UK’s ESG Regulatory Reporting Requirements

Leading up to its presidency of COP26, the UK has taken up the charge as a leader in ESG. In 2019, the UK passed a law targeting net zero greenhouse gas (GHG) emissions by 2050. To reach that target, the government has pushed reporting requirements that are expected to expand over the next five years.

For large companies (listed, >500 employees, or >£500 million annual turnover)

A key regulation for UK ESG disclosures is the Companies Act of 2006, which includes requirements for annual reporting. These rules apply to large companies that are either listed, exceed £500 million in annual turnover, or have more than 500 employees. Non-financial information has always been required in annual reports, but in 2022, the Act was expanded to include sustainability matters. The new requirements align with the recommendations from the Task Force on Climate-Related Financial Disclosure (TCFD). 

As such, companies are required to discuss the strategy, processes, and due diligence regarding matters of: 

• The environment (including the company’s impact on the environment)
• The company’s employees
• Social matters
• Respect for human rights
• Anti-corruption and anti-bribery

Additionally, large UK companies are required to report on their UK energy use and carbon emissions within their annual reports through the Streamlined Energy and Carbon Reporting. This applies to companies with either £36 million annual turnover, £18 million balance sheet total, or 250 employees. Companies are required to report on energy use and Scope 1 and 2 emissions within the UK.

Starting in 2023, ESG reporting in the UK will be further formalised through the Sustainability Disclosure Requirements (SDRs). The SDRs will provide a framework for corporates to manage sustainability-related risks, opportunities and impacts, as well as set relevant metrics and targets. Additionally, the SDRs will incorporate the UK Green Taxonomy, a classification system of which activities can be considered “green”. While the SDRs are rolled out over the next two years, fully mandatory disclosure is expected by 2025.