approach must be consistent year-on-year.

Intercompany Recharges

Many groups operate shared service centers where one entity purchases utilities and recharges others.

Example:

Parent Co Ltd pays all electricity bills
Recharges subsidiaries based on usage

SECR Treatment:
- Parent reports: Only its own consumption (if separately identifiable)
- Each subsidiary reports: Its own consumption (whether directly billed or recharged)

Critical Rule: Avoid double counting. If the parent includes a subsidiary's consumption in the group report, the subsidiary should not separately report that same consumption if claiming the exemption.

Joint Ventures and Associates

Joint ventures and associates add another layer of complexity to group SECR reporting.

Joint Ventures (Jointly Controlled Entities)

Definition: An entity where you share control with one or more other parties under a contractual arrangement.

Financial Reporting Treatment: Typically equity method (UK GAAP) or proportionate consolidation/equity method (depending on standard and choices made).

SECR Treatment:

If using proportionate consolidation in financial statements:

• Include your proportionate share of the JV's UK energy consumption
• Example: 50% ownership → Report 50% of UK consumption

If using equity method in financial statements:

• Generally not included in your SECR report
• The JV itself may need to report if it independently meets thresholds

Associates

Definition: An entity where you have significant influence (typically 20-50% ownership) but not control.

Financial Reporting Treatment: Equity method (single-line consolidation showing your share of profit/loss).

SECR Treatment: Generally not included in parent company group report. The associate may need to report independently if it meets thresholds.

Practical Example: Complex Group Structure

Holdings Ltd (Parent)
├── 100% Subsidiary A Ltd → Include 100% of UK consumption
├── 100% Subsidiary B Ltd → Include 100% of UK consumption
├── 75% Subsidiary C Ltd (consolidated) → Include 100% of UK consumption
├── 50% Joint Venture D Ltd (proportionate consolidation) → Include 50%
└── 30% Associate E Ltd (equity method) → Exclude

Holdings Ltd Group SECR Report includes:
- Holdings Ltd own UK consumption: 100%
- Subsidiaries A, B, C UK consumption: 100% each
- Joint Venture D UK consumption: 50%
- Associate E: Not included (may report separately)

Practical Implementation Strategies

1. Establish a Clear Reporting Boundary

Action Steps:

1. List all group entities from your consolidated financial statements
2. Identify UK presence for each entity (offices, facilities, operations)
3. Determine consolidation approach used in financial reporting
4. Document the boundary clearly for audit and compliance purposes

Output: A definitive list of which entities' UK energy consumption must be included in your group SECR report.

2. Centralize Data Collection

Group SECR reporting requires coordinating data collection across multiple entities.

Centralized Approach Benefits:

• Consistent methodology across all entities
• Reduced duplication of effort
• Easier year-on-year comparison
• Single point of quality control

Implementation Options:

Option A: Central Finance Team

• Group finance department requests utility data from all entities
• Central team calculates emissions and prepares consolidated report
• Best for: Groups with strong central finance function

Option B: Shared Reporting Platform

• Implement a central system where each entity inputs its own data
• Automated consolidation and calculation
• Best for: Larger groups with multiple reporting entities

Option C: Automated Solution

• Use a platform like Comply Carbon that handles multi-entity data collection, consolidation, and reporting
• Each subsidiary uploads utility bills; system automatically consolidates
• Best for: Groups seeking efficiency and accuracy

3. Address Common Data Challenges

Challenge 1: Missing Subsidiary Data

Problem: Overseas subsidiary operates UK facility but doesn't track energy consumption separately.

Solution:

1. Request utility bills directly from UK facilities
2. If centrally billed, work with accounts payable to identify UK-related invoices
3. For future years, establish clear data collection protocols

Challenge 2: Partial-Year Acquisitions/Disposals

Problem: Acquired Subsidiary F Ltd on 1 October 2024 (halfway through financial year ending 31 March 2025).

SECR Treatment:

• Include Subsidiary F in group report if consolidated in financial statements
• Include only the portion of the year under your ownership (Oct-Mar)
• Clearly disclose the acquisition and its impact on year-on-year comparisons

Year-on-Year Comparison:

• Following year (FY 2025/26): Show increase due to full-year inclusion
• Disclosure: "Emissions increased 15%, of which 8% reflects full-year inclusion of Subsidiary F Ltd acquired October 2024"

Challenge 3: Different Financial Year Ends

Problem: Parent financial year ends 31 December, but Subsidiary G has 31 March year-end.

Solution:

• For consolidated financial statements, you typically adjust subsidiary data to match parent year-end
• Apply the same principle to SECR: Use Subsidiary G's energy data for the period matching your group financial year (e.g., Jan-Dec 2024)
• This may require pro-rating or obtaining specific extracts from utility data

4. Implement Consistent Methodology

All entities within the group report must use:

Consistent Emission Factors: All entities use the same year's UK Government GHG Conversion Factors.

