Introduction
The UK Government recently published its Post-Implementation Review (PIR) of the Streamlined Energy and Carbon Reporting (SECR) framework, fulfilling its statutory obligation to evaluate whether SECR has met its objectives, remains proportionate, and continues to be an appropriate mechanism for achieving policy goals.
This article provides an update to our earlier strategic guide to climate and sustainability reporting in the UK and considers what the PIR’s findings mean for businesses subject to SECR.
1. Aims and Scope of the PIR
The PIR was structured around four core questions: the extent to which SECR improved transparency on energy use and GHG emissions; compliance levels and the quality of disclosures; behavioural impacts, including changes in energy management practices and investor engagement; and costs and benefits.
The headline findings are broadly positive. Some 79% of businesses disclosed data they otherwise would not have published, and both behavioural and emissions impacts were observed. However, the PIR acknowledges an inherent limitation: SECR’s influence diminishes over time as reporting becomes routine and other frameworks gain prominence, highlighting the importance of complementary measures to sustain impact.
Interestingly, the PIR specifically flags that establishing whether a company is in scope of SECR can be complex. Due to complexities in establishing eligibility for SECR, much of the screening for whether a company was in or out of scope had to be conducted during the survey itself. This challenge will be familiar to many businesses, particularly those operating within complex group structures.
2. Has SECR Met its Objectives?
Transparency (Objective 1)
The PIR concludes that SECR has largely achieved its transparency objective, significantly increasing the amount of energy and carbon data in the public domain and providing a standardised reporting route through annual reports.
Lenders and investors who routinely extract information from statutory filings responded that they valued the accessibility and comparability of SECR-mandated data.
Nevertheless, the PIR identifies material limitations. SECR is backward-looking, with no forward targets or transition plans, limiting its strategic relevance when compared to frameworks such as TCFD and CSRD. Heterogeneous intensity metrics and limited verification further undermine comparability and confidence in data quality.
Whether these shortcomings will prompt amendments to SECR remains to be seen, but they are clearly identified as areas for improvement. A recurring theme in the PIR is that SECR is often treated as a compliance exercise rather than a driver of action: “One of the drawbacks for SECR is that it doesn’t mandate any action … people are just treating it as reporting without having to do any actual implementation.”
Internal Awareness of Energy Costs (Objective 2)
Evidence indicates that the awareness objective has largely been achieved: nearly half of surveyed organisations experienced increased internal awareness of energy use and emissions following SECR’s introduction. Embedding disclosures in the Directors’ Report has had the effect of elevating energy consumption and carbon emissions to board level.
That said, the PIR notes SECR’s backward-looking disclosures can be understood as foundational, providing the measurement and governance infrastructure on which more strategic, forward-looking approaches build. In this sense, SECR’s value lies in establishing the baseline data that is needed to underpin and give credibility to more ambitious sustainability commitments made under other frameworks.
Coverage and Consistency of Reporting (Objective 3)
On coverage, the picture is broadly positive, but non-compliance remains a slight concern.
On balance, the evaluation concludes that actual non-compliance is likely to be between 14% and 23%, with gaps more prevalent among private companies and LLPs. The evaluation notes enforcement challenges and highlights the need for clearer guidance on eligibility and group boundaries.
Proportionate reporting burden (Objective 4)
The PIR concludes that the reporting burden under SECR is generally manageable and proportionate, though higher than anticipated at policy design and uneven across organisations.
Complying with SECR requires on average 94 hours of internal staff time per year, equating to approximately £2,500 in internal labour costs; once external costs such as consultancy and audit fees are included, the total mean ongoing compliance cost rises to £7,100 per year.
A notable upside is that respondents highlighted that SECR data can be reused across a range of overlapping frameworks, including ESOS, TCFD, Carbon Reduction Plans, Climate Change Agreements, CSRD, and the UK ETS. However, duplication and inconsistency across frameworks – arising from variations in definitions, scope, and assurance requirements – continue to create time and effort overhead.
Reducing Energy Use and Emissions (Objective 5)
The evaluation’s analysis found evidence that SECR reduced electricity and gas use for in-scope businesses by around 4.5% in 2020 and 6.2% in 2021, with the impact in 2022 less clear, suggesting SECR’s influence may have lessened over time. On the cost-benefit picture, the central benefit-cost ratio (BCR) of 2.72 is better than the originally predicted BCR of 1.6, indicating better-than-expected value for money.
Since SECR’s introduction, the reporting landscape has evolved significantly, creating unintended duplication and complexity that the original Impact Assessment did not anticipate. Stakeholders emphasised the need for greater alignment with ISSB and CSRD to reduce duplication and maintain SECR’s relevance.
3. Looking Ahead: Possible Refinements to SECR
The overarching recommendation of the PIR is to retain SECR requirements with possibly some minor amendments, implementing targeted reforms to improve effectiveness, reduce duplication, and ensure coherence with the evolving reporting landscape. There is, in short, no suggestion that SECR will be removed or wound down.
The PIR identifies several areas where refinements may be made, and businesses should monitor these closely as the planned 2026 consultation on streamlining energy and emissions reporting takes shape:
- Alignment with forward-looking frameworks: Aligning SECR with frameworks such as ISSB and TCFD to enhance its strategic value and reduce duplication.
- Clearer guidance on eligibility and group boundaries: Updating the Environmental Reporting Guidelines to provide clearer definitions and practical examples, to reduce ambiguity for businesses – particularly those operating through complex structures.
- Standardised disclosure templates: Introducing a standardised template to improve consistency and comparability across disclosures.
- Expansion of digital solutions: Introducing centralised and/or digital filing.
- Targeted enforcement: The current model works better for quoted companies with stronger FRC oversight than for private companies and LLPs, where compliance gaps are more prevalent. The PIR raises the possibility of targeted communications to higher-risk cohorts, improved guidance signposting, and proportionate follow-up where omissions are detected in statutory reports.
4. How Bird & Bird Can Help
As SECR continues to evolve, and as its interactions with ESOS, TCFD, ISSB, CSRD, and the UK ETS grow ever more complex, so too does the importance of commercially-minded advice to stay ahead of regulatory obligations and anticipate what may come next.
Whether you need assistance with establishing SECR eligibility, navigating group reporting boundaries, understanding your current compliance position, or preparing for the forthcoming reforms, our market-leading ESG team is well-placed to help. If you would like to discuss your organisation’s sustainability reporting obligations, please get in touch with Andrew Dean or Hadrien Espiard.
For further information, please contact:
Andrew Dean, Partner, Bird & Bird
andrew.dean@twobirds.com
