How To Measure And Report On Your Company’s Carbon Emissions
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To measure and report your company’s carbon emissions, multiply activity data, such as kWh, fuel or miles, by the UK Government’s conversion factors for each year, set a baseline, then report annually. Scope 3, which includes employee commuting, is typically the largest share, and it's where electric car salary sacrifice through The Electric Car Scheme can help.
Why Do Carbon Emissions Matter?
Higher global temperatures raise sea levels and disrupt weather patterns, which threatens the safety and livelihoods of communities and habitats worldwide. Smaller businesses, which account for around half of all UK business emissions and 37% of the UK's total according to 2025 research by the British Business Bank, must begin the transition towards net zero. Reducing carbon emissions not only helps combat climate change but also appeals to customers.
Domestic transport was the UK’s largest emitting sector in 2024, at 30% of emissions. Provisional DESNZ estimates put domestic transport at 31% of UK emissions in 2025, up from 30% in 2024, so the way your employees travel is a large part of the national picture. Helping them switch to electric cars is one of the more direct ways a business can influence that share, because every electric car that replaces a petrol or diesel model removes tailpipe emissions.
The UK Government published the UK Sustainability Reporting Standards (UK SRS S1 and S2) for voluntary use, based on the International Sustainability Standards Board's global standards, and on 30 September 2026 the FCA published final rules (PS26/19) requiring in-scope listed companies to report against them on a comply-or-explain basis for accounting periods beginning on or after 1 January 2027. Smaller businesses aren’t required to follow the standards, but they set a clear baseline for what credible carbon emissions reporting looks like.
How To Measure Your Company’s Carbon Emissions
The first step in measuring your company’s carbon emissions is to calculate its carbon footprint, which includes the total greenhouse gas emissions from business operations. Establishing a baseline, typically using data from the previous year, is essential for tracking progress.
Streamlined Energy and Carbon Reporting (SECR) requires qualifying organisations to disclose energy use, Scope 1 and 2 emissions, intensity ratios and energy efficiency actions. Scope 3 commuting sits outside mandatory SECR but is increasingly expected, so measuring it now puts you ahead of any future requirement.
What Are The Three Scopes?
Businesses categorise emissions into three scopes. This is to help understand their carbon footprint and identify areas for reduction. The table below shows what each scope covers and where a salary sacrifice car may sit.
| Scope 1, 2 and 3 compared for company cars | What it covers | Typical examples | Where salary sacrifice cars may sit |
|---|---|---|---|
| Scope 1 | Direct emissions from sources you own or control | Gas heating, fuel for company vehicles | Possible where you hold the lease and control how the vehicle is used |
| Scope 2 | Indirect emissions from purchased electricity, steam, heat and cooling | Office electricity, EV charging at your own sites | Electricity you buy for workplace charging |
| Scope 3 | Other indirect emissions across your value chain | Purchased goods, business travel, employee commuting (Category 7) | Employee commuting in vehicles you don’t control |
Are Company Cars Scope 1, 2, or 3?
Company cars fall under different scopes depending on who owns the vehicles and how they're operated. Company-owned or leased vehicles your business controls are classified as Scope 1 (direct emissions) since you're directly responsible for fuel combustion.
However, employee-owned vehicles used for business purposes, including salary sacrifice schemes where employees lease the cars, typically fall under Scope 3 (indirect emissions) as these emissions aren’t directly under company ownership.
How To Calculate Scope 1 And Scope 2 Carbon Emissions
To calculate scopes 1 and 2, you’ll need to gather records of energy consumption over the course of a year. You’ll then need to convert the records into compatible units:
Gas and electricity: Measured in kilowatt-hours (kWh) on utility bills
Car travel: Measured in kilometres. If distances aren't tracked, sum fuel receipts and use a fuel calculator
The Carbon Trust’s SME Carbon Footprint Calculator is a helpful tool to use to convert the records.
To calculate the GHG emissions associated with each activity, you need to do the following calculation: Data x Emission Factor = GHG. You can then add the total GHG emission from each activity to reveal your company’s carbon footprint.
Use the UK Government's conversion factors for company reporting, published by DESNZ, as your emission factors, and choose the set that matches the year the activity took place. The 2026 factors, published on 11 June 2026 for activity in 2026, lowered the UK electricity factor by 26% and the factors for charging electric cars and plug-in hybrids by 23% to 26%. Note the factor year in your report and explain any movement in your Scope 2 figures between years.
How To Calculate Your Company’s Scope 3 Carbon Footprint
Calculating Scope 3 emissions can be challenging, yet they typically make up the largest share of a company’s footprint. Scope 3 emissions typically stem from activities involving assets not directly owned or controlled by the reporting organisation but still influenced indirectly within its value chain.
Businesses have options to use the Greenhouse Gas Protocol calculation guidance, which sets out methods for each of the 15 Scope 3 categories (such as purchased goods and services, transportation and distribution, and use of sold products), or enlist environmental consultants.
For most employers, employee commuting (Category 7) is one of the more practical Scope 3 categories to measure, because you can collect the data yourself. The Electric Car Scheme's annual impact report includes total committed mileage and the estimated CO₂e saved for employees in the scheme.
Identify Opportunities To Reduce Your Carbon Emissions
Reducing transport emissions means fuel-efficient vehicles, encouraging carpooling, and promoting remote work. Implementing an electric car salary sacrifice scheme at your company can support these efforts by encouraging the transition to electric vehicles for a larger portion of your workforce.
You don't need a fully electric fleet to make real progress. Even partial uptake, such as switching combustion cars to plug-in hybrids where full EVs aren't yet viable, can deliver measurable CO₂ reductions that you can record in your sustainability reporting.
