Sustainability Reporting Requirements for Large Organisations in the UK

Introduction

Sustainability reporting is the organisational approach to make environmental, social and economic data publicly available in the format of a report, commonly covered issues in reports include:

• Environment – climate change, pollution and biodiversity.
• Social – occupational health and safety, fair wages and diversity.
• Economic – socially responsible investment, fair contracts and pricing and taxes and subsidies.

The reasons sustainability is reported include legal requirements, financial, meeting the needs of stakeholders and requirements of voluntary standards.

Organisations that are impacted by the requirement to report sustainability tend to be larger organisations, for example the UK Streamlined Energy and Carbon Reporting (SECR) requirements mean that organisations that are large unquoted companies (meet two of the following : turnover of £36 million and over, balance sheet of 18 million or over and 250 or over employees), UK registered quoted companies, large Limited Liability Partnership (meeting the same thresholds as large unquoted companies) must report their greenhouse gas emissions. 

The landscape for reporting in the UK is changing in February 2026 the UK government introduced the following reporting standards:

• UK SRS S1 ‘General Requirements for Disclosure of Sustainability-related Financial Information’, and
• UK SRS S2 ‘Climate-related Disclosures’, when reporting climate-related information

The implementation of these standards is currently voluntary but will be applied if the requirements for sustainability reporting becomes law in the future, which is likely. 

Reporting is ultimately the responsibility of those at the top of an organisation such as a company’s board of directors and senior management. Production of report is often undertaken by ESG and finance departments. Third party assurance is undertaken by specialist external auditors. 

Some reporting is required by legislation (such as SECR requirements) while others including SRS S1 and SRS S2 are voluntary. Both voluntary and mandatory reporting requirements build a framework of what and how to report.

Evolution of Sustainability Reporting Requirements

We will take a look at how reporting  standards/laws relate to each other and how sustainability reporting has evolved over time.

Our journey begins with the international Financial Reporting Standards (IFRS) Foundation, an international non-profit organisation. Being formed in 1973 it was established to develop accounting standards and to promote their worldwide use. As we will see they played a key role in sustainability reporting. 

Next, we have The Companies Act 2006. This is foundational UK company law covering many reporting requirements. In particular it sets requirements for large UK Companies to include sustainability related disclosures in their Strategic Reports and Directors Reports. 

In 2015 the Task Force on Climate-Related Financial Disclosures (TCFD) was created to develop recommendations for better climate related disclosures. This resulted in the publication of various guidance publications on the climate related disclosures such as the 2021 Guidance on Metrics, Targets, and Transition Plans.

In 2019 in an update to the Companies Act 2006 (from the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013) introduced mandatory streamlined energy and carbon reporting for large UK companies. This introduced the requirement for Scope 1 (direct) and scope 2 (energy indirect) greenhouse gas emissions to be reported annually in  Directors Report/accounts.

In 2021 the IFRS Foundation formed the International Sustainability Standards Board (ISSB). Created with the goal of creating a global baseline for sustainability reporting

TCFD was made mandatory for organisations in the UK in 2022. Ultimately the TCFD was disbanded in 2023 with the IFRS foundation taking over its duties.

In 2023 the IFRS published two globally recognised sustainability standards, these being : IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and a complimentary standard IFRS S2 Climate-related Disclosures.

In 2023 the EU Corporate Sustainability Reporting Directive (CSRD) was introduced and required organisations  of 1,000 employees and over 450 million euros in net annual turnover to disclose sustainability information in their management reports. Meaning that sustainability and financial information will be published at the same time. 

In 2026 the UK government introduced UK SRS S1 and UK SRS S2, these being the UK’s interpretation of the IFRS S1 and S2 international standards.

Current Mandatory Sustainability Reporting Requirements for Large Organisations in the UK

Energy Savings Opportunities Scheme (ESOS)

The Energy Savings Opportunity Scheme Regulations 2014 (commonly known as ESOS) set requirements for a mandatory energy assessment. They apply to organisations that:

• employ over 250 people; or
• employ fewer than 250 people but have an annual turnover in excess of £44 million and an annual balance sheet in excess of £38 million.

The Requirements of ESOS are 

• Calculation of total energy consumption.
• Identification of areas of significant consumption of energy
• Appointment of a lead assessor 
• Notification – to the Environment Agency (regulator). 

The assessment should be undertaken every four years and organisations that are fully covered by a certified ISO 50001:2018 +A1:2024 energy management system do not need to carry out an ESOS assessment.

Companies Act 2006 Streamlined Energy and Carbon Reporting (SECR)

Companies that are large unquoted companies (meeting two of the following : turnover of £36 million and over, balance sheet of 18 million or over and 250 or over employees), UK registered quoted companies, large Limited Liability Partnership (meeting the same thresholds as large unquoted companies) must report their greenhouse gas emissions. Scope 1 (direct) and scope 2 (energy indirect) greenhouse gas emissions must be reported annually in the Directors Report/Accounts on an annual basis.

