TCFD and SECR: How Climate Disclosures Are Converging

UK climate reporting is at an inflection point. For the past five years, SECR (Streamlined Energy and Carbon Reporting) has been the baseline mandatory requirement for most mid-sized and large UK companies—a straightforward framework focused on energy consumption and carbon emissions. Meanwhile, TCFD (Task Force on Climate-related Financial Disclosures) has established a more comprehensive climate reporting standard for the largest companies, covering governance, strategy, risk management, and metrics.

Now these frameworks are beginning to converge. As climate risks become increasingly material to financial performance, stakeholder expectations are rising, and regulatory direction signals that today's TCFD requirements for large companies may become tomorrow's expectations for all. For CFOs, sustainability directors, and forward-thinking business leaders, understanding this convergence is critical for strategic planning.

This comprehensive guide explains the relationship between TCFD and SECR, where UK climate reporting is headed, and how to prepare your business for expanded disclosure requirements.

Understanding the Two Frameworks

SECR: The Baseline Energy and Carbon Reporting

What is SECR?

Streamlined Energy and Carbon Reporting came into force in April 2019, requiring qualifying UK companies to report:

• Total UK energy consumption (kWh)
• Greenhouse gas emissions (Scope 1 and 2, in tCO2e)
• Intensity ratio (emissions per business metric)
• Energy efficiency actions taken

Who must comply?

Companies meeting two or more of:

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

This captures approximately 11,900 UK companies, including most mid-sized businesses and SMEs.

Where reported?

In the annual Directors' Report filed with Companies House.

Key characteristics:

• Backward-looking (reports historical emissions)
• Quantitative focus (numbers-driven)
• Operational scope (Scope 1 and 2 only)
• No governance or strategy requirements

Learn more in our comprehensive SECR guide.

TCFD: Comprehensive Climate-Related Financial Disclosure

What is TCFD?

The Task Force on Climate-related Financial Disclosures was established by the Financial Stability Board in 2015 to develop recommendations for climate-related financial risk disclosures. The UK mandated TCFD-aligned reporting from 2021-2022 for certain companies.

TCFD's four pillars:

1. Governance: Board oversight and management's role in assessing and managing climate risks
2. Strategy: Climate-related risks and opportunities, including scenario analysis
3. Risk Management: Processes for identifying, assessing, and managing climate risks
4. Metrics and Targets: KPIs, emissions (Scope 1, 2, and 3), and targets for managing climate risks

Who must comply?

Currently mandatory for:

• Premium-listed companies (UK stock exchange)
• Large private companies (500+ employees AND £500M+ turnover)
• Banks, insurers, and asset managers above certain thresholds
• AIM-listed companies (from 2024)

This currently affects approximately 1,300 UK entities.

Where reported?

In annual financial reports (for listed companies) or dedicated climate reports.

Key characteristics:

• Forward-looking (focuses on future risks and opportunities)
• Strategic focus (integrates climate into business strategy)
• Comprehensive scope (Scope 1, 2, and 3 emissions)
• Governance and risk management disclosure required

The Key Difference: SECR is "What," TCFD is "What, Why, and How"

SECR answers: "How much energy did we use and what were our emissions?"

TCFD answers: "How much energy did we use, what were our emissions, why does this matter to our business, what climate risks do we face, how are we managing them, and where are we headed?"

SECR is a compliance exercise. TCFD is a strategic disclosure.

Why These Frameworks Are Converging

1. Climate Risk is Financial Risk

The fundamental insight driving convergence is that climate change poses material financial risks to companies across all sectors, not just energy-intensive industries.

Physical risks:

• Extreme weather damaging facilities, disrupting supply chains
• Chronic changes (temperature, precipitation) affecting operations
• Resource availability (water stress, energy constraints)

Transition risks:

• Policy changes (carbon pricing, efficiency standards)
• Technology shifts (electrification, renewable energy)
• Market changes (customer preferences, investor pressure)
• Reputational risks (climate activism, litigation)

As these risks manifest, investors, lenders, and regulators increasingly view climate disclosure as essential financial information—not optional CSR reporting.

2. Investor and Stakeholder Pressure

Even if your company isn't yet TCFD-required, you likely face stakeholder expectations:

Investors: Institutional investors (pension funds, asset managers) increasingly require climate disclosure from portfolio companies, regardless of regulatory requirements.