Consistent Calculation Approach: Same methodology for estimating missing data, allocating shared consumption, etc.

Consistent Scope: All entities apply the same understanding of what constitutes UK operations and which emission sources to include.

Documentation: Maintain a group SECR methodology document that all subsidiaries reference.

Intensity Metrics for Group Reports

Parent companies must include at least one intensity metric in their group SECR report.

Choosing Group-Level Metrics

The intensity metric should reflect the group's activities and allow meaningful comparison:

Common Options:

Tonnes CO2e per £million group revenue

• Most common choice
• Easy to calculate (uses data already in financial statements)
• Comparable across industries

Tonnes CO2e per employee (group-wide)

• Suitable for service companies where activity scales with headcount
• Requires accurate employee counts

Tonnes CO2e per square meter of floor space

• Suitable for groups with primarily office/retail operations
• Requires maintaining floor space data

Tonnes CO2e per unit produced

• Suitable for manufacturing groups with homogeneous output
• Requires production data tracking

Calculation Example

Group Structure:
- Parent Co Ltd: £10M revenue, 50 employees, 45 tonnes CO2e
- Subsidiary A Ltd: £25M revenue, 150 employees, 120 tonnes CO2e
- Subsidiary B Ltd: £15M revenue, 80 employees, 75 tonnes CO2e

Group Totals:
- Revenue: £50M
- Employees: 280
- Emissions: 240 tonnes CO2e

Intensity Metrics:
- Per £M revenue: 240 / 50 = 4.8 tonnes CO2e per £million
- Per employee: 240 / 280 = 0.86 tonnes CO2e per employee

Year-on-Year Comparisons with Changing Group Structure

Challenge: Comparing FY 2024/25 (after acquiring two subsidiaries) with FY 2023/24 (before acquisition).

Solutions:

1. Like-for-Like Comparison (Preferred)

• Restate prior year to include acquired entities as if they were part of the group
• Provides true operational performance comparison
• Example disclosure: "On a like-for-like basis, group emissions decreased 5%"

2. Reported Comparison with Disclosure

• Show reported figures (different scope each year)
• Clearly disclose impact of acquisitions/disposals
• Example: "Reported emissions increased 20%, of which 25% stems from acquisitions, representing a 5% like-for-like decrease"

3. Intensity Ratio Focus

• Highlight intensity metric which may normalize for size changes
• Example: "Whilst absolute emissions increased due to acquisitions, intensity improved from 5.2 to 4.8 tonnes CO2e per £million revenue"

Common Compliance Questions for Groups

Can a parent company prepare separate reports for different divisions?

Question: Our group has distinct divisions (e.g., Manufacturing Division, Retail Division). Can we prepare separate SECR reports for each?

Answer: No. SECR requires a single consolidated group report in the parent company's directors' report. However, you may voluntarily provide additional divisional breakdowns as supplementary information within or alongside the required report.

What if our parent company is overseas?

Question: We're a UK subsidiary of an overseas parent. Who reports?

Answer: It depends:

If overseas parent prepares UK-equivalent consolidated directors' report:

• Overseas parent may include UK subsidiary in group report
• UK subsidiary can claim exemption if included

If overseas parent doesn't prepare UK-equivalent report:

• UK subsidiary must report if it independently meets thresholds
• Assessment is based on UK entity alone, not worldwide group

If UK subsidiary is itself a parent of UK sub-subsidiaries:

• UK subsidiary (as intermediate parent) must prepare group report if it meets thresholds
• Include all its own UK subsidiaries

How do we handle confidential subsidiary operations?

Question: One subsidiary operates in a sensitive industry. Can we exclude it from the group report?

Answer: No. If the subsidiary is included in consolidated financial statements, its UK energy consumption must be included in the SECR report.

However: SECR requires group-level disclosure only. You don't need to break down emissions by subsidiary or name sensitive entities. Report consolidated group figures only.

Exception: If the subsidiary is legally excluded from financial consolidation (e.g., national security grounds), it would also be excluded from SECR.

What about offshore operations in UK waters?

Question: We operate oil platforms in UK territorial waters. Are these "UK operations"?

Answer: Yes. "UK" for SECR purposes includes:

• England, Scotland, Wales, Northern Ireland
• UK territorial waters (12 nautical miles from coast)
• UK continental shelf (for activities like oil/gas extraction)

Offshore energy consumption must be included if it occurs within UK jurisdiction.

Do we report emissions separately for parent and subsidiaries?

Question: The group SECR report is in the parent's directors' report. Do we also put disclosures in subsidiary directors' reports?

Answer:

If subsidiary claims exemption:

• Note in subsidiary's directors' report that it's exempt because included in parent's group report
• No need to repeat emissions data

If subsidiary reports independently:

• Full SECR disclosure in subsidiary's own directors' report
• Parent group report includes the subsidiary's UK consumption as part of group total

Multi-Jurisdiction Considerations

Many UK groups have overseas subsidiaries or are themselves owned by overseas parents.

