How To Measure And Report On Your Company’s Carbon Emissions
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The steps to measuring and reporting on carbon emissions in 2026 look like this: calculate your Scope 1, 2 and 3 emissions by multiplying activity data, such as kWh, fuel or miles, by the UK Government's conversion factors for the year, set a baseline, then report progress 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.
Environmental, Social, and Governance (ESG) was first used in the 2004 UN Global Compact report Who Cares Wins, and the voluntary UN-backed Principles for Responsible Investment (PRI) launched in 2006 encouraged investors to integrate it into their evaluations of companies.
Today, reporting on carbon emissions has become a central focus for businesses of all sizes, not just for regulatory compliance but as a strategic cornerstone that affects reputation, investor relations and long-term sustainability. As stakeholders increasingly want transparency around environmental impact, companies need robust methods to measure, report, and reduce their carbon footprint.
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.
| Sector | Share of UK emissions, 2024 | Emissions (MtCO₂e) |
|---|---|---|
| Domestic transport | 30% | 110.4 |
| Buildings and product uses | 22% | 81.8 |
| Agriculture and land use, land-use change and forestry (LULUCF) | 13% | 46.8 |
| Industry | 12% | 46.5 |
| Electricity supply | 10% | 37.7 |
| Fuel supply | 8% | 28.8 |
| Waste | 6% | 21.4 |
Domestic transport has been the UK's largest emitting sector since 2014, and cars and taxis account for 53% of its 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 the FCA has consulted on requiring listed companies to report against them from 1 January 2027.
The Task Force on Climate-related Financial Disclosures (TCFD) has since been disbanded and superseded by the ISSB, with UK SRS S2 building on its recommendations. Smaller businesses aren't required to follow the standards, but they set a clear baseline for what credible carbon emissions reporting looks like.
Given these developments, it’s now crucial for companies of all sizes to report on their emissions as a concrete step towards achieving net zero targets. This awareness of a company's environmental impact serves as the foundation for implementing positive changes to reduce carbon emissions across operations.
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. This involves assessing emissions from various activities, like electricity usage and product transportation.
Establishing a baseline, typically using data from the previous year, is essential for tracking progress. Once you have your emissions data, you can work on reducing your company’s greenhouse gas emissions by investing in renewable energy, adopting more efficient transportation methods (such as electric vehicles), and minimising waste production.
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. The UK Government's conversion factors are designed for organisations of all sizes and are relevant to SECR, so the same method works whether or not you're required to do carbon emissions reporting.
What Are The Three Scopes?
Businesses categorise emissions into three scopes. This is to help understand their carbon footprint and identify areas for reduction.
Scope 1
Emissions created by your organisation through actions like heating systems and fuelling company vehicles.
Scope 2
Indirect emissions from the electricity, steam, heat and cooling your company buys.
Scope 3
Indirect emissions that happen due to your business activity, like the transportation of office supplies or employees travelling to and from work. This is typically the biggest category for businesses.
The table below shows what each scope covers and where a salary sacrifice car may sit. Use it to decide which vehicles and journeys belong in which scope before you start collecting data.
| Scope | 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 are not directly under company ownership. Where a salary sacrifice car sits depends on who holds the lease and how you set your organisational boundary, so agree the treatment with your carbon accountant before you report.
Electric vehicle salary sacrifice schemes can lower emissions from employee driving, giving businesses a practical way to reduce their carbon footprint while providing valuable employee benefits.
How To Calculate Scope 1 And Scope 2 Carbon Emissions
To calculate scopes 1 and 2, you will need to gather records of energy consumption over the course of a year. This typically includes utility records for water, electricity, plus gas and fuel for company vehicles. Water, flights and rail journeys typically fall under Scope 3, but you convert them in the same way. You’ll then need to convert the records into compatible units:
Gas and electricity: Measured in kilowatt-hours (kWh) on utility bills.
Water: Measured in cubic metres, listed on utility bills.
Car travel: Measured in kilometres. If distances aren't tracked, sum fuel receipts and use a fuel calculator.
Rail or boat travel: Measured in passenger kilometres (pkm). For example, two employees on a 1,000-kilometre round trip equal 2,000 pkm.
Air travel: Measured in pkm, similar to rail or boat travel.
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%. Because the update covers two years of grid change rather than the usual one, and includes some method corrections, 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 often constitute the majority of emissions. 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. This includes information not included in the Scope 3 Standard, like:
Methods for calculating GHG emissions for each of the 15 categories (like purchased goods and services, transportation and distribution and use of sold products),
Guidance on selecting the correct calculation methods,
Examples to demonstrate each calculation method.
