SECR Worked. Now What? What the Government's Own Evaluation Means for Your Business

In January 2026, DESNZ published its formal evaluation of the Streamlined Energy and Carbon Reporting regulations. The headline: SECR cost businesses £3 billion from 2019 to 2025, but delivered £2.72 of benefits for every £1 spent.

On the surface, that looks like a clear policy win. Read further, and the picture shifts — the evaluation found that SECR’s impact peaked in 2021 and has been declining since.

This article breaks down what that means for your business, how to avoid the main reporting traps the evaluation highlights, and how to use SECR data to prepare for UK SRS and supply chain pressure.

Why the SECR evaluation matters to your business

If your company files SECR reports, you are already spending time and money on carbon data collection. The evaluation confirms that 79% of businesses put more carbon data into the public domain because of SECR, and 25% say SECR alone caused direct energy use reductions. Those are real results.

But the “diminishing impact” finding is the one that matters most. DESNZ found that the initial effect of SECR — forcing companies to measure for the first time — has levelled off. Businesses that were going to act on their data have already done so. The rest are filing compliant reports without changing anything.

This is not an academic concern. The evaluation feeds directly into the government’s SECR review, which will consider “reducing unnecessary duplication” with UK SRS — the new UK Sustainability Reporting Standards available for voluntary use since February 2026. The signal is clear: SECR is transitional, and something bigger is coming.

What the data actually shows

The evaluation covers the period from SECR’s introduction in April 2019 through to 2025. Three findings stand out for SMEs:

1. Measurement alone stops working

The evaluation found peak impact in 2021, two years after SECR began. By the time businesses had filed two or three reports, the act of measuring was no longer driving change. The initial shock of seeing your emissions on paper wears off.

If your SECR process is still just “collect, calculate, disclose”, you are in the part of the curve where impact is flattening.

2. The businesses that reduced emissions had something to compare against

The 25% of businesses that reported direct energy reductions were disproportionately those that:

• set internal energy or emissions targets, and/or
• compared their performance against industry benchmarks.

Measurement without context — without knowing whether your 50 tonnes is good, bad, or average for your size and sector — does not motivate action. The evaluation is explicit: benchmarking and target‑setting are what turn SECR data into reductions.

3. The compliance threshold disconnect is creating confusion

Companies Act 2006 “large company” thresholds were uplifted in April 2025, but SECR thresholds in the 2018 Regulations were not updated to match. Some companies that are no longer “large” under the Companies Act may still be in scope for SECR.

If you are near the threshold, check your status against the SECR‑specific criteria, not just your Companies House filing category.

Common mistakes when reading the evaluation

Mistake 1: Assuming SECR is going away immediately

It is not. The UK SRS framework is available for voluntary use, and the FCA proposes mandatory climate disclosures for listed companies from January 2027. But SECR remains a legal obligation for in‑scope companies until it is formally replaced. The review will take time.

For now, you should plan on continuing SECR reporting while gradually aligning your data model with UK SRS.

Mistake 2: Treating a declining footprint as proof of progress

This is the biggest trap in SECR reporting right now. The 2025 DESNZ conversion factors include a 14.5% reduction in the electricity emissions factor alone.

If your reported footprint dropped this year, part of that reduction is methodological — the factor changed, not your energy use. The evaluation’s “diminishing impact” finding may partly reflect this: apparent improvements that are not operational.

To avoid misleading conclusions:

• Track activity data (kWh, litres, miles) as well as emissions.
• Separate like‑for‑like comparisons (same factors) from methodology‑driven changes.

Mistake 3: Filing and forgetting

The evaluation makes clear that the businesses deriving value from SECR are those that use the data actively — for:

• procurement positioning,
• customer conversations, and
• operational cost reduction.

If your SECR report goes into a drawer after filing, you are bearing the cost without capturing the benefit.

Where carbon reporting goes next

The trajectory is visible. UK SRS S1 and S2 set out comprehensive sustainability disclosure requirements. The FCA proposes mandatory UK SRS S2 climate disclosures for listed companies from 2027, with Scope 3 and broader S1 requirements following on a “comply or explain” basis from 2028–2029.

For SMEs not directly in scope, the pressure comes through the supply chain. Large companies reporting under UK SRS will need Scope 3 data from their suppliers — that means your data. The VSME standard, currently in consultation until 3 June 2026, will likely become the template for those data requests.

The practical question is not “will I need to report?” It is “can I answer the questions my customers are about to ask?”

How CYF helps

CYF’s benchmark dataset means you can see how your emissions compare to other businesses in your sector — not just your own year‑on‑year change. This is the step the SECR evaluation identifies as missing: context.

A 50‑tonne footprint means nothing in isolation. A 50‑tonne footprint that is 30% below your sector average means you have a competitive advantage worth communicating to procurement teams.

CYF is built around UK frameworks — DEFRA/DESNZ conversion factors, SECR reporting requirements, and UK SRS data fields — so your data is structured for compliance today and ready for the transition to UK SRS when it becomes mandatory.

• Benchmark your footprint against peers by sector and size.
• Track both activity data and emissions, so you can explain changes driven by methodology.
• Map SECR data fields to emerging UK SRS S1/S2 requirements.

Read the full SECR evaluation report on GOV.UK, or book a demo to see how CYF benchmarks your carbon data against your sector.

Methodology guidance from Alice Roberts, Head of Methodology at Compare Your Footprint.