Lenders: Banks are integrating climate risk into credit assessments, especially for real estate, agriculture, and infrastructure financing.

Customers: Corporate clients conducting supply chain due diligence ask suppliers about climate risks and emissions.

Employees: Talent attraction and retention increasingly depend on credible climate commitments, particularly for younger workers.

Insurers: Rising climate losses make insurers scrutinize clients' climate resilience and adaptation plans.

These pressures create a "market-led TCFD" even for companies not yet legally required to comply.

3. Regulatory Direction Signals Expansion

UK Government policy documents and consultations consistently signal intent to expand climate reporting requirements over time:

UK Sustainability Disclosure Requirements (SDR): The government is developing SDR aligned with the International Sustainability Standards Board (ISSB) standards, which build on TCFD foundations. SDR may eventually apply to all listed companies and large private companies.

FCA consultations: The Financial Conduct Authority has explored extending TCFD-aligned reporting to smaller listed companies.

Companies Act reform: Long-term discussions about modernizing UK corporate reporting include climate disclosure as a core component.

Alignment with international standards: The UK is committed to aligning with ISSB standards (which incorporate TCFD), suggesting UK requirements will evolve in parallel.

The direction is clear: what's required of large companies today will likely cascade to mid-sized companies tomorrow.

4. SECR as TCFD Foundation

Importantly, SECR and TCFD are not competing frameworks—SECR is the quantitative foundation upon which TCFD builds.

TCFD Pillar 4 (Metrics and Targets) includes emissions reporting that overlaps substantially with SECR:

• Scope 1 and 2 emissions ✓ (SECR requires this)
• Scope 3 emissions (SECR doesn't require, but TCFD does)
• Emissions intensity (SECR requires this)
• Climate-related targets (SECR doesn't require, but increasingly expected)

If you're already SECR-compliant, you've completed roughly 40% of TCFD Pillar 4. The additional work is Scope 3 emissions and forward-looking targets.

Mapping SECR to TCFD: Where They Overlap

Let's map SECR requirements to TCFD's four pillars to understand the relationship:

TCFD Pillar 1: Governance

TCFD requirement: Describe board oversight and management's role in assessing and managing climate risks.

SECR requirement: None explicitly, though someone must oversee SECR compliance.

The gap: SECR doesn't require governance disclosure, but establishing governance for SECR (e.g., "CFO responsible for SECR, reporting annually to Board") creates foundation for TCFD.

Convergence opportunity: Document your SECR governance now—you're already doing it, just not disclosing it.

TCFD Pillar 2: Strategy

TCFD requirement: Describe climate-related risks and opportunities, impact on business, and strategy resilience (including scenario analysis).

SECR requirement: Describe energy efficiency actions taken (limited forward-looking strategy).

The gap: SECR's energy efficiency narrative is tactical (what you did), while TCFD strategy is strategic (where you're going and why).

Convergence opportunity: Expand your SECR energy efficiency narrative to connect actions to broader business strategy (e.g., "LED upgrades reduce energy costs, improving margins and reducing exposure to future carbon pricing").

TCFD Pillar 3: Risk Management

TCFD requirement: Describe processes for identifying, assessing, and managing climate risks, and how these integrate with overall risk management.

SECR requirement: None.

The gap: SECR is purely retrospective reporting; TCFD requires forward-looking risk management processes.

Convergence opportunity: Use SECR data to identify climate risks (e.g., "Our emissions intensity analysis reveals heavy dependence on natural gas; transitioning to heat pumps would reduce exposure to future gas price volatility and carbon pricing").

TCFD Pillar 4: Metrics and Targets

TCFD requirement: Disclose key metrics (including Scope 1, 2, 3 emissions), intensity ratios, and targets for managing climate risks.

SECR requirement: Disclose energy consumption, Scope 1 and 2 emissions, and intensity ratio.

The gap: Scope 3 emissions and climate targets.

Convergence opportunity: SECR provides the core metrics. Adding Scope 3 (voluntarily in SECR or separately) and setting targets completes TCFD Pillar 4.

Summary: SECR is effectively a simplified version of TCFD Pillar 4. Companies doing SECR well are 30-40% of the way to TCFD compliance.