Alternatively, many companies enlist environmental consultants to calculate Scope 3 emissions.
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. A commuting survey covering distance, travel mode and vehicle type gives you activity data to multiply by the same conversion factors, and scheme data on the cars your employees drive can replace assumptions with records. 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 carbon emissions involves enhancing processes or adopting new technologies to lower emissions, especially for smaller businesses lacking existing infrastructure. Examples include:
Improving Your Energy Efficiency
This hinges on your office setup and the flexibility to make changes, such as with lighting. However, you do have control over the equipment you use.
Switching To Renewable Energy Sources
This can be anything from solar to wind energy. Check whether your electricity contract is backed by renewable guarantees, because that changes your market-based Scope 2 figure.
Improving Transportation
This means fuel-efficient vehicles, encouraging carpooling, and promoting remote work. Implementing The Electric Car 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. Log the vehicle each employee is moving from and to, so the change is visible year on year.
Plug-in hybrids aren't zero-emission, so treat them carefully when you count reductions. Official CO₂ figures come from type-approval tests, and stricter Euro 6e-bis testing, which has applied in Northern Ireland and the EU since January 2025, produces higher figures for many models. For carbon reporting, use actual fuel and electricity data or the DESNZ plug-in hybrid factors, noting that the 2026 factors fell by around 5% for some car segments and rose by 9.5% for sports plug-in hybrids.
Company car tax works differently from carbon reporting. The Government has announced a temporary ease for plug-in hybrids first registered between 1 January 2025 and 5 April 2028, which deems their CO₂ emissions at 1 g/km for tax purposes, so that figure shouldn't appear in your emissions data. Check the current hybrid HMRC rules before you rely on any tax figure.
How To Implement And Make Changes
Once you have completed your GHG emission reporting, highlighted areas of improvement and implemented changes, you need to track progress over time. You can do this by comparing your emission data from one year to the next, which will help to identify where your emissions have increased and make subsequent changes.
Getting Employees On Board
Scope 3 covers various aspects of your company, with employees being a key factor. To significantly reduce your company’s carbon emissions, your employees must be committed to climate action.
Here are a couple of ways to raise awareness of their carbon footprint:
Educate them on the current climate crisis,
Encourage employees to take action,
Offer incentives or a company-wide incentive, like The Electric Car Scheme.
Carbon Emissions-Based Vehicle Scheme
Carbon emissions-based vehicle schemes help organisations reduce their transportation carbon footprint by transitioning to low- or zero-emission vehicles, particularly electric cars. 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.
Unlike vague green initiatives, these programmes deliver real, countable results. 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 straightforward reports showing your estimated emissions avoided, which you can use in your sustainability reporting alongside your own activity data. The estimates use a Distance-Based Impact method, combining Department for Transport mileage and occupancy data with International Energy Agency life-cycle comparisons of electric and petrol cars.
This helps you show investors, customers, and employees the environmental progress you're making, rather than making promises about future goals.
How Does The Electric Car Scheme Improve My Company’s Carbon Footprint?
Every person can make a significant impact in lowering carbon emissions. Switching to an electric car is one of the biggest steps you can take as an individual to reduce your carbon footprint.
By offering The Electric Car Scheme as an employee benefit, you can help everyone at your company make the choice to accelerate the transition to net zero. The Electric Car Scheme provides a comprehensive solution with competitive pricing, Complete Employer Protection, and detailed emissions reporting. This enables businesses to estimate the emissions avoided for ESG reporting while employees typically save 20-50% compared with a personal lease, creating a dual benefit of environmental progress and valuable employee perks.
The more employees who adopt The Electric Car Scheme, the bigger impact this will have on your company’s carbon footprint
Why does The Electric Car Scheme exist?
“Cars typically spend around 12 years on the road, covering approximately 120,000 miles in their lifetime. At The Electric Car Scheme, our focus is not on existing vehicles but on shaping the impact of new cars entering the market. Our significant influence lies in steering consumers towards opting for a new Battery Electric Vehicle (BEV) instead of a traditional Internal Combustion Engine (ICE) car.”
Thom Groot, CEO and Co-Founder of The Electric Car Scheme
By addressing key barriers, particularly affordability, The Electric Car Scheme facilitates a smoother transition for customers to electric vehicles, fostering an increase in demand for new electric cars. This shift in consumer preference triggers a positive cycle, driving infrastructure and manufacturing investments, subsequently accelerating innovation and uptake rates.”
