UK climate legislation: what each regime requires

Most large UK organisations now sit inside more than one climate regime at once, and the rules have moved since 2023. This guide covers the Climate Change Act, the UK ETS, SECR, climate-related financial disclosure, UK SRS, ESOS and the UK CBAM: who each one covers, what it requires, and when.

Last reviewed 29 July 2026. Each section names the instrument and carries the date of the version described. These regimes reach organisations directly, and they reach the suppliers and portfolio companies those organisations report on. Penalty levels and monetary thresholds change, so confirm any figure against the regulator's current guidance before you rely on it.

What does the Climate Change Act 2008 require?

The Climate Change Act 2008 sets the UK's legally binding target of net zero greenhouse gas emissions by 2050, added to the Act by the Climate Change Act 2008 (2050 Target Amendment) Order 2019. It works through carbon budgets covering five years each, set in law twelve years ahead, which cap total UK emissions for the period.

• Who it covers: the UK government rather than individual companies. Carbon budgets bind ministers, and the policy that flows from them is what reaches organisations.
• What it requires: successive caps on total UK emissions, plus advice and annual progress reporting from the Climate Change Committee.
• Where it stands: Parliament passed the Seventh Carbon Budget into law on 24 June 2026, setting a legally binding target of around 87% emissions reduction across 2038 to 2042, in line with the Committee's advice.

Who does the UK Emissions Trading Scheme cover in 2026?

The UK ETS covers electricity generation, energy intensive industry, aviation and, since 1 July 2026, domestic maritime. It started on 1 January 2021, replacing UK participation in the EU ETS. Government caps total emissions from the covered sectors, participants surrender allowances against their verified emissions, and allowances can be traded.

• Who it covers: electricity generators, energy intensive industrial installations, aviation, and ships of 5,000 gross tonnage and above on domestic voyages between UK ports, brought in on 1 July 2026.
• What it requires: monitoring, reporting and verification of emissions from covered installations, and surrender of enough allowances to cover them. Some participants receive free allowances, others buy at auction or on the secondary market.
• What has changed: free allocation for aviation ended on 1 January 2026. Energy from waste and incineration plants entered a monitoring and reporting period in 2026 ahead of full inclusion in 2028. The second free allocation period has moved to 2027.
• Link with the EU: the UK and the EU agreed in May 2025 to work towards linking the two schemes, which would allow mutual recognition of allowances. That link is not yet in force.
• Non-compliance: civil penalties apply to failures on permits, reporting and surrender. The Environment Agency publishes the current amounts.

What is SECR and which companies have to report?

Streamlined Energy and Carbon Reporting requires quoted UK companies of any size, plus large UK unquoted companies and large UK LLPs, to disclose energy use and greenhouse gas emissions in their annual report. It runs under the Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 and applies to financial years starting on or after 1 April 2019.

• Who it covers: every quoted UK company regardless of size, plus unquoted companies and LLPs that are large on the Companies Act two of three size test. Admission to AIM alone does not make a company quoted.
• What it requires: UK energy use, Scope 1 and Scope 2 emissions, at least one intensity ratio, the calculation methodology, a prior year comparative, and the energy efficiency action taken during the year. Quoted companies report on a global basis. Scope 3 is not required.
• Where it sits: the directors' report for companies, an energy and carbon report for LLPs. Both are filed publicly, so an omission is checkable.
• The trap worth knowing: the general Companies Act size thresholds rose for financial years starting on or after 6 April 2025, under the Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024. The SECR thresholds were not changed with them, so a company that has just become medium sized for accounts purposes can still be in SECR scope. Check your own position against current SECR guidance rather than assuming the two moved together.

Which UK companies must make climate-related financial disclosures?

The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 require large UK companies and LLPs to publish climate-related financial disclosures in their strategic report. The disclosures follow the four TCFD pillars: governance, strategy, risk management, and metrics and targets. The regulations came into force on 6 April 2022 and apply to financial years starting on or after that date.

• Who it covers: traded companies, banking companies, insurance companies and AIM companies above an employee threshold, plus other large UK companies and LLPs above both an employee and a turnover threshold. Read the figures out of the regulations themselves, because they are not the same as the SECR or ESOS tests.
• What it requires: how the board oversees climate risk, how climate risk affects the business model and strategy, the process for identifying and managing it, the targets used, and the metrics behind those targets.
• Status: in force and applying now. This is the regime that mandatory climate disclosure in the UK runs on today.

What are the UK Sustainability Reporting Standards?

UK SRS S1 and UK SRS S2 are the UK's sustainability and climate disclosure standards, based on the ISSB's IFRS S1 and IFRS S2. The Department for Business and Trade published the final standards on 25 February 2026. They are available for voluntary use and are not mandatory for any company yet.

