Carbon Accounting 2025 Compliance Checklist for Businesses

The rules around carbon reporting are evolving quickly, and businesses need to stay on top of both current and upcoming obligations. From Streamlined Energy and Carbon Reporting (SECR) to the UK’s new Sustainability Reporting Standards (SRS) and the Carbon Border Adjustment Mechanism (CBAM), here’s what you need to know for the remainder of 2025 and beyond.

Matthew Jones
September 11th 2025

High-impact Carbon Reporting regulatory developments

Several major regulatory changes are on the horizon that will significantly impact how UK businesses collect, report and disclose their carbon data:

1. UK Sustainability Reporting Standards (UK SRS)

The UK is in the process of adopting its own sustainability disclosure standards to bring consistency and comparability to non-financial reporting. Here’s a timeline:

Draft standards published: Exposure drafts for UK SRS S1 and S2 were released in June 2025, based on international frameworks but with UK-specific adjustments.
Consultation period: The consultation is open until 17th September 2025, with final standards expected to be published in autumn 2025.
Phased implementation: Adoption is expected to begin on a voluntary basis from 2026, starting with listed companies. Smaller companies may follow later as requirements expand.
Disclosure timeline:
1. Year 1: Climate-related disclosures only (excluding Scope 3 emissions).
2. Year 2: Scope 3 emissions added.
3. Year 3: Wider sustainability disclosures, including biodiversity, social, and governance topics.
Integration with financial reporting: Businesses will be required to publish sustainability disclosures at the same time as their annual financial statements, ensuring transparency and alignment.

2. UK Carbon Border Adjustment Mechanism (UK CBAM)

Launching on 1st January 2027, the UK’s CBAM will apply a carbon price to certain imported goods, ensuring they face similar costs to domestic products manufactured under the UK’s carbon pricing rules. The first CBAM returns will be due in May 2028, covering the 2027 accounting year.

Sectors in scope: The mechanism will initially cover aluminium, cement, fertiliser, hydrogen, and iron and steel. Other sectors could be added later as the policy evolves.
Types of emissions: Importers will need to account for both direct emissions (Scope 1 – emissions from owned or controlled sources) and indirect emissions (Scope 2 – energy-related emissions from purchased electricity, heat, steam and cooling).
Data reporting options: Businesses can choose between reporting verified emissions data from suppliers or using government-issued “default values”. Verified data is likely to be more accurate, but default values will provide a fallback option.
Group reporting: Companies with multiple entities may be able to apply for group treatment, allowing a nominated representative to file CBAM returns on behalf of the whole UK group.

Current reporting requirements: Streamlined Energy and Carbon Reporting (SECR)

While new frameworks are being introduced, SECR remains the foundation of carbon reporting for many UK companies and provides a useful starting point. Here are some FAQs we’ve answered about SECR.

Who does SECR apply to?

SECR is mandatory for large UK companies and limited liability partnerships (LLPs) meeting set thresholds, though smaller businesses are encouraged to adopt its principles.

What must be reported under SECR?

Organisations must disclose their total energy consumption, greenhouse gas emissions (Scopes 1 and 2), and any energy efficiency measures taken during the financial year.

How is SECR reported?

Disclosures are made within the annual Directors’ Report, tying carbon data directly to financial reporting.

Why is SECR important?

SECR is not only a regulatory requirement but also a useful baseline for businesses preparing for the more detailed demands of UK SRS and CBAM.

2025 carbon compliance checklist

With overlapping frameworks and key deadlines approaching, at LWA, we thought it would be helpful to map out requirements and prepare your business for what’s coming next.

Carbon Report	Timeline / Status	Action Required
Streamlined Energy and Carbon Reporting (SECR)	Ongoing annually	Continue collecting data on energy use and emissions, and report within statutory accounts. Use this as the foundation for wider sustainability reporting.
UK Sustainability Reporting Standards (SRS)	Drafts released June 2025, consultation until September 2025, final expected Autumn 2025, phased adoption from 2026	Review the consultation drafts, prepare to align internal systems with the new standards, and plan for phased disclosure obligations.
UK Carbon Border Adjustment Mechanism (CBAM)	Effective 1st January 2027, first returns due May 2028	Assess whether your business imports in-scope goods, identify emissions data sources, and decide whether to use verified supplier data or government default values.
Group treatment & default values (CBAM)	Available from 2027	If part of a group, evaluate whether group reporting would be more efficient. Review data availability and decide on your reporting approach.

Carbon Reporting compliance tips for businesses

When it comes to Carbon Accounting, proactive preparation will help avoid compliance risks and create efficiencies in reporting.

Map your data flows – Identify where your energy and emissions data comes from and ensure it is collected consistently.
Prepare early for CBAM – Importers of in-scope goods should begin gathering emissions data from suppliers now, as retroactive reporting may prove difficult.
Track the UK SRS consultation – Consider submitting responses to the consultation and keep updated on the final requirements due later in 2025.
Upgrade reporting systems – Align sustainability and financial reporting systems to ensure both can be produced together.
Seek third-party assurance – Independent verification of data from a qualified firm will build trust and credibility with regulators, stakeholders, and customers.

Carbon Accounting expertise from LWA Accountants & Business Advisors

Carbon compliance is no longer optional and is becoming an integral part of financial and business reporting in the UK. By keeping your Streamlined Energy and Carbon Reporting (SECR) obligations up to date, preparing for the UK Sustainability Reporting Standards (SRS), and planning ahead for the UK Carbon Border Adjustment Mechanism (CBAM), your business will stay compliant while strengthening its sustainability credentials.

If you have any queries about carbon accounting or how these changes may affect your business, please contact Matt Jones, Innovation Lead at LWA, who will be happy to help, on 0161 905 1801 in our Manchester office, or you can email mail@lwaltd.com with ‘Carbon Accounting’ in the subject field.