Guide
ESG reporting has gone from a glossy annual brochure to a set of regulated disclosures with audit trails. Here is what applies to UK companies in 2026, what is still voluntary, and how to build one reporting operation rather than four.
By Christopher Fagan, Managing Partner, PEF Consulting Partners
ESG reporting is the disclosure of how a company affects, and is affected by, the environment, the people it touches and the way it is governed. The environmental strand covers emissions, energy, water, waste and climate risk. The social strand covers the workforce, the supply chain, customers and communities. The governance strand covers the board, controls, ethics and how the other two are managed. What has changed in the last three years is not the subject matter but the standard of evidence: narrative has given way to data, voluntary frameworks have given way to regulation, and assurance by an auditor is becoming the norm for the larger reporters.
Four regimes do most of the work. SECR requires large UK companies and LLPs to report energy use and carbon emissions in the directors’ report, with an intensity ratio and a note on efficiency action. Climate related financial disclosures, aligned to the TCFD, are mandatory for larger companies under the Companies Act and for listed companies under FCA rules. CSRD, the EU directive, now reaches only companies and groups with more than 1,000 employees and more than €450 million of turnover, which still catches some UK groups through large EU subsidiaries or more than €450 million of EU turnover; the Omnibus that narrowed it has been law since March 2026. UK SRS, the UK version of the ISSB standards, was published in final form in February 2026, and the FCA confirmed in September 2026 that listed companies will report against it on a comply or explain basis for accounting periods beginning on or after 1 January 2027, in place of the TCFD rules. Around those sit the long standing social disclosures: modern slavery statements, gender pay gap reporting and the Section 172 statement. Our guides on SECR, CSRD and UK SRS, linked below, go through each in detail.
Much of what customers, lenders and investors ask for is not required by law. GRI remains the most used framework for a full sustainability report. CDP disclosure is requested by large customers and asset managers. EcoVadis ratings are now a condition of supply in many procurement processes. Science based targets through the SBTi signal that a net zero commitment is more than a slogan. None of these is mandatory, and all of them turn up in tender questionnaires, which is why the practical scope of ESG reporting is usually wider than the legal one.
Good ESG reporting starts with a materiality assessment that decides which topics matter, for both the impact the company has on the world and the financial effect the world has on the company. From that comes a data model: every metric with a definition, a source system, an owner and a control, run with the same discipline as the finance close. The evidence sits in one place, so that when an auditor, a customer or a regulator asks how a number was produced, the answer is a file rather than a meeting. Companies that skip this stage end up with three versions of their carbon number and no way to choose between them.
The most expensive mistake we see is treating SECR, climate disclosures, CSRD and UK SRS as four separate projects with four separate advisers. The underlying data overlaps heavily, the calendars can be aligned and most of the controls are shared. Mapping every disclosure to a single data set, one reporting calendar and one set of owners typically removes a third of the effort and all of the inconsistency. It also makes assurance straightforward, because there is one trail to follow. Our Managing Partner holds an ESG qualification from the University of Oxford, and the £52m value programme we ran for a global industrial manufacturer, linked below, started with exactly this consolidation.
Confirm which regimes apply to you this year and next, including through EU subsidiaries. Run or refresh the materiality assessment. Build the data model and assign owners. Reuse the SECR energy and carbon data as the base for everything else. Decide early whether you will seek assurance, because that changes how evidence is kept. Then write the report last, which is the opposite of how most companies do it.
Related reading: ESG consultancy, the SECR compliance and reporting guide, what CSRD is and who it applies to, UK SRS explained, double materiality assessment, the £52m ESG value case study, the CSRD checker.
Parts of it are. SECR energy and carbon reporting applies to large companies and LLPs, climate related financial disclosures apply to larger and listed companies, and UK groups with significant EU operations can fall under CSRD. A full ESG report in the GRI sense is still voluntary for most companies, but customers and lenders increasingly expect one.
In practice they are used interchangeably. Sustainability reporting tends to describe the full narrative report, while ESG reporting is more often used for the data investors and lenders want. CSRD and UK SRS use the term sustainability reporting for what most UK businesses call ESG.
Rarely by law, often by contract. Large customers pass their own reporting obligations down the supply chain through questionnaires and EcoVadis style ratings, so a smaller company that wants to keep those customers needs the core data, above all energy and carbon, even without a legal duty.
A first materiality assessment and data model for a mid sized company is typically a low to mid five figure project. Ongoing reporting costs depend on how many regimes apply and whether assurance is sought. The cost that matters more is the one avoided: a lost tender, a lender covenant or a restated number.
If you want to know exactly which ESG reporting rules apply to you and how to run them as one operation, a short confidential conversation is the right first step.
Environmental, social and governance. Our guide to what ESG means explains each part and how it is used in business.