Explainer
Carbon accounting is measuring your greenhouse gas emissions; carbon reporting is disclosing them. Here is how both work in the UK, which rules apply to whom, and how to build numbers that stand up to scrutiny.
By Christopher Fagan, Managing Partner, PEF Consulting Partners
Carbon accounting is the process of measuring an organisation’s greenhouse gas emissions, expressed in tonnes of carbon dioxide equivalent (tCO2e). In practice it means collecting activity data, such as kilowatt hours of electricity, litres of fuel, miles travelled or money spent, and multiplying it by emission factors, most often the UK government conversion factors for company reporting. The results are organised into scope 1, 2 and 3 under the GHG Protocol.
| Requirement | Who it applies to | What it asks for |
|---|---|---|
| Streamlined Energy and Carbon Reporting (SECR) | Quoted companies, plus large unquoted companies and LLPs meeting two of: 250 employees, £36 million turnover, £18 million balance sheet | UK energy use and scope 1 and 2 emissions (global for quoted companies), an intensity ratio, the method, efficiency actions and prior year figures |
| Climate related financial disclosures | Companies and LLPs with more than 500 employees that are traded, banking or insurance companies, or that have more than £500 million turnover | Eight TCFD aligned disclosures on governance, strategy, risk management and metrics |
| UK Sustainability Reporting Standards (UK SRS) | Voluntary standards issued in February 2026; listed companies report against them on a comply or explain basis for periods from 1 January 2027 | ISSB based sustainability and climate disclosures, including scope 1, 2 and 3 |
| Carbon reduction plans (PPN 006) | Suppliers bidding for central government contracts over £5 million a year | Net zero commitment, scope 1 and 2 plus five scope 3 categories, board sign off |
| ESOS | Large undertakings: 250 or more employees, or turnover over £44 million and balance sheet over £38 million | An energy audit covering at least 95% of energy use every four years, plus action plans |
Under SECR, a company that used 40 MWh or less in the year does not need to report the figures, but must say that it falls below the threshold.
A small business can produce a credible first footprint in a well structured spreadsheet. As data sources multiply, especially for scope 3, carbon accounting software helps with data collection, emission factors, audit trails and reporting. The best carbon accounting software is the one that fits your data and your reporting duties, so test it with your own data before you buy and check how it handles market based scope 2 and supplier specific scope 3 data.
A footprint is only useful if it changes decisions: where to cut energy, which suppliers to work with, and how to price carbon into investment. Tie the numbers to a reduction plan with owners and dates, and report progress the same way every year.
Related reading: free carbon footprint calculator, SECR reporting, sustainability assurance readiness, the carbon reduction plan template, ESOS Phase 4 explained.
Carbon accounting is measuring emissions. Carbon reporting is disclosing them, in an annual report, a carbon reduction plan or a sustainability report, in the format a rule or standard requires.
For many larger businesses, yes. SECR applies to quoted companies and to large unquoted companies and LLPs, and climate related financial disclosures apply to the largest. Suppliers to central government need carbon reduction plans for big contracts.
An unquoted company or LLP is large, and in scope, if it meets two of: 250 or more employees, more than £36 million turnover and more than £18 million balance sheet. All quoted companies are in scope.
Software that collects energy, travel, spend and supplier data, applies emission factors and produces footprints and reports, with an audit trail. It speeds up the work but does not replace a sound method.
If you need carbon numbers that a tender panel, lender or auditor will accept, we can help you set the boundary, gather the data and document the method.