SECR Legislation Changes 2026: What's New This Year?

The Streamlined Energy and Carbon Reporting (SECR) framework has been a cornerstone of UK corporate climate disclosure since it came into force in April 2019. While the core requirements remain stable—providing businesses with regulatory certainty—there are important updates for 2026 that compliance officers, finance directors, and company secretaries need to understand.

This comprehensive guide covers everything new in SECR for 2026, including conversion factor updates, enforcement developments, emerging best practices, and the evolving relationship between SECR and broader UK climate reporting requirements like TCFD.

Quick Summary: What's Changed in 2026?

Before diving into details, here's what's new for SECR reporting in 2026:

1. Updated GHG conversion factors (June 2025 release for 2026 reporting)
2. Enhanced Companies House scrutiny of SECR disclosures
3. Clarified guidance on Scope 3 voluntary reporting
4. Alignment signals with TCFD and ISSB standards
5. New materiality expectations for energy efficiency narratives
6. Increased market pressure for digital/API-based reporting
7. No fundamental legislative changes to SECR thresholds or scope (good news: your existing compliance processes remain valid)

The core SECR framework is unchanged—qualifying companies still report energy consumption, emissions (Scope 1 and 2), intensity ratios, and energy efficiency actions. However, the details of implementation and stakeholder expectations have evolved.

1. Updated GHG Conversion Factors for 2026

What Changed?

The UK Government publishes updated GHG conversion factors annually, reflecting changes in:

• Grid electricity carbon intensity (continues to decline as UK electricity becomes greener)
• Fuel combustion factors (minor updates based on latest scientific data)
• Well-to-tank emissions (upstream emissions from fuel production and transport)

For 2026 reporting periods (covering financial years ending between April 2026 and March 2027), companies must use the 2025 conversion factors published in June 2025.

Key 2025 Conversion Factor Highlights

Grid Electricity (Scope 2):

• 2025 factor: 0.193 kgCO2e per kWh
• 2024 factor: 0.207 kgCO2e per kWh
• Change: ~7% reduction, reflecting increased renewable generation and reduced coal/gas

This means companies with unchanged electricity consumption will automatically report lower Scope 2 emissions—this is expected and correct, reflecting the actual decarbonization of the UK grid.

Natural Gas (Scope 1):

• 2025 factor: 0.203 kgCO2e per kWh (gross CV basis)
• No significant change from 2024

Transport Fuels (Scope 1):

• Minor updates to factors for petrol, diesel, and alternative fuels
• New factors added for emerging fuels (HVO biodiesel, compressed biomethane)

What This Means for Your 2026 SECR Report

Action required:

• Download the 2025 UK Government GHG Conversion Factors (available from June 2025)
• Recalculate your emissions using 2025 factors, not 2024 factors
• Expect your Scope 2 emissions to decrease even if consumption stayed constant

Common mistake to avoid: Some companies mistakenly use outdated conversion factors. Companies House may query SECR disclosures that appear to use incorrect factors (identified through year-on-year emission trends inconsistent with known grid decarbonization).

Best practice for year-on-year comparison:

When reporting year-on-year emissions changes, note:

"Scope 2 emissions decreased 12% from 450 tCO2e (2024-25) to 396 tCO2e (2025-26). This reflects both a 6% reduction in electricity consumption due to LED lighting upgrades and the 7% decrease in UK grid carbon intensity. On a like-for-like basis (applying 2025 conversion factors to both years), emissions decreased 6%, consistent with our energy efficiency improvements."

This demonstrates sophisticated understanding and helps stakeholders separate your active improvements from grid decarbonization.

2. Enhanced Companies House Scrutiny

What's Changed?

Companies House has signaled increased scrutiny of SECR disclosures as part of broader efforts to improve the quality of corporate reporting following the Economic Crime and Corporate Transparency Act 2023.

Key developments in 2025-26:

• Automated flagging: Companies House is implementing automated checks to flag SECR disclosures that appear incomplete or implausible
• Rejection rates increasing: More accounts are being rejected for inadequate SECR reporting (still rare, but growing from <1% to approximately 2-3%)
• Follow-up queries: Companies may receive queries requesting clarification or amendment of SECR disclosures before accounts are accepted

What Triggers Companies House Scrutiny?

