SECR and carbon reporting for SMEs: who must report, how electricity becomes tCO2e, and where brokers can help with the data

Who actually has to report

Streamlined Energy and Carbon Reporting (SECR) came in through The Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, and applies to financial years beginning on or after 1 April 2019. It catches quoted companies, large unquoted companies and large LLPs. The disclosure sits inside the directors' report, or an energy and carbon report for an LLP, so it is filed at Companies House and visible to anyone who looks.

Most genuine SMEs are out of scope. That is worth saying plainly, because a lot of sales activity in this market implies otherwise. The catch is that "large" follows the Companies Act 2006 definition, and those size thresholds were uplifted for financial years beginning on or after 6 April 2025. A company is large if it exceeds two or more of: turnover of £54 million, balance sheet total of £27 million, 250 employees. Before the uplift the money figures were £36 million and £18 million, with the same headcount test. Some businesses that reported under SECR for years have dropped out as a result, and a few clients are still preparing reports they no longer need to file. Check the client's financial year start date before deciding which set of thresholds applies, and check the two consecutive years rule.

A low energy user exemption also exists. If a company in scope consumed 40,000 kWh or less across the whole reporting period, it can state that in the report rather than give the full disclosure. That threshold covers all energy, not just electricity, so a small office with a gas boiler and two vans can pass it faster than people expect.

For those in scope, the report needs UK energy use in kWh, associated greenhouse gas emissions in tonnes of CO2 equivalent, at least one intensity ratio, a narrative on energy efficiency measures taken during the year, the methodology used, and comparatives after the first year. Quoted companies report global scope 1 and 2 emissions. Large unquoted companies and LLPs report UK energy and emissions only, including transport where the company is responsible for the fuel. The detail sits in the DESNZ Environmental Reporting Guidelines.

Why smaller clients get pulled in anyway

SECR is not the only reason an SME is asked for carbon numbers. Large customers reporting their own scope 3 emissions push questionnaires down the supply chain, and lenders attach emissions data to green loan margins. Public sector procurement frequently asks bidders for a carbon reduction plan. None of that is regulated in the way SECR is, which makes it worse rather than better: requests arrive in different formats, with different boundaries and deadlines, and nobody is obliged to be consistent.

The practical position for a broker follows from that. Very few of your SME clients must file a SECR disclosure. Many of them will be asked for the same underlying numbers by someone who matters commercially, and those numbers all start with metered consumption that you already handle.

From kWh to tCO2e: the actual arithmetic

DESNZ publishes UK government conversion factors for company reporting each year, and the 2026 set is the current release, sitting alongside earlier years in the full collection. The rule of thumb is to use the factors published for the year in which the consumption occurred, not the year you happen to be writing the report.

The electricity section of the spreadsheet splits into three lines that people routinely confuse:

• Electricity: generation. The scope 2 figure, covering emissions at the power station for each kWh delivered to your meter.
• Transmission and distribution. Grid losses, reported under scope 3.
• Well to tank. Upstream extraction, refining and transport of the fuels burned to generate, also scope 3.

A worked example helps. The 2025 factor set put grid electricity generation at about 0.177 kgCO2e per kWh, down roughly 15 per cent on the 2024 figure of 0.20705, mainly because of less gas generation and higher net imports. A site consuming 250,000 kWh in that year produces 250,000 × 0.177 = 44,250 kgCO2e, which is 44.25 tCO2e once you divide by 1,000. Add the transmission and distribution and well to tank lines if you are reporting scope 3 as well. Gas works the same way, but check your unit: bills often show cubic metres, and the conversion to kWh depends on calorific value, which appears on the invoice.

Renewable tariffs raise two points. Under SECR and the GHG Protocol, the default UK grid average factor is the location based figure, and a green tariff does not change it. A supplier backed contract with Renewable Energy Guarantees of Origin certificates can support a market based figure of zero for purchased electricity, reported alongside the location based number rather than instead of it. Clients who have been told their electricity is "carbon free" often do not have the certificate evidence to back a market based claim, and that gap surfaces during audit.

Where the data usually falls over

Billed consumption is not the same as metered consumption. Estimated reads, long period catch up invoices and non half hourly sites with stale profiles all produce totals that do not line up with a financial year. Half hourly and advanced meter data from the data collector is the cleaner source, and the move to market wide half hourly settlement is gradually making settlement grade data available for smaller sites too. Elexon governs the codes and processes behind that data, and the meter operator or data collector is where you go when readings look wrong.

Other recurring problems: MPANs missing from the portfolio after a site closure or acquisition; landlord supplies at multi let sites double counted or omitted entirely; consumption reported gross when part of it is on site generation; and vehicle fuel cards left out because nobody thought of transport as energy.

Beyond SECR

Two neighbouring regimes matter. ESOS applies to large undertakings with 250 or more staff, or turnover above £44 million with a balance sheet above £38 million, with the phase 4 qualification date of 31 December 2026 and a compliance deadline of 5 December 2027. Separately, the Department for Business and Trade published UK Sustainability Reporting Standards S1 and S2 on 25 February 2026, based on IFRS S1 and S2 and currently available for voluntary use, with any mandatory application for listed companies still to be confirmed. Neither touches most SMEs directly, but both drive data requests downwards.

What a broker can do in the next month

• Run the size test for each client with a financial year starting after 6 April 2025, and tell any client who has slipped below the uplifted thresholds that they can stop filing.
• Check total annual energy against the 40,000 kWh low energy user threshold before anyone commissions a full report.
• Pull a twelve month, financial year aligned consumption dataset per MPAN and MPRN from data collector records rather than invoices, and flag estimated reads.
• Reconcile the site list against the client's fixed asset register so acquisitions, closures and landlord supplies are handled once, deliberately.
• Ask the supplier for REGO evidence where a green tariff exists, and keep it with the consumption file.
• Use the DESNZ factor set matching the consumption year, record the version you used, and keep the calculation in a form someone else can rerun.

Get those six things right and the emissions figure becomes arithmetic. Most of the cost and argument in carbon reporting sits in the data, which is the part brokers already touch every day.