Addleshaw Goddard LLP | David Alfrey, Rachel MacLeod, Martin Sacchi and Jenna Lenk
Mandatory ESG reporting and disclosure
What statutory ESG reporting and disclosure frameworks apply to businesses in your jurisdiction?
In the United Kingdom, ESG reporting obligations are drawn from a combination of statutory regimes addressing corporate governance, environmental disclosure and climate-related financial risk. The Streamlined Energy and Carbon Reporting (SECR) framework, introduced by the Companies (Directors’ Report) and Limited Liability Partnerships (Amendment) Regulations 2018, requires large UK companies and LLPs to report annually on energy use, greenhouse gas emissions and associated efficiency measures. The regime applies to quoted companies, as well as large unquoted companies and LLPs that meet at least two of three thresholds: turnover of £36 million or more, a balance sheet total of £18 million or more, or 250 or more employees.
Separately, the Companies Act 2006 imposes disclosure obligations through the Strategic Report and Directors’ Report Regulations. Certain companies must include in their annual reports information on how directors have considered environmental matters, employees, social issues and community relationships when carrying out their duties. This requirement is designed to embed stakeholder and sustainability considerations into corporate governance and long-term decision-making.
Climate-specific disclosure obligations were significantly expanded in 2022, when TCFD-aligned reporting became mandatory for over 1,300 UK-registered entities. The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 and associated amendments to pension scheme regulation require large companies, AIM-listed issuers and occupational pension schemes to disclose information consistent with the recommendations of the Task Force on Climate-related Financial Disclosures. These disclosures address governance arrangements, strategy, risk management and metrics for climate-related risks and opportunities, and are intended to provide investors and stakeholders with consistent and decision-useful information.
Collectively, these frameworks establish the statutory basis for ESG reporting in the UK, combining general corporate law obligations with targeted requirements on energy and carbon reporting, and more recent climate-related financial disclosures.
This article first appeared on Lexology | Source