Based on rejection patterns, Companies House appears to flag:

1. Missing SECR sections entirely (when company clearly meets thresholds based on filed accounts)
2. Implausibly low emissions (e.g., 100+ employee office-based company reporting <5 tCO2e suggests data errors)
3. No intensity ratio provided (required by regulations)
4. No energy efficiency narrative (even a brief statement is mandatory)
5. Inconsistent year-on-year data without explanation (e.g., 500% emission increase with no context)

Best Practices to Avoid Rejection

Include all mandatory elements:

• ✓ Total UK energy consumption (kWh) by category (electricity, gas, transport)
• ✓ Scope 1 and Scope 2 emissions (tCO2e)
• ✓ At least one intensity ratio (with denominator clearly stated)
• ✓ Energy efficiency actions taken (even if brief)
• ✓ Methodology note (which conversion factors used)

Provide context for unusual results:

• Explain significant year-on-year changes (acquisitions, disposals, office relocations)
• Note any data quality limitations (e.g., "Electricity data for Property X estimated based on floor area due to landlord sub-metering unavailable")
• Flag first-year reporting (no prior year comparison available)

Use clear, standardized formatting:

• Dedicated SECR section in Directors' Report (don't bury in miscellaneous sections)
• Clear headings matching SECR requirements
• Tabular presentation of data (easier for human and automated review)

3. Voluntary Scope 3 Reporting Guidance

What's New?

While SECR only requires Scope 1 and 2 emissions, there's growing market expectation for Scope 3 disclosure (indirect emissions from value chain activities). In 2025, BEIS (Department for Business, Energy & Industrial Strategy) published updated guidance clarifying best practices for voluntary Scope 3 reporting within SECR.

What is Scope 3?

Scope 3 covers indirect emissions from sources you don't directly control, including:

• Upstream: Purchased goods/services, business travel, employee commuting, upstream transportation
• Downstream: Product use, end-of-life treatment, investments

For most UK SMBs, the most material Scope 3 categories are:

1. Purchased goods and services (40-70% of total footprint for many companies)
2. Business travel (flights, rail, hotels)
3. Employee commuting
4. Waste disposal

SECR Scope 3 Best Practice (2026)

If you voluntarily report Scope 3:

• Separate from mandatory SECR: Clearly distinguish mandatory Scope 1/2 from voluntary Scope 3
• Explain methodology: State data sources, estimation approaches, and boundaries
• Focus on material categories: You don't need all 15 GHG Protocol Scope 3 categories—focus on what's significant for your business
• Note limitations: Scope 3 data is often estimated—transparency about uncertainty is better than false precision

Example voluntary Scope 3 disclosure:

"In addition to our mandatory SECR reporting, the company has voluntarily estimated material Scope 3 emissions. Business travel (flights and rail) accounted for approximately 125 tCO2e, and employee commuting an estimated 200 tCO2e. These Scope 3 estimates are based on expense system data and employee surveys respectively and should be considered indicative. We plan to improve Scope 3 data quality through enhanced travel tracking systems in the coming year."

This demonstrates leadership without creating compliance risk through over-precise claims about uncertain data.

4. SECR and TCFD Alignment Signals

Background: What is TCFD?

The Task Force on Climate-related Financial Disclosures (TCFD) is a more comprehensive climate reporting framework covering:

• Governance: Board oversight of climate issues
• Strategy: Climate risks and opportunities, scenario analysis
• Risk Management: How climate risks are identified and managed
• Metrics and Targets: KPIs, emissions data, targets

TCFD is currently mandatory for:

• Premium-listed companies
• Large private companies (500+ employees and £500M+ turnover)
• Banks, insurers, and asset managers above certain thresholds

SECR is mandatory for a broader population (250+ employees or 50+ employees with £36M+ turnover).

How SECR and TCFD Are Converging

While SECR is not changing to require TCFD-level disclosure, regulatory signals suggest future alignment:

1. FCA consultations have explored extending TCFD to more listed companies
2. UK Sustainability Disclosure Requirements (SDR) being developed align with ISSB standards (International Sustainability Standards Board)
3. Government climate strategy documents reference eventual convergence of UK climate reporting frameworks

What This Means for 2026

If you're already TCFD-required:

• Your SECR disclosure can be cross-referenced to TCFD report
• Emissions data (SECR Scope 1/2 plus voluntary Scope 3) feeds into TCFD metrics

If you're only SECR-required (for now):

• No new obligations in 2026
• However, preparing for potential future TCFD is prudent if you're approaching thresholds (450+ employees, £400M+ turnover)
• Good SECR practice (robust data collection, governance, target-setting) makes future TCFD compliance easier

Future-Proofing Your SECR Compliance

To prepare for possible expanded climate reporting:

• Document governance: Note who oversees SECR compliance (e.g., "The CFO is responsible for SECR compliance, reporting to the Board annually")
• Set targets: Even simple targets demonstrate climate strategy (e.g., "The company aims to reduce emissions intensity 25% by 2030")
• Expand to Scope 3: Voluntary Scope 3 reporting prepares you for broader frameworks
• Assess climate risks: Informally consider physical and transition risks relevant to your business

This incremental preparation means you're not starting from scratch if TCFD or successor frameworks eventually apply to your company.

