Carbon accounting for UK SRS S2 — Scope 1, 2 and 3 practitioner guide
The practitioner guide to carbon accounting under UK SRS S2. GHG Protocol Corporate Standard methodology, DESNZ conversion factors, Scope 1 + 2 + 3 calculation and the value-chain assessment UK SRS S2 sets out. Plus the audit-ready evidence trail ISSA (UK) 5000looks for — a standard published for voluntary use, not a duty anyone is under.
The GHG Protocol Corporate Standard
The global methodology used by UK SRS S2, IFRS S2, ESRS E1, SECR, TCFD and most national reporting regimes. Three scopes, two consolidation approaches, seven greenhouse gases.
Scope 1, Scope 2, Scope 3 explained
The architecture every UK carbon accounting exercise uses. Scope 1 (direct), Scope 2 (purchased energy), Scope 3 (value chain across 15 categories).
- Scope 1 — Direct emissionsOwned or controlled sources
- Direct GHG emissions from sources owned or controlled by the company: fuel combustion in company vehicles, on-site combustion (boilers, furnaces, generators), process emissions, fugitive emissions (refrigerants, methane leaks). Calculated by multiplying activity data (litres of fuel, kg of refrigerant) by DESNZ emission factors 2. Mandatory under UK SRS S2 3, SECR and SI 2022/31.
- Scope 2 — Purchased energyIndirect from purchased electricity, heat, steam, cooling
- Two methods both required: location-based (using UK grid emission factor from DESNZ 2) and market-based (using residual mix factor where no contractual instruments, or supplier-specific factor where verified). UK SRS S2 3 follows GHG Protocol Scope 2 Guidance 4— both methods must be disclosed.
- Scope 3 — Value chain emissions15 GHG Protocol categories
- Upstream and downstream emissions across 15 categories per GHG Protocol Corporate Value Chain Standard 5. Upstream: Cat 1 purchased goods and services; Cat 2 capital goods; Cat 3 fuel and energy related; Cat 4 upstream transport; Cat 5 waste; Cat 6 business travel; Cat 7 employee commuting; Cat 8 upstream leased assets. Downstream: Cat 9 downstream transport; Cat 10 processing of sold products; Cat 11 use of sold products; Cat 12 end-of-life treatment; Cat 13 downstream leased assets; Cat 14 franchises; Cat 15 investments.
- Operational vs financial controlBoundary choice
- The GHG Protocol 1 allows two consolidation approaches. Operational control: include emissions from operations the company has authority to operate. Financial control: include emissions from operations consolidated in financial statements. Most UK preparers use operational control for emissions and financial control for connectivity to financial statements. Document the choice and apply consistently.
- The gases counted — six, plus NF3 by amendmentCoverage
- CO2, CH4, N2O, HFCs, PFCs and SF6 are the six gases the 2004 Corporate Standard covers; NF3 was added by the GHG Protocol's February 2013 'Required gases and GWP values' amendment. All are converted to tonnes of CO2-equivalent (tCO2e) using IPCC Global Warming Potentials (typically AR5 100-year GWPs unless stated). UK SRS S2 para 29(a)(ii) points at the Corporate Standard as at 2004; whether that frozen reference picks up the 2013 amendment is not settled in the Standard's text, so name the base edition and the amendment together rather than asserting a single number.
UK SRS S2 vs SECR — what changes
SECR has required Scope 1 + 2 since 2019. UK SRS S2 adds Scope 3 and significantly tightens every other dimension of carbon accounting.
Six-step UK SRS S2 carbon accounting process
From boundary definition to disclosure. Typically 6–12 months end-to-end for the first full Scope 1 + 2 + 3 exercise.
Typical first-time UK SRS S2 carbon accounting cycle
Companies starting from a SECR-only baseline typically need 12-18 months to reach UK SRS S2audit-readiness. The longest pole is Scope 3 — supplier engagement for Categories 1 and 11, business-travel data centralisation, and use-of-sold-products methodology development. If the FCA makes the rules it consulted on, they would bite for accounting periods beginning on or after 1 January 2027, with the first reports appearing during 2028 — so a programme started in 2026 is not late, but one started in 2027 would be.
What ISSA (UK) 5000 looks for
The FRC published ISSA (UK) 5000 on 12 November 2025 for voluntary use, and it codifies what an assurance provider looks for. Nobody is obliged to obtain assurance, but designing carbon accounting for audit-readiness is the cheapest path to credible disclosure.
- Source documentationFoundation
- Every reported data point traceable to source: utility bill PDFs, fleet management exports, travel-management reports, supplier-confirmed emissions, payroll records (for commuting). Sample-tested by an assurer under ISSA (UK) 5000 8 where one is engaged — and note that ISAE 3410 is being withdrawn, the IAASB having approved that in March 2025 with effect from ISSA 5000’s effective date 9. Missing source documentation is the most common assurance failure.
- Methodology logCalculation transparency
- Per-calculation log: emission factor source (DESNZ table 2, IEA, supplier), factor version and date, calculation formula, assumptions, estimation method (activity-based vs spend-based for Scope 3). Auditable trail from source data to disclosed metric.
- Boundary documentationScope
- Operational vs financial control choice documented. Consolidated entities listed. Joint ventures and associates treated consistently. Boundary changes vs prior year explained. Subsidiaries acquired/divested disclosed.