Preparing for Expanded Climate Disclosure: A Roadmap

Even if TCFD doesn't yet apply to your company, preparing incrementally positions you for future requirements and meets growing stakeholder expectations.

Phase 1: SECR Excellence (Year 1)

Objective: Establish robust SECR compliance with high-quality data and processes.

Actions:

• Implement reliable energy data collection across all sites
• Use automated tools (like Comply Carbon to ensure accuracy and efficiency
• Calculate intensity ratios that are meaningful for your business
• Document governance (who oversees SECR, how often reviewed)
• Write substantive energy efficiency narratives (not boilerplate)

Outcome: High-quality baseline emissions data and established processes.

Phase 2: SECR Plus (Year 2)

Objective: Extend SECR with voluntary disclosures that move toward TCFD.

Actions:

• Add Scope 3 emissions: Start with most material categories (business travel, purchased goods/services, employee commuting)
• Set emissions targets: Even simple targets demonstrate forward-looking strategy (e.g., "Reduce emissions intensity 25% by 2030")
• Enhance energy efficiency narrative: Connect actions to business strategy and risks (e.g., "Reducing emissions improves resilience to potential carbon pricing")
• Document governance formally: "Board reviews climate risks annually; CFO responsible for climate reporting"

Outcome: SECR-plus disclosure that demonstrates climate leadership and prepares for TCFD.

Phase 3: TCFD-Aligned Reporting (Year 3+)

Objective: Develop full TCFD-aligned climate disclosure.

Actions:

• Governance: Formalize Board-level climate oversight and management accountability
• Strategy: Conduct materiality assessment of climate risks and opportunities; consider scenario analysis (2°C vs. 4°C warming scenarios)
• Risk Management: Integrate climate risks into enterprise risk management framework
• Metrics and Targets: Expand metrics (Scope 1, 2, 3), set science-based targets, report progress annually

Outcome: Full TCFD-aligned disclosure, whether required or voluntary, positioning company as climate leader.

Incremental Investment, Cumulative Value

This phased approach avoids overwhelming your organization. Each phase builds on the previous, and all work remains valuable regardless of future regulatory changes.

Investment timeline:

• Year 1 (SECR): Minimal (£2-5k if automated; £15-25k if consultant-led)
• Year 2 (SECR Plus): Moderate (£5-15k for Scope 3 baseline and target-setting)
• Year 3+ (TCFD): Significant (£20-50k+ for full TCFD, depending on complexity)

By spreading investment over three years and building internal capability, the financial and resource burden is manageable.

Sector-Specific Convergence Trends

Different sectors face varying timelines and pressures for expanded climate disclosure:

Financial Services (Banks, Asset Managers, Insurers)

Status: Already TCFD-required for most firms above minimal thresholds.

Convergence driver: Financial regulators (PRA, FCA) prioritizing climate risk in supervision. Investors face TCFD requirements, creating supply chain pressure on investments.

Timeline: Full TCFD adoption now; focus is on improving Scope 3 (financed emissions) quality.

Real Estate and Property

Status: Largest property companies TCFD-required; mid-sized facing growing investor pressure.

Convergence driver: Physical risks (flooding, overheating) and transition risks (MEES regulations, EPC requirements) highly material. Tenants and buyers demand disclosure.

Timeline: Voluntary TCFD adoption accelerating; expect formal expansion within 3-5 years.

Retail and Hospitality

Status: SECR-compliant; TCFD required only for largest chains.

Convergence driver: Consumer expectations, supply chain pressure from large customers, physical risks to operations.

Timeline: Voluntary Scope 3 disclosure growing; TCFD likely for larger SMBs within 5 years.

Professional Services (Law, Consulting, Accounting)

Status: SECR-compliant; TCFD rare except Big 4 and largest law firms.

Convergence driver: Client procurement requirements (B2B climate due diligence), talent attraction, and reputational expectations.

Timeline: Voluntary SECR-plus disclosure growing; full TCFD driven by client demand rather than regulation.

Manufacturing and Logistics

Status: SECR-compliant; TCFD required for largest manufacturers.

Convergence driver: Supply chain pressure (corporate buyers requiring supplier emissions data), transition risks (carbon pricing, efficiency standards), physical risks (supply chain disruption).