Task Force on Climate-related Financial Disclosures (TCFD-aligned reporting) 

The TCFD developed four key recommendations on climate related financial disclosures. These include being adoptable by any organisation, should be incorporated into financial reports, consist of information that could be used for decision making information on financial impacts and the risks and opportunities associated with the transition to a lower carbon economy.  

The four key pillars of TCFD reporting include 

• Governance – governance surrounding climate related risks and opportunities.
• Strategy – actual and potential impacts of climate orientated risks and opportunities.
• Risk management – how the organisation identifies, assesses and manages risk related to climate. 
• Metrics and targets – the data and targets that are used to assess and manage climate related risk and opportunities. 

The UK government has formerly endorsed the TCFD reporting disclosures and stated that it should be used as a reporting standard for large private sector organisations. The requirements apply to banking companies, authorised insurance companies and traded companies that meet various criteria such as employing more than 500 people.

The TCFD will ultimately be superseded by the UK SRS

What’s Changing for UK-based Organisations? Introduction of the UK Sustainability Reporting Standards (SRS) 

The UK government has supported the ISSB standards. Following a consultation process the UK has adopted UK versions of the ISSB standards namely UK SRS S1 and UK SRS S2. Companies are required to report on the following:

• Governance – processes, controls and procedures used to monitor sustainability related risks and opportunities.
• Strategy – the approach that is used to manage sustainability related risks and opportunities, 
• Risk management – the processes used to identify, asses, prioritise and monitor sustainability related risks and opportunities. 
• Metrics and targets – performance measurement that relates to sustainability associated risks and opportunities.

The UK SRS has been designed for use by profit orientated organisations but it may be used by not for profit organisations in the private or public sectors with amendment.  The standard was released in February 2026 and it is expected that the use of the standard will become mandatory and apply to the financial years staring on or after 1^st January 2027 following a consultation in Winter 2026. 

What Should UK-based Organisations Be Doing to Prepare?

It is essential that relevant organisations prepare for the mandatory application of the SRS standards. The following is advisable:

• Understand which existing reporting frameworks/laws apply to them.
• Familiarise themselves with the SRS as it is now available.
• For very large organisations, assess whether CSRD applies.
• Organising environmental managers and wider ESG team to manage evolving reporting requirements

International Context: Global Regulations that Impact Large UK-based Organisations

International Financial Reporting Standards (IFRS) foundation and the creation International Sustainability Standards Board (ISSB) 

The IFRS is a not for profit organisation that develops global standards for financial reporting allowing for better communication between companies and investors providing for better investment decisions. The IFRS created the ISSB in 2021. The ISSB function is to develop IFRS Sustainability Disclosure Standards that delivers an international baseline of sustainability related financial disclosures to inform capital markets. Many countries have or are in the process of adopting or deciding how to adopt the ISSB standards. 

IFRS S1 and IFRS S2

IFRS S1 is a standard that requires organisations to disclose information regarding sustainability related risks and opportunities that could affect cash flow and access to capital. It describes how to prepare and report sustainability related financial disclosures. The organisation is required to report governance, management of sustainability related risks and opportunities, how it monitors sustainability risks and opportunities and its performance related to sustainability risks and opportunities.

IFRS S2 requires organisations to disclose information regarding its climate related risks and opportunities in general financial reports that allows those reading them to make a decision whether to provide resources to the organisation.   The standard applies to climate related risks (physical and transitional) and climate related opportunities applicable to the organisation. Like IFRS S1 the organisation is required to report governance, management of climate related risks and opportunities, how it monitors climate related risks and opportunities and its performance related to climate risks and opportunities

Both standards apply ‘The Four Pillars’ logic created originally by the TCFD but IFRS 2 uses it for climate whereas IFRS 1 extends to all aspects of sustainability.

Corporate Sustainability Reporting Directive (CSRD)

Large companies operating in the EU must report on sustainability using the European Sustainability Reporting Standards (ESRS). However, the Directive can apply to organisations outside of the EU if they have eligible operations in the EU.

Although similar, the UK SRS requires companies to report on how sustainability risks and opportunities affect the business financially. Whereas the CSRD companies report on how sustainability risks and opportunities affect the business financially and how the business impacts people and the environment. Large UK organisations with EU operations may be subject to both CSRD and UK SRS simultaneously.

Social Reporting Requirements 

It should be mentioned that social reporting requirements also fall under the umbrella term of sustainability. Key social reporting requirements include the Modern Slavery Act 2015 where commercial organisations that have a turnover of over £36 million or more are required to publish a statement outlining the steps taken to ensure that slavery is not present in their organisations or supply chains. The Equality Act 2010 requires employers with 250 or more employees to report gender pay gap data every year.

Conclusion

Sustainability reporting requirements for large organisations in the UK are already mandatory in several forms: ESOS, SECR etc. The landscape is changing rapidly as the new UK SRS framework is being introduced. Training is key for gaining an understanding on sustainability and related issues such as NEBOSH and ISEP courses.

John Binns BSc (Hons), MSc, MISEP (formerly IEMA)

With over 19 years’ experience working in environment management, John Binns BSc (Hons) MSc MISEP (formerly IEMA) is an experienced environmental tutor and consultant with knowledge of health and safety manage