Company car tax works differently from carbon reporting. A temporary HMRC easement treats the CO₂ figure of eligible plug-in hybrids first registered on or after 1 January 2025 as 1 g/km for tax purposes until 5 April 2028, so that figure shouldn’t appear in your emissions data.
Once you have completed your GHG emission reporting, highlighted areas of improvement and implemented changes, you need to track progress over time. Your wider benefits carry a footprint too, so check how green your benefits are alongside your workplace practices.
How Can Electric Car Salary Sacrifice Support Carbon Reporting?
Electric vehicle salary sacrifice schemes have become a popular benefit, allowing employees to lease EVs through pre-tax salary deductions while helping companies meet sustainability targets. The Electric Car Scheme takes this a step further by showing you an estimate of the CO₂e emissions avoided when employees choose electric cars. You'll get clear reports showing your estimated emissions avoided, which you can use in your sustainability reporting alongside your own activity data. This helps you show investors, customers, and employees the environmental progress you're making, rather than making promises about future goals.
Some employers offer plug-in hybrids alongside electric cars through a mixed fleet to give employees more choice. If you do, report the two separately, because plug-in hybrids aren’t zero-emission and use different DESNZ factors from battery electric cars. Dreams, which employs over 2,300 colleagues, introduced the scheme as part of its pledge to the British Retail Consortium Climate Action Roadmap.
What Do Employers Get From An Electric Car Salary Sacrifice Scheme?
Employers get protection, cost certainty and reporting support from the scheme.
Complete Employer Protection
At The Electric Car Scheme, Complete Employer Protection ensures employers are protected from day one. If an employer has to make redundancies or dismiss an employee, they can do this at any time without facing a fee. It also covers long-term sickness, loss of licence on medical grounds and death from day one, with no excess, and protects the employer from any shortfall if an employee resigns.
Cost-Neutral Benefit
The scheme has no net cost to your business to run. So, you can roll it out without affecting your bottom line. Employees can use the quote tool to see 200+ new and used electric cars by salary and lease terms.
Clear Reporting
We help you keep your HR, Finance and Tax affairs on track. Our automated monthly payroll, HMRC and climate reporting help you with compliance and minimise hassle. The Electric Car Scheme’s reporting tools include:
Automated monthly payroll reports
HMRC compliance documentation (P46 Car, P11D, P11D(b))
Clear BiK, National Insurance and VAT calculations
Carbon Emissions Reporting FAQs
Are Salary Sacrifice Cars Scope 1, 2 Or 3 Emissions?
It depends on who holds the lease and how you set your organisational boundary under the GHG Protocol. Vehicles your business leases and controls are generally reported in Scope 1, while emissions from employee commuting in vehicles you don't control sit in Scope 3, Category 7. Because scheme structures differ, agree the treatment with your carbon accountant before you publish figures.
Do UK Businesses Have To Report Their Carbon Emissions?
Not every business does. SECR requires qualifying organisations to disclose energy use, Scope 1 and 2 emissions, intensity ratios and energy efficiency actions, and the UK SRS were published for voluntary use in February 2026, with the FCA now requiring in-scope listed companies to report on a comply-or-explain basis for accounting periods beginning on or after 1 January 2027.
Are Plug-In Hybrids Zero Emission?
No, plug-in hybrids aren't zero-emission, because they produce tailpipe emissions whenever the petrol engine runs. Their official CO₂ figures come from type-approval tests that can differ from real-world use, so count reductions from actual fuel and electricity data or the DESNZ plug-in hybrid factors.
Which Emission Factors Should I Use For 2026 Reporting?
Use the DESNZ conversion factors for company reporting that match the year the activity took place, which for 2026 activity means the set published on 11 June 2026. That set lowered the UK electricity factor by 26%, partly because it reflects two years of grid change and a revised method.
Measuring and reporting on your company's carbon emissions is no longer only an environmental consideration. As stakeholders, investors, and customers prioritise sustainability, knowing how to measure and report carbon emissions across all three scopes provides the foundation for meaningful reduction strategies.
Electric vehicle salary sacrifice schemes like The Electric Car Scheme offer a dual-purpose solution: they provide a valuable employee benefit while helping to lower emissions from employee driving. With detailed emissions reporting, Complete Employer Protection, and a model with no net cost to your business, such schemes represent a practical step toward your sustainability goals.
See what an electric car salary sacrifice scheme could look like for your business, or speak to our team about building a carbon reduction strategy around electric vehicle adoption. Get a quote with The Electric Car Scheme to see 200+ new and used electric cars, the all-inclusive monthly payment and the monthly cost for your pay.
Tax rules and rates can change, and individual savings depend on personal circumstances. This guide isn't tax advice. HMRC's guidance on the tax treatment of company benefits is available on the official Government Website.
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Last updated: 27.10.2026
Information and prices provided are accurate at the time of release and may be subject to change. Our pricing is based on data collected from The Electric Car Scheme quote tool. All final pricing is inclusive of VAT. All prices above are based on the following lease terms: using a flat payment profile, 10,000 miles pa, 36 months, and are inclusive of Maintenance and Breakdown Cover. The Electric Car Scheme’s terms and conditions apply. All deals are subject to credit approval and availability. All deals are subject to excess mileage and damage charges. Prices are calculated based on the following tax saving assumptions: England & Wales, 40% tax rate. The Electric Car Scheme Limited provides services for the administration of your salary sacrifice employee benefits. The Electric Car Scheme Holdings Limited is a member of the BVRLA (10608), is authorised and regulated by the FCA under FRN 968270, is an Appointed Representative of Marshall Management Services Ltd under FRN 667174, and is a credit broker and not a lender or insurance provider.
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