SECR Carbon Reporting
A Practical Calculation Guide for UK Companies
SECR Calculation Requirements
Energy Consumption
Gas, electricity, transport fuels in kWh with UK/overseas split
GHG Emissions
Scope 1 & 2 emissions in tCO2e using DEFRA factors
Intensity Ratio
Energy or emissions per unit of business activity
Calculation Foundation
SECR calculations follow the GHG Protocol Corporate Accounting and Reporting Standard. This guide focuses on the practical implementation challenges: which conversion factors to use, how to handle missing data, and how to treat complex corporate structures.
GHG Protocol Implementation for SECR
Organizational Boundaries
Equity Share Approach (Recommended)
Company accounts for emissions according to its equity share in each operation.
Example:
Manufacturing facility with 60% ownership → Include 60% of facility emissions
Calculation: Facility emissions (1,000 tCO2e) × Equity share (60%) = 600 tCO2e
✅ Advantages:
- • Consistent with financial reporting
- • Reflects economic interest
- • Suitable for joint ventures
Control Approach (Alternative)
Company accounts for 100% of emissions from operations under its control.
Financial Control
Ability to direct financial and operating policies (majority shareholding)
Operational Control
Authority to introduce and implement operating policies
⚠️ Considerations:
- • Can overstate emissions for minority stakes
- • May differ from financial consolidation
- • Control definition can be complex
Operational Boundaries: Scope 1 & 2 for SECR
Scope 1: Direct Emissions
Stationary Combustion
- • Natural gas boilers and furnaces
- • Oil heating systems
- • Biomass and coal combustion
- • Emergency generators (diesel/gas)
Mobile Combustion
- • Company-owned vehicles
- • Fleet cars and delivery vehicles
- • Construction equipment
- • Company boats and aircraft
Process & Fugitive
- • Refrigerant leakage (F-gases)
- • Industrial process emissions
- • Waste treatment on-site
- • Chemical reactions
Scope 2: Indirect Energy Emissions
Location-Based Method
Uses average emission factor for electricity grid where consumption occurs
UK Grid Factor 2023: 0.21233 kgCO2e/kWh
Market-Based Method
Uses emission factors from contractual arrangements (green electricity contracts)
SECR Requirement
UK companies should use location-based method unless they have specific contractual instruments (REGOs)
Using DEFRA Conversion Factors Correctly
Critical: Use Correct Version Year
Use conversion factors for the year of your reporting period, not the year of submission. For FY2023 emissions, use 2023 factors even if reporting in 2024.
Fuel Conversion Factors
| Fuel Type | Unit | 2023 Factor |
|---|---|---|
| Natural Gas | kWh | 0.18316 |
| Gas Oil/Diesel | litre | 2.69240 |
| Petrol | litre | 2.16763 |
| LPG | litre | 1.51095 |
Factors in kgCO2e. Full tables available at gov.uk/ghg-conversion-factors
Electricity Grid Factors
UK Grid Electricity
Common Mistake
Don't mix grid electricity factors with transmission & distribution (T&D) factors. T&D losses are automatically included in UK grid factors.
Overseas Operations
Use IEA country-specific factors for overseas electricity consumption. DEFRA provides these in their international factors spreadsheet.
Handling Complex Scenarios
Partial-Year Acquisitions and Disposals
Acquisition During Reporting Period
Example Scenario:
Company acquired on 1 July 2023 (6 months into FY2023)
Pro-rata calculation: If annual emissions were 1,200 tCO2e, include 600 tCO2e (6 months post-acquisition)
Best Practice:
Disclose the impact of acquisitions and disposals separately in your SECR narrative to aid year-on-year comparisons.
Practical Implementation
Data Collection Strategy
- • Request pre-acquisition emissions data for context
- • Identify billing period cutoffs (may not align with legal acquisition date)
- • Pro-rate based on business days, not calendar days
- • Document any seasonal adjustments needed
Reporting Considerations
- • State acquisition date clearly in SECR disclosure
- • Provide like-for-like comparison excluding acquisitions
- • Consider normalising intensity ratios for business size change
- • Flag any one-off integration costs (e.g., dual facilities)
Overseas Operations Reporting
Geographic Split Requirement
SECR requires separate disclosure of UK and overseas energy consumption and emissions.
What counts as "UK":
- • England, Scotland, Wales
- • Northern Ireland
- • UK territorial waters
- • NOT Channel Islands or Isle of Man
Conversion Factor Selection
Fuel Combustion
Use UK DEFRA factors for all locations (consistent methodology)
Electricity
Use country-specific grid factors from IEA data
Practical Challenges
Different Fiscal Years
Align overseas subsidiary reporting periods where possible
Currency Conversion
Use average exchange rates for the reporting period
Data Quality
Lower quality overseas data acceptable with disclosure
Missing Data and "Reasonable Estimates"
SECR "Reasonable Estimate" Standard
SECR regulations allow "reasonable estimates" where precise measurement is not possible. The key is documenting your methodology and ensuring materiality.
✅ Acceptable Methods:
- • Pro-rata from available months
- • Previous year data with activity adjustments
- • Benchmarking against similar sites
- • Engineering calculations
❌ Not Acceptable:
- • Ignoring material emissions sources
- • Using clearly outdated factors
- • No supporting rationale
- • Systematic underestimation
Materiality Assessment
5% Materiality Threshold
If missing data represents >5% of total emissions, enhanced estimation procedures required.
Documentation Requirements:
- • Reason for missing data
- • Estimation methodology used
- • Data sources for estimation
- • Uncertainty range (+/- %)
- • Actions to improve future data quality
Quality Assurance and Common Errors
Pre-Submission Checklist
Common Calculation Errors
Unit Conversion Mistakes
- • kWh ↔ MWh conversion (÷1000)
- • m³ gas → kWh (×11.2 for natural gas)
- • Litres ↔ gallons (×4.546 for UK gallons)
Boundary Issues
- • Including leased vehicles in Scope 1 vs 3
- • Business travel vs company cars
- • Tenant electricity in multi-occupancy buildings
Double Counting
- • Counting grid electricity AND renewable certificates
- • Including emissions in both acquired company and group
- • Counting fuel AND associated electricity generation
Verification Considerations
While SECR doesn't require third-party verification, many companies choose limited assurance to enhance credibility, especially when emissions are material to business operations or stakeholder decisions.
Benefits of Verification:
- • Enhanced stakeholder confidence
- • Improved data quality processes
- • Readiness for UK SRS requirements
- • Better investor ESG scores
Typical Verification Scope:
- • Data collection procedures
- • Calculation methodologies
- • Activity data and invoices
- • Management controls
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