Timeline: Scope 3 becoming essential; TCFD adoption likely to accelerate driven by B2B requirements.

Common Questions About TCFD and SECR Convergence

Q: If I'm already SECR-compliant, do I have to do TCFD separately?

A: If TCFD applies to you (currently: 500+ employees and £500M+ turnover, or listed company), yes—TCFD requires additional disclosure beyond SECR. However, your SECR emissions data feeds directly into TCFD Metrics (Pillar 4), so you're not starting from scratch.

Q: Can I just do TCFD and skip SECR?

A: No. If you meet SECR thresholds, SECR is a legal requirement regardless of whether you also do TCFD. However, TCFD disclosure satisfies SECR if it includes all SECR mandatory elements (which it should). Many large companies produce one integrated climate report that meets both SECR and TCFD.

Q: Should I voluntarily adopt TCFD even if not required?

A: It depends on your stakeholder landscape:

Consider voluntary TCFD if:

• You have institutional investors asking for climate disclosure
• You're approaching TCFD thresholds (e.g., 400+ employees, £400M+ turnover)
• Major clients/customers require climate risk disclosure
• You operate in sectors with high climate risk (real estate, agriculture, logistics, energy-intensive manufacturing)
• You want to demonstrate climate leadership for reputational/recruitment reasons

Probably not necessary yet if:

• You're a small/mid-sized company (under 250 employees, under £100M turnover)
• Stakeholders aren't requesting it
• You're in a low-climate-risk sector (though fewer sectors qualify as "low risk" every year)

A sensible middle ground: do SECR-plus (add Scope 3, set targets, improve governance disclosure) without full TCFD.

Q: What's the difference between TCFD and ISSB standards?

A: The International Sustainability Standards Board (ISSB) has built upon TCFD, incorporating TCFD's four pillars into IFRS S2 (Climate-related Disclosures). ISSB standards are more detailed and prescriptive than TCFD. The UK is aligning with ISSB through its Sustainability Disclosure Requirements (SDR), so think of ISSB as "TCFD 2.0"—an evolution, not replacement.

Q: Will SECR disappear when UK adopts ISSB standards?

A: Unlikely to disappear entirely, but may be absorbed or superseded. The UK Government has signaled that SDR (aligned with ISSB) may eventually replace or absorb existing climate reporting requirements like SECR for companies above certain thresholds. However, SECR is likely to remain the baseline for smaller companies not caught by SDR. Think evolution rather than revolution.

The Business Case for Getting Ahead

Why prepare for expanded climate disclosure before it's mandatory?

1. Risk Management

Physical and transition climate risks are real and growing, regardless of disclosure requirements. Conducting TCFD-style climate risk assessment helps you:

• Identify vulnerabilities (supply chain exposure, asset risk, regulatory exposure)
• Prioritize adaptation investments (resilience measures, transition planning)
• Avoid costly surprises (policy changes, market shifts, extreme weather)

Example: A UK food manufacturer conducting TCFD scenario analysis identified that 40% of raw material suppliers were in water-stressed regions. This prompted supplier diversification efforts that proved critical when drought in 2025 disrupted harvests.

2. Cost of Capital

Investors and lenders increasingly factor climate risk into valuations and lending terms. Companies with strong climate disclosure:

• Access lower-cost capital (green bonds, sustainability-linked loans)
• Attract ESG-focused investors (growing pool of capital)
• Avoid divestment (declining fossil fuel and high-carbon exposure appetite)

Example: A UK logistics company voluntarily adopted TCFD reporting and set science-based targets, qualifying for a sustainability-linked loan with interest rate 0.25% lower than standard terms—saving £300k annually on £120M borrowing.

3. Competitive Advantage

Climate disclosure differentiates you in competitive situations:

• Procurement (corporate tenders increasingly require supplier climate disclosure)
• Talent (climate commitments improve employee attraction and retention)
• Reputation (climate leaders gain positive media coverage and brand equity)

Example: A mid-sized UK consultancy voluntarily published TCFD-aligned climate report. This disclosure helped secure a major government contract where climate credentials were an evaluation criterion, worth £2M annually.

