ESG Compliance & Reporting — SECR to Net Zero

Two groups. First, all quoted companies, which report their global energy use and greenhouse gas emissions. Second, large unquoted companies and large LLPs, which report their UK energy use and emissions. Large uses the SECR size test: you are caught if you meet at least two of three thresholds, more than 250 employees, turnover of more than 36 million pounds, and a balance sheet total of more than 18 million pounds. The disclosure goes in the directors' report (or an energy and carbon report for large LLPs) and is filed with your annual accounts at Companies House. There is one relief: a low energy user that consumes 40,000 kWh or less in the reporting period does not have to make the detailed disclosure but must state that it qualifies as a low energy user in its directors' report. These thresholds are verified against the UK government's environmental reporting guidelines as at 2 July 2026.

They are the three categories the GHG Protocol and the UK government's environmental reporting guidelines use to organise a company's greenhouse gas emissions. Scope 1 is direct emissions from sources you own or control, for example gas burned in your own boilers and fuel used in your own fleet vehicles. Scope 2 is indirect emissions from the energy you buy, principally purchased electricity, and also purchased heat, steam and cooling. Scope 3 is every other indirect emission across your value chain that you do not own or control, purchased goods and services, transport and distribution, business travel, waste, and the use of the products you sell, split into fifteen categories. For most businesses Scope 3 is by far the largest part of the footprint and the hardest to measure, which is exactly why it is the part large customers and public buyers ask about.

It can, but only for Scope 2, and only with honest caveats. Under the GHG Protocol's dual Scope 2 method you report two figures: a location-based figure using the average grid, and a market-based figure reflecting the electricity you have specifically contracted for. On-site solar or a well-structured power purchase agreement (PPA) reduces your market-based Scope 2 emissions, so yes, it counts towards that part of your target. Two things to be clear about. First, it does nothing for your Scope 1 fuel use or your Scope 3 value chain, which are often the bigger numbers. Second, the credibility depends on quality and additionality, a genuine on-site installation or a proper PPA is far more defensible than unbundled renewable certificates bought to flatter the figure. Build targets so a PPA counts where it genuinely should, and no further; that keeps the claim safe from a greenwashing challenge.

For major central-government contracts, the headline requirement is a Carbon Reduction Plan under Procurement Policy Note 006 (which updated the former PPN 06/21 to reflect the Procurement Act 2023). It applies to contracts with an estimated value above 5 million pounds per year including VAT, and the supplier must have, and publish, a Carbon Reduction Plan that confirms a commitment to net zero by 2050, states the current carbon footprint and sets out the measures to reduce it, in a set format. Beyond central government, selection questionnaires and PQQs from local authorities, NHS bodies, universities and large private buyers increasingly ask for your carbon footprint, your reduction targets, evidence of an environmental management system, and your policies on modern slavery and governance. The practical point is that ESG has become a gateway to winning work, not just a compliance chore, and a missing Carbon Reduction Plan can disqualify an otherwise winning bid. Verified against gov.uk as at 2 July 2026.

Not yet. The UK Sustainability Reporting Standards, UK SRS S1 and S2, are the UK's version of the ISSB's global baseline (IFRS S1 and S2). The government has finalised them and made them available for voluntary use, the gov.uk guidance was last updated on 25 February 2026, but has not made them mandatory. Government has said it will consider whether to require certain UK entities to report against them, and the FCA has since published policy statement PS26/19 (30 September 2026): certain listed issuers will report against UK SRS on a comply-or-explain basis for accounting periods starting on or after 1 January 2027. So the honest position as at 25 October 2026 is: finalised, voluntary for most companies, comply-or-explain for certain listed issuers from 2027, and not a general legal duty. Anyone telling you UK SRS is already compulsory is overstating it. Build reporting on the duties that bind you now, structured so adopting UK SRS later is an extension, not a rebuild.

They are related but not the same. SECR is a specific, mandatory disclosure of your energy use and carbon emissions in your annual accounts, it is a legal reporting duty with a filing deadline. ESG is the broad umbrella, environmental, social and governance, covering everything from carbon and climate to labour practices, diversity, supply-chain ethics and board governance, only some of which is currently mandated in law. Net zero is a target, a state where your remaining emissions are balanced by removals, which the UK has committed to reach by 2050 in statute and which individual companies set their own dated targets towards. In short: net zero is the destination, ESG is the whole map, and SECR is one specific report you must file along the way. A good programme connects all three so the report, the strategy and the target reinforce each other.