UK Parent with Overseas Subsidiaries

Scenario: UK-based Holdings Ltd owns subsidiaries in France, Germany, and USA.

SECR Requirement:

• Report only UK energy consumption
• Overseas subsidiaries' emissions are excluded from SECR report
• However, maintain the same organizational boundary (include overseas subsidiaries in boundary, report only their UK activities if any)

Voluntary Disclosure: Many groups voluntarily disclose global emissions alongside SECR-compliant UK figures.

Overseas Parent with UK Subsidiaries

Scenario: USA-based Corporation Inc owns UK Subsidiary Ltd.

SECR Requirement:

• If UK Subsidiary meets thresholds independently, it must report
• If USA parent prepares equivalent directors' report including UK Subsidiary, exemption may apply
• US parent's own reporting requirements (e.g., SEC climate disclosure) don't replace SECR obligations

Brexit Implications

Post-Brexit, UK SECR remains distinct from EU requirements:

Energy Efficiency Directive (EED): EU requirement for energy audits; separate from SECR Corporate Sustainability Reporting Directive (CSRD): New EU requirement from 2024; doesn't replace UK SECR UK subsidiaries of EU parents: Still must comply with SECR for UK operations

Technology and Tools for Group Reporting

Effective group SECR reporting requires coordinated technology approaches.

Spreadsheet-Based Approaches

When Suitable: Small groups (2-3 entities) with straightforward structures

Limitations:

• Manual data entry errors
• Version control issues across multiple entities
• Time-intensive consolidation
• Difficult to maintain audit trail

Enterprise Sustainability Platforms

When Suitable: Large multinationals with extensive global reporting requirements

Features:

• Multi-jurisdiction compliance
• Scope 3 and supply chain emissions
• Integration with ERP systems

Limitations:

• High cost (£50k-500k+ implementation)
• Complex setup requiring consultants
• Often overkill for SECR-only requirements

Purpose-Built SECR Solutions

When Suitable: UK groups focused on efficient SECR compliance

Comply Carbon Approach:

• Multi-entity data collection with subsidiary access
• Automated consolidation following financial reporting boundaries
• Built-in UK Government conversion factors
• Group and subsidiary report generation
• Audit trail for all calculations

Benefits:

• Significantly faster than manual approaches (10 minutes vs. weeks)
• Lower cost than enterprise platforms (£1,999 vs. £50k+)
• Purpose-built for UK SECR requirements

Check if your group needs to comply and see a complete sample group report.

Future Developments Affecting Group Reporting

Mandatory Climate Disclosures

The UK is moving toward enhanced climate disclosure requirements:

Task Force on Climate-related Financial Disclosures (TCFD):

• Already mandatory for premium listed companies and large private companies
• Requires governance, strategy, risk management, and metrics disclosure
• SECR data feeds into TCFD Scope 1 and 2 metrics

Sustainability Disclosure Requirements (SDR):

• FCA proposals for asset managers and listed companies
• Would expand climate disclosure beyond current SECR
• Groups should prepare for enhanced reporting

Scope 3 Reporting Trends

While Scope 3 is not currently mandatory for SECR, increasing stakeholder pressure means many groups voluntarily report value chain emissions.

Group Scope 3 Considerations:

• Category 8 (upstream leased assets): If parent leases facilities to subsidiaries
• Category 13 (downstream leased assets): If parent owns buildings leased to third parties
• Category 15 (investments): If parent holds non-consolidated investments

Digital Reporting Requirements

Companies House is gradually moving toward digitally-filed, machine-readable reports.

Implication for Groups: Standardized tagging of SECR data may become required, making consistent methodology across group entities even more important.

Conclusion

SECR compliance for corporate groups requires careful attention to consolidation principles, clear organizational boundaries aligned with financial reporting, and coordinated data collection across all entities. Parent companies must take a leadership role in establishing methodology, collecting data, and ensuring consistent reporting across the group.

Key takeaways for group financial controllers and holding company directors:

1. Align SECR boundaries with financial reporting boundaries - use the same consolidation approach
2. Clearly document which entities are included and maintain a complete list of UK operations
3. Establish centralized data collection processes to ensure consistency and completeness
4. Apply consistent methodology across all group entities using UK Government conversion factors
5. Plan for acquisitions and disposals by establishing clear protocols for mid-year changes
6. Consider automated solutions to reduce manual effort and improve accuracy

Whether you're preparing your first group SECR report or refining an established process, understanding these consolidation principles ensures compliance while providing valuable insights into your group's environmental performance.

Need help with multi-entity SECR reporting? Comply Carbon's platform is specifically designed for group structures, with multi-entity data collection, automated consolidation, and audit-ready documentation—all delivered in a fraction of the time traditional approaches require.

This guidance reflects UK SECR requirements for corporate groups as of January 2026. Always consult current government guidance and your legal advisors for specific situations.