Reasons To Implement The Electric Car Scheme At Your Company
There are many positives to implementing The Electric Car Scheme at your company; here are a couple of the key reasons:
Complete Risk Protection
Our 2026 survey of 250+ senior HR professionals found that 86% of organisations planned to offer an electric car salary sacrifice scheme in the coming year. Yet 79% still believed it would cost their business money to launch, so there were some misconceptions and concerns about the cost and risk to the businesses implementing these schemes
At The Electric Car Scheme, we offer Complete Employer Protection to ensure 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 protects the employer from any shortfall due to employee resignation (from three months into the lease), long-term sickness, or family-friendly leave.
Make Your Team Feel Rewarded
By offering this benefit, you can support your team’s personal journey to Net Zero and lower emissions from employee driving. Employees typically save 20-50% compared with a personal lease through salary sacrifice.
Cost-Neutral Benefit
The Electric Car Scheme has no net cost to your business to run. The scheme fee is equivalent to your employer National Insurance savings and VAT recovery, so you can roll it out without affecting your bottom line.
Best Prices Available
You’ll access the top leasing companies to ensure the best prices are available. The best prices are required to get good employee take-up. You can view our quote tool to see the vehicles available by salary and lease terms.
Happy Employees, Healthy Company
Employee happiness is at the heart of a healthy, thriving company. With The Electric Car Scheme, you can show your commitment to sustainability. Your employees will appreciate the opportunity to make a positive impact.
Straight-forward Reporting
We help you keep your HR, Finance and Tax affairs on track. The Electric Car Scheme’s automated monthly payroll, HMRC and climate reporting help you with compliance and minimise hassle.
Including uptake data for electric and hybrid vehicles in your sustainability reports demonstrates a measurable commitment to your environmental goals. Those metrics can align with the frameworks your stakeholders already use, including the Global Reporting Initiative standards and the UK Sustainability Reporting Standards, which build on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
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
We also produce an annual impact report that summarises key metrics, including the number of employees enrolled in the scheme, those who have requested car quotes, cars ordered and delivered, total committed mileage, kilograms of carbon dioxide equivalent saved, and the estimated Scope 3 carbon dioxide equivalent reduction achieved by participating in the scheme.
The Electric Car Scheme Is A B Corp
In January 2024, we were proud to have been certified as a B Corp, which acknowledges our commitment to being a force for good in the world of work. But what does that actually mean? B Corps are businesses that live the highest social and environmental standards for people and the planet. To be certified as a B Corp means that we are held accountable by a recognised network and that we stay focused on our mission to help people transition to electric cars.
To become a certified B Corp, businesses must score 80 points or more. We're proud to say that we've surpassed this benchmark with a score of 104.3. We were also named EV Salary Sacrifice Provider of the Year 2026 by SME News.
What Other Green Initiatives Will Help Improve My Company’s GHG Emissions?
Green initiatives encompass a wide range of practices aimed at reducing a company's carbon footprint while promoting sustainability. Some examples of green initiatives include:
Recycling in the workplace: Efforts to maximise workplace recycling can help reduce carbon emissions and demonstrate commitment to environmental protection.
Going paperless: Implementing a paperless workflow helps save trees, cut costs, and reduce energy consumption from printing equipment.
Hybrid working schemes for staff: Implementing hybrid working can improve work-life balance and reduce the carbon footprint by reducing commuting.
Your wider benefits carry a footprint too, so check how green your benefits are alongside your workplace practices.
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 proposing to require listed companies to report from 1 January 2027. Scope 3 commuting sits outside mandatory SECR but is increasingly expected.
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. The tax treatment is separate from the emissions figures, and plug-in hybrid salary sacrifice has its own rules.
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. Record the factor year in your methodology notes so year-on-year changes can be explained.
How Can Electric Car Salary Sacrifice Support Carbon Reporting?
It gives you scheme-level data to use alongside your own commuting data. The Electric Car Scheme's annual impact report covers employees enrolled, cars ordered and delivered, total committed mileage and the estimated CO₂e saved, calculated with a Distance-Based Impact method. Agree with your carbon accountant how to include those estimates in your Scope 3 reporting.
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.
By empowering employees to make environmentally conscious transportation choices through affordable access to electric vehicles, your organisation can demonstrate tangible progress toward net-zero targets. As the transition to sustainable business practices accelerates, companies that proactively measure, report, and reduce their carbon emissions will be better positioned to thrive in an increasingly climate-conscious marketplace.
To see what an electric car salary sacrifice scheme could look like for your business, use our quote tool to see how The Electric Car Scheme can benefit both your business and your employees, or speak to our team about building a carbon reduction strategy around electric vehicle adoption.
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.
Last updated: 21.09.2026
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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