5. Energy Efficiency Narrative Expectations

What's Changed?

SECR has always required companies to describe "energy efficiency action taken in the financial year." However, 2026 guidance emphasizes materiality and specificity over generic boilerplate.

What NOT to Do (Generic Boilerplate)

Poor example:

"The company is committed to energy efficiency and continually seeks opportunities to reduce consumption."

This says nothing meaningful and may be flagged as inadequate.

What TO Do (Specific, Material Actions)

Good example:

"During FY2025-26, we completed LED lighting retrofits across our Manchester and Birmingham warehouses (580,000 kWh annual saving, ~£87k cost reduction). We also implemented building management system upgrades enabling automated HVAC scheduling, reducing out-of-hours energy use by 22%. Capital investment totaled £340k with projected 3.2-year payback. Future priorities include solar PV installation (planned Q3 2026) and fleet electrification business case development."

This demonstrates:

• Specificity: Named sites, quantified savings
• Financial materiality: Costs and paybacks
• Forward-looking: Future plans
• Accountability: Clear actions taken, not vague commitments

If You Haven't Taken Energy Efficiency Actions?

Be honest, but frame constructively:

"The company did not undertake significant capital investments in energy efficiency during FY2025-26. However, we conducted an energy audit of our head office identifying LED lighting, insulation improvements, and HVAC optimization as priorities for FY2026-27, with board approval for £200k capital allocation. We also implemented staff awareness campaigns promoting equipment switch-off and energy-conscious behaviors."

This shows:

• Honesty about limited action this year
• Active planning and governance
• Low-cost behavioral initiatives
• Commitment to future investment

Much better than meaningless boilerplate.

6. Digital Reporting and XBRL Tagging (Future Development)

What's Emerging?

While not yet mandatory, there's growing movement toward digital, machine-readable corporate reporting including climate data.

Key developments:

• ESEF (European Single Electronic Format): EU-listed companies already tag financial statements in XBRL
• UK exploring XBRL extensions for non-financial data including SECR and TCFD
• Investor pressure for API-accessible ESG data

What This Means for 2026

No immediate action required for most companies. SECR is still filed as part of PDF/iXBRL-formatted statutory accounts.

However, forward-thinking companies are:

• Structuring SECR data in databases/spreadsheets for easy extraction
• Using standardized terminology aligned with GHG Protocol
• Preparing for potential future XBRL tagging requirements

Platforms like Comply Carbon are building toward this future by storing emissions data in structured formats, making companies ready for digital reporting mandates when they arrive.

7. What Has NOT Changed (Important to Know)

Amidst the updates, it's equally important to understand what remains unchanged in 2026:

SECR Thresholds: Unchanged

Companies must still meet two or more of:

• 50 employees
• £36M turnover
• £18M balance sheet

No changes to these thresholds are planned. Some have speculated about lowering thresholds to catch smaller companies, but no legislative proposals exist.

Scope 1 and 2 Requirement: Unchanged

SECR still requires only Scope 1 and 2 emissions. Scope 3 remains voluntary (though increasingly expected by stakeholders).

Exemptions: Unchanged

The following remain exempt:

• Low-energy users (less than 40,000 kWh in the reporting period)—can report zero if they meet this threshold
• Companies with no UK energy consumption (offshore operations only)
• Subsidiaries included in parent company group SECR disclosure

Penalties: Unchanged

There are still no specific SECR fines. Enforcement is through:

• Companies House rejection of inadequate accounts
• General Companies Act penalties for non-compliant statutory reporting
• Reputational risk and stakeholder pressure

Compliance Checklist for 2026 SECR Reporting

Use this checklist to ensure your 2026 SECR disclosure meets current expectations:

Data and Calculations

• Gathered 12 months of energy bills covering your financial year
• Used 2025 UK Government GHG Conversion Factors (published June 2025)
• Calculated total energy consumption (kWh) by fuel type
• Calculated Scope 1 emissions (direct fuel combustion)
• Calculated Scope 2 emissions (purchased electricity)
• Calculated at least one intensity ratio (emissions per relevant denominator)
• (Optional) Calculated material Scope 3 emissions if voluntarily reporting