• What S1 covers: sustainability-related risks and opportunities that could reasonably be expected to affect an organisation's cash flows, access to finance or cost of capital.
• What S2 covers: climate, including Scope 1, Scope 2 and Scope 3 emissions across the fifteen GHG Protocol categories, climate resilience and scenario analysis.
• Who it will cover: the Financial Conduct Authority has consulted on requiring companies in certain UK Listing Rule categories to report against UK SRS. Final rules had not been published when this page was reviewed on 29 July 2026, so treat any start date you see as proposed rather than settled.
• Why Scope 3 changes the work: UK SRS S2 is the first UK standard to ask for the full Scope 3 picture rather than energy and transport alone. That makes it a data question about other organisations before it is a reporting question.

What does ESOS require, and when is the phase 4 deadline?

The Energy Savings Opportunity Scheme requires large UK undertakings to assess their energy use every four years and notify the Environment Agency that they have complied. It runs under the Energy Savings Opportunity Scheme Regulations 2014. Phase 4 is the current cycle.

• Who it covers: large UK undertakings. Qualification is tested either on employee numbers alone or on turnover and balance sheet total together, which is not the same test SECR uses. Confirm the current figures against the Environment Agency's ESOS guidance.
• What it requires: an assessment of total energy consumption, identification of energy saving opportunities, an action plan, and annual progress reports against that plan.
• Phase 4 dates: the qualification date is 31 December 2026, and the compliance notification is due by 5 December 2027.
• Phase 3 is closed: the compliance deadline was 5 June 2024 and action plans were due by 5 March 2025. Progress reports fell due on 5 March 2026, with the next on 5 March 2027.

What is the UK CBAM and when does it start?

The UK carbon border adjustment mechanism is a charge on emissions embodied in certain imported goods, starting on 1 January 2027. Primary legislation sits in the Finance Act 2026, which received Royal Assent on 18 March 2026. Secondary legislation was still being laid when this page was reviewed.

• Who it covers: importers of aluminium, cement, fertiliser, hydrogen, and iron and steel goods, above a registration threshold measured over a rolling twelve month period. Take the threshold from HMRC's guidance rather than from a summary.
• What it requires: reporting the emissions embodied in covered imports and paying the charge, with an adjustment for any carbon price already paid in the country of origin.
• Why procurement should read this one: the charge depends on emissions embodied in what you buy, which turns emissions data at supplier level into a cost input rather than a reporting line. The EU runs its own CBAM on a separate scope and timetable, covered in our guide to EU climate legislation.

What is the UK Green Finance Strategy?

The Green Finance Strategy is government policy rather than a duty on companies. The current published version is Mobilising Green Investment, from March 2023, which sets out how the government intends to align private finance with the net zero target and fund the transition.

• Who it covers: government and regulators. The obligations that reach companies arrive through the separate instruments above, not through the strategy itself.
• What changed after it was published: the UK Infrastructure Bank, capitalised with £22 billion, became the National Wealth Fund on 14 October 2024 and received a further £5.8 billion. Any description that still refers to the UK Infrastructure Bank is describing a body that has been renamed and given a wider remit.
• Status: treat the 2023 strategy as the current published version and check for a successor before citing it.

Where does supplier and portfolio emissions data fit?

Every regime above that asks for emissions asks for numbers somebody else can check. SECR wants a stated methodology and a prior year comparative. UK SRS S2 reaches into all fifteen Scope 3 categories. The UK CBAM prices emissions embodied in goods you buy. All three run on data about organisations other than your own.

DitchCarbon provides verified emissions data for over 2 million organisations, so procurement, sustainability and finance teams can measure and act on supply chain and portfolio emissions from one source.

The DitchCarbon Portal calculator is verified to ISO 14064-3, limited assurance, by UL Solutions, renewed annually, and DitchCarbon was the first company to earn UL Solutions' Sustainability Information Calculator Verification, June 2025. The emission factor methodology for spend-based Scope 3 categories 1 and 2 was independently assessed by Globus Thenken in August 2025. Every figure carries its source and change history, so the numbers are auditable and a third-party auditor can follow them. Audit-ready here means verified to ISO 14064-3 with provenance attached, not a claim about what your own auditor will conclude. Both reports are in our trust centre.

Coverage arrives at a usable level quickly: a recent deployment reached about 60% of a large supplier base within 2 weeks.

If you are on the other side of the request, being asked for emissions data by a customer or an investor, you can claim your company profile and answer once with data other people can reuse.

Work out which of your suppliers and portfolio companies you can already report on

Reporting under any of these regimes starts with knowing where you already have defensible numbers and where the gaps are. See how DitchCarbon builds that coverage.

Sources

1. Climate Change Act 2008, legislation.gov.uk
2. Response to Parliament passing the Seventh Carbon Budget into law, Climate Change Committee, 24 June 2026
3. Participating in the UK ETS, gov.uk
4. UK government confirms major UK ETS expansions: maritime, waste and carbon removals to be phased in, International Carbon Action Partnership
5. The Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018, legislation.gov.uk
6. The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022, legislation.gov.uk
7. Exposure drafts of UK Sustainability Reporting Standards: consultation response, Department for Business and Trade
8. Energy Savings Opportunity Scheme (ESOS), gov.uk
9. Carbon Border Adjustment Mechanism, House of Commons Library
10. Green Finance Strategy, gov.uk
11. UK Infrastructure Bank becomes the National Wealth Fund, National Wealth Fund