- Restatement policyComparability
- Documented restatement policy. Material restatements (typically >5% of prior reported figure) trigger restatement with explanation. Improvements in data quality, methodology changes, acquisition impact and boundary changes are common triggers.
- Internal controls + sign-off chainGovernance
- Role-based approval: data owner enters; reviewer validates; controller signs off; CFO/CSO authorises final disclosure. Documented in the company's internal control framework. Aligned with forthcoming Audit Reform expectations.
- Materiality assessment for Scope 3Scope justification
- Documented materiality screen for the 15 Scope 3 categories per GHG Protocol Corporate Value Chain Standard 5. Categories assessed against size of company spend, relevance to business model, stakeholder concern, and emissions intensity. Categories included AND excluded both explained.
Carbon accounting for UK SRS — frequently asked
What carbon accounting is, UK SRS S2 vs SECR, conversion factors, verification, and time to complete.
What is carbon accounting?
Carbon accounting is the systematic measurement, calculation and reporting of greenhouse gas (GHG) emissions associated with a company's activities.
Under the GHG Protocol Corporate Standard — the global methodology used by UK SRS S2, IFRS S2, ESRS E1, TCFD, SECR and most regulatory regimes — emissions are categorised across three scopes: Scope 1 (direct), Scope 2 (purchased energy) and Scope 3 (value chain across 15 categories).
How does UK SRS S2 differ from SECR on carbon accounting?
Three differences. (1) Scope coverage: SECR requires Scope 1 and Scope 2, and for large unquoted companies and LLPs one narrow Scope 3 limb — fuel consumed for the purposes of transport (SI 2008/410 Sch 7 para 20D(1)(b)); quoted companies have no SECR Scope 3 duty at all.
UK SRS S2 asks for Scope 1, Scope 2 and Scope 3, but para C4 of its transition appendix disapplies Scope 3 with no time limit, so for a voluntary applier the relief is indefinite until legislation or FCA rules close it. (2) Scope 3 depth: UK SRS S2 para B32 requires an entity to consider all 15 GHG Protocol categories and disclose which are included — consider is not report.
Comply-or-explain is not a feature of the Standard; it is the FCA's proposal in CP26/5, and CP26/5 para 4.8 says Scope 3 would stay on comply-or-explain even after the transitional reliefs end. (3) Connected information: UK SRS S1 paras 21–24 are headed 'Connected information' and require connections across the entity's reports, consistent data and assumptions, and a presentation currency matching the financial statements.
The word 'connectivity' appears nowhere in the Standard.
SECR sits in the directors' report, largely separate from the financial statements.
What conversion factors should UK companies use?
DESNZ (formerly BEIS) Greenhouse Gas Conversion Factors, updated annually each summer for use in reports.
The current versions are also referenced by UK SRS S2 and SECR.
For Scope 2 location-based calculations: UK grid emission factor from DESNZ; for market-based: residual mix factor or supplier-specific contractual instruments.
International operations use IEA country-specific factors or supplier-specific factors where verified.
Do I need to verify carbon accounting data?
No UK entity is under any legal duty to obtain sustainability assurance today.
SECR carries none — the government's own guidance says 'there is no statutory requirement to have your environmental information audited'.
Companies Act 2006 s.414CB imposes disclosure duties only.
UK SRS is not mandatory at all.
And CP26/5 para 7.5 says the FCA is 'not proposing to set mandatory requirements for the assurance of sustainability reporting at this time'; what it proposes instead (para 7.6) is a statement of whether assurance was obtained, with no reasons required if it was not.
The FRC published ISSA (UK) 5000 on 12 November 2025 for voluntary use by UK assurance providers: it is effective for engagements on sustainability information reported for periods beginning on or after 15 December 2026, or as at a specific date on or after that day, and earlier application is permitted.
ISAE 3410 is being withdrawn — the IAASB approved its withdrawal in March 2025, effective at ISSA 5000's effective date.
Practical implication: design data systems for audit-readiness from day one, because the commercial demand is real even though the legal duty is not.
How long does a first carbon accounting exercise take?
Scope 1 + 2: typically 3-6 weeks for a mid-market company with reasonably-organised utility data.
Scope 3: 4-12 months depending on value-chain complexity and supplier engagement maturity.
UK SRS S2 preparation usually requires software (Watershed, Persefoni, Sweep, Workiva, Climatise) above £100m turnover.
See our /carbon-reporting-software guide.
Continue across the related guides
From carbon accounting, continue to broader carbon accounting concept, GHG Protocol detail, software and UK SRS readiness.
Carbon accounting — concept guide
Definitional guide to carbon accounting methodology and history.
MethodGHG Protocol
The methodology underpinning carbon accounting under UK SRS S2.
StandardUK SRS S1 and S2
The UK standards published on 25 February 2026, voluntary today.
Scope 3UK SRS Scope 3 reporting
Scope 3 specific guidance under UK SRS S2.
SoftwareCarbon reporting software
Independent reviews of UK carbon platforms.
AdjacentSECR reporting guide
The current UK carbon-reporting regime UK SRS S2 builds on.
Related guides & references
Primary references
GHG Protocol, DESNZ, IFRS Foundation, DBT and IAASB cited throughout this page.