Carbon compliance in the UK: what applies, when, and what follows

Carbon compliance is the set of UK rules that require a company to measure, disclose or pay for its energy use and greenhouse gas emissions. For most large companies that means SECR in the directors' report and ESOS energy assessments. Some installations are in the UK ETS, some importers will be liable to UK CBAM from 1 January 2027, and listed companies make TCFD-aligned disclosures today. UK SRS is a voluntary standard, which the FCA's final rules require listed companies in scope to report against, or explain, from 2027.

Three populations. Quoted companies of any size. Unquoted companies that do not qualify for the exemption in SI 2008/410 Schedule 7 paragraph 20B — in practice, those exceeding at least two of £36 million turnover, £18 million balance sheet total and 250 employees. And LLPs exceeding the same limits under SI 2008/1911 regulation 12B. These limits did not move when the Companies Act size thresholds rose on 6 April 2025.

Any UK undertaking that is large on 31 December 2026: it employs at least 250 people, or it has an annual turnover in excess of £44 million and an annual balance sheet total in excess of £38 million. Group undertakings are aggregated. Compliance must be notified to the Environment Agency by 5 December 2027.

For ESOS, the 2014 Regulations set civil penalties: up to £50,000 for failing to undertake an assessment, plus up to £500 per working day for up to 80 working days; up to £5,000 plus the same daily amount for failing to notify; and up to £50,000 for a false or misleading statement. SECR creates no penalty of its own; a non-compliant directors' report is caught by the Companies Act 2006, section 419.

They share one foundation: an energy and emissions inventory. Scope 1 and 2 figures and energy use populate the SECR disclosure; ESOS assesses the energy consumption behind them; and UK SRS S2 asks for gross Scope 1, 2 and 3 emissions for those who report against it. Building one inventory, with documented methods, avoids reporting three different numbers for the same business.

It does not become mandatory. UK SRS S1 and S2 were published by the Department for Business and Trade on 25 February 2026 for voluntary use. The FCA's final rules (PS26/19, 30 September 2026) require listed companies in scope to report against UK SRS on a comply-or-explain basis for accounting periods beginning on or after 1 January 2027, with first reporting in 2028, a one-year relief for Scope 3 and a two-year relief for UK SRS S1 on matters beyond climate. CP26/5, the consultation, had proposed mandatory UK SRS S2; the final rules did not adopt it.

Only for ESOS, where the assessment must be reviewed by a lead assessor on an approved register unless an exemption applies. No credential is legally required to prepare SECR figures. UK ETS emissions reports must be verified by a UKAS-accredited verifier, which is a verification body, not a consultant.

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