4. Operational Efficiency

The process of measuring and managing emissions reveals efficiency opportunities:

• SECR identifies high-consumption areas (lighting, HVAC, equipment)
• Scope 3 analysis highlights supply chain inefficiencies
• Target-setting drives continuous improvement

Example: A hotel group extending SECR to include Scope 3 (food and beverage procurement) discovered that 60% of their food carbon footprint came from beef. Modest menu changes (reducing beef, increasing plant-based options) cut food emissions 25% while maintaining guest satisfaction and reducing costs.

5. Future-Proofing

When (not if) expanded disclosure becomes mandatory, you'll be ready:

• No scrambling to establish processes under deadline pressure
• No sudden resource drain or consultant fees
• Smooth transition rather than disruptive compliance burden

Example: When TCFD became mandatory for AIM-listed companies in 2024, companies that had been voluntarily preparing completed disclosure in weeks, while those starting from scratch spent months and £50k+ on consultants.

Tools and Resources for the TCFD-SECR Journey

For SECR Compliance

• Comply Carbon: Automated SECR reporting in 10 minutes (complycarbon.com)
• UK Government GHG Conversion Factors: gov.uk/ghg-conversion-factors
• SECR Guidance: gov.uk/secr-guidance

For TCFD Preparation

• TCFD Knowledge Hub: tcfdhub.org (comprehensive resources and examples)
• TCFD Guidance: Official TCFD recommendations and supplemental guidance
• Science Based Targets initiative: sciencebasedtargets.org (for setting credible emission reduction targets)
• CDP (Carbon Disclosure Project): cdp.net (voluntary disclosure platform aligned with TCFD)

For Scenario Analysis

• Climate Scenario Analysis Tool: IEA World Energy Outlook scenarios
• Network for Greening the Financial System: ngfs.net (climate scenarios for financial risk assessment)

For Scope 3 Emissions

• GHG Protocol Scope 3 Standard: Detailed methodology for value chain emissions
• Scope 3 Evaluator: Online tool helping prioritize material categories

Key Takeaways: TCFD and SECR Convergence

• SECR is the foundation: Strong SECR compliance provides ~40% of what's needed for TCFD
• Convergence is underway: Regulatory signals, stakeholder pressure, and international standards alignment point to expanded climate disclosure for all large companies
• Incremental preparation is wise: Build from SECR to SECR-plus to TCFD over 2-3 years, avoiding overwhelming resource burden
• Climate disclosure is strategic: Goes beyond compliance—risk management, cost of capital, competitive advantage, and operational efficiency
• Start with governance: Document who oversees climate issues and how they're managed
• Add Scope 3 and targets: Two key gaps between SECR and TCFD that create biggest impact
• Voluntary disclosure is increasingly expected: Even if not legally required, stakeholders (investors, customers, employees) want climate transparency

Next Steps: From SECR to Climate Leadership

Ready to move beyond basic SECR compliance and prepare for expanded climate disclosure?

Immediate Actions (This Year)

1. Perfect your SECR: Ensure current SECR reporting is excellent—use our sample report as benchmark
2. Document governance: Who oversees SECR? How often reviewed by leadership/Board?
3. Set a simple target: Even "reduce emissions intensity 20% over 5 years" demonstrates forward-looking strategy

Medium-Term (Next 1-2 Years)

1. Calculate Scope 3: Start with most material categories (likely business travel and purchased goods/services)
2. Conduct basic risk assessment: What climate risks (physical and transition) affect your business?
3. Expand energy efficiency narrative: Connect actions to business strategy, not just operational details

Long-Term (3+ Years)

1. Adopt TCFD framework: Formalize disclosure across all four pillars (governance, strategy, risk, metrics)
2. Science-based targets: Set emissions reduction targets aligned with 1.5°C pathway
3. Integrate with strategy: Climate risk and opportunity assessment becomes core part of strategic planning

Start with SECR excellence using Comply Carbon—the foundation for everything that follows.

About Comply Carbon: We're the UK's leading automated SECR compliance platform, trusted by 200+ companies. We help businesses establish the robust emissions data and governance that form the foundation for expanded climate disclosure. Whether you're pursuing TCFD or simply want to future-proof your climate reporting, it starts with excellent SECR compliance—delivered in 10 minutes for £1,999.