Disclosure Content

• Included all mandatory SECR elements in Directors' Report
• Provided year-on-year comparison (if not first year)
• Explained significant changes or anomalies
• Described specific energy efficiency actions taken (not generic boilerplate)
• Noted methodology and conversion factors used
• Clearly separated mandatory (Scope 1/2) from voluntary (Scope 3) reporting if applicable

Quality Assurance

• Cross-checked data against bills for accuracy
• Verified calculations (many errors come from formula mistakes in spreadsheets)
• Reviewed intensity ratio for plausibility (compare to prior year and sector benchmarks)
• Had disclosure reviewed by second person (accountant, company secretary, or compliance officer)
• Ensured SECR section is clearly labeled and easy to locate in Directors' Report

Filing and Compliance

• Included SECR in Directors' Report filed with Companies House
• Filed before statutory deadline (9 months after year-end for private companies, 6 months for public)
• Retained supporting documentation (bills, calculations, methodology notes) for audit trail
• (If applicable) Published SECR on company website for stakeholder access

How Comply Carbon Stays Current with SECR Changes

Comply Carbon automatically incorporates all SECR updates into our platform:

• Conversion factors updated annually: We integrate new UK Government factors as soon as they're published (June each year)
• Regulatory guidance monitored: Our compliance team tracks all BEIS, Companies House, and FRC guidance updates
• Report templates updated: SECR disclosure templates reflect current best practice and Companies House expectations
• Automated quality checks: Platform flags potential errors or missing data before you finalize reports
• 100% acceptance rate: Every Comply Carbon SECR report has been accepted by Companies House without query

When you use Comply Carbon, you're always compliant with the latest SECR requirements—no need to track regulatory changes yourself.

Looking Ahead: SECR Beyond 2026

While no fundamental SECR changes are imminent, the broader UK climate reporting landscape continues to evolve:

Possible Developments (Next 3-5 Years)

TCFD expansion: Possible lowering of TCFD thresholds to align with SECR population (bringing climate risk and governance disclosure to all SECR-reporting companies)

UK Sustainability Disclosure Requirements (SDR): Adoption of ISSB standards could create new UK climate reporting framework, potentially superseding or absorbing SECR

Scope 3 requirements: Possible mandatory Scope 3 for certain sectors or company sizes (likely for larger companies first)

Biodiversity and nature: Emerging frameworks (TNFD - Taskforce on Nature-related Financial Disclosures) may add nature-related reporting alongside climate

Digital reporting mandates: XBRL or similar machine-readable tagging for climate data

How to Prepare

• Maintain robust SECR compliance: Good SECR foundation makes any future requirements easier
• Build Scope 3 capability: Even if voluntary now, Scope 3 skills position you for future mandates
• Monitor thresholds: If you're growing toward 500 employees / £500M turnover, prepare for TCFD
• Engage with sustainability developments: Understanding evolving climate disclosure helps anticipate requirements

The direction of travel is clear: more comprehensive, more digitized, more integrated climate reporting. But SECR remains the foundation.

Key Takeaways for 2026

• Use 2025 conversion factors (published June 2025) for all 2026 reporting periods
• Expect lower Scope 2 emissions due to grid decarbonization—this is correct
• Provide specific energy efficiency narratives—generic boilerplate may be questioned
• Anticipate Companies House scrutiny—ensure all mandatory elements are included
• Consider voluntary Scope 3—increasingly expected by stakeholders
• No fundamental SECR changes—thresholds, scope, and core requirements unchanged
• Monitor TCFD/SDR developments—broader climate reporting is evolving

Resources for Staying Current

• UK Government GHG Conversion Factors: gov.uk/ghg-conversion-factors (updated annually)
• BEIS SECR Guidance: gov.uk/secr-guidance
• Companies House: companieshouse.gov.uk
• GHG Protocol: ghgprotocol.org (methodology underlying SECR)

Get Compliant with 2026 SECR Requirements

Ready to ensure your 2026 SECR reporting meets the latest regulatory expectations?

1. Check if SECR applies: Use our compliance checker
2. See what compliant reporting looks like: Review our sample SECR report
3. Learn the fundamentals: Read our comprehensive SECR Guide
4. Get compliant in 10 minutes: Upload your energy bills to Comply Carbon for automated, up-to-date SECR reporting using the latest 2025 conversion factors

Comply Carbon automatically updates with every regulatory change, ensuring you're always compliant without tracking legislation yourself.

About Comply Carbon: We're the UK's leading automated SECR compliance platform, serving 200+ companies with a 100% Companies House acceptance rate. Our platform is continuously updated with the latest conversion factors, regulatory guidance, and best practices—so you're always compliant with current SECR requirements. Save £13,000+ on average vs. consultants and get your compliant report in 10 minutes.