ESG Reporting Requirements for the UK and Europe: A Clear Guide
- Feb 2
- 6 min read
Environmental, social and governance (ESG) reporting has moved from optional disclosure to a core compliance obligation for companies operating in the UK and across Europe.
Investors, regulators and stakeholders expect transparent sustainability performance, but knowing where to start can feel daunting.
This guide breaks down the key ESG reporting requirements, explains where they apply, and highlights tools that help organisations comply with evolving standards.
What is ESG Compliance?
ESG compliance is all about how organisations measure, manage and share information on their environmental (E), social (S) and governance (G) impacts.
Environmental: Measurable environmental impacts of an organisation
Social: How an organisation treats all stakeholders from suppliers to employees
Governance: How the organisation is run, decision-making, ethics, transparency, anti-corruption, board oversight, and compliance
ESG itself is a broad idea rather than a single rule. Underneath it sit different laws, reporting standards and taxonomies in each country that explain what information businesses need to track and report.
While it links to multiple frameworks that vary by region, they still share common aims including:
improving transparency and accountability
standardising sustainability data and sustainability reporting
linking sustainability performance to financial risk and opportunity
This is why ESG reporting requirements differ between the UK and Europe, even though many of the underlying principles overlap.
Definitions/Key Terms
ESG (Environmental, Social and Governance): A framework for measuring an organisation’s environmental impact, social responsibility and governance practices.
Sustainability reporting: The disclosure of information about a company’s environmental, social and governance performance, risks and impacts.
Scope 1, 2 and 3 emissions: Categories used in carbon reporting. Scope 1 covers direct emissions, Scope 2 covers emissions from purchased energy, and Scope 3 covers indirect emissions across the value chain.
What Are UK ESG regulations and Reporting Requirements?
UK ESG reporting follows a mix of UK regulations and global standards, requiring organisations to share clear sustainability information.
These rules continue to evolve, so this overview reflects our current understanding and we welcome comments on anything we may have missed.
UK: Sustainability Disclosure Requirements (SDR)
The UK Sustainability Disclosure Requirements (SDR) are designed to improve the quality and consistency of sustainability reporting across the UK.
They set expectations for how organisations disclose sustainability risks, opportunities, and impacts, with a strong focus on transparency and credibility.
SDR also plays a key role in reducing greenwashing by aligning disclosures with recognised frameworks and clear labelling rules.
For organisations, this means more structured sustainability reporting and greater accountability to investors, regulators, and the public.
All large UK companies above certain thresholds will be required to comply, not just listed companies.
International Sustainability Standards Board (ISSB)
The International Sustainability Standards Board (ISSB) provides a global baseline for sustainability reporting, designed to bring consistency and comparability to ESG disclosures across markets.
The UK is adopting ISSB standards through its own Sustainability Reporting Standards, making them central to future UK ESG reporting requirements.
For now, implementation is phased, starting with large companies.
SDR will also require disclosures on Scope 1, 2 and, for some companies, Scope 3 emissions, as well as on social and governance risks.
While this is a global baseline, the EU doesn't choose to apply ISSB standards directly.
Instead, companies in scope of the Corporate Sustainability Reporting Directive (CSRD) must report using European Sustainability Reporting Standards (ESRS), which are more detailed and tailored to EU policy objectives, including broader impact reporting.
How Are European Sustainability Reporting Standards Different?
In the EU, sustainability reporting is shaped by a set of connected regulations that define what companies must report, how financial products are disclosed, and which activities can be considered environmentally sustainable.
Unlike the UK, where SDR and the forthcoming UK SRS are gradually being aligned with ISSB standards, the EU uses its own comprehensive framework focused on broader environmental and social impacts.
This overview reflects our current understanding of how these rules work in practice.
EU: Corporate Sustainability Reporting Directive (CSRD)
The Corporate Sustainability Reporting Directive (CSRD) sets out mandatory reporting requirements for companies operating in the EU.
It expands both the number of organisations required to report and the level of detail they must provide, using European Sustainability Reporting Standards (ESRS).
CSRD is designed to improve transparency and comparability across European sustainability reporting.
For in-scope organisations, it means more structured disclosures on environmental, social, and governance impacts, risks, and opportunities.
CSRD also expands reporting from ~11,000 previous NFRD companies to ~50,000+ companies in scope.
EU: Sustainable Finance Disclosure Regulation (SFDR)
The Sustainable Finance Disclosure Regulation (SFDR) is a set of rules in the EU that tells financial firms how to explain the sustainability of their investments.
It helps investors understand the environmental, social, and governance (ESG) impact of the products they are buying.
SFDR also makes firms more transparent about their claims, reducing the risk of greenwashing.
This means companies need to clearly show how sustainability is considered in their funds and investment decisions.
For the most part, this mainly applies to financial market participants and advisers, not all companies.
EU: EU Taxonomy
The EU Taxonomy is a classification system that defines which economic activities can be considered environmentally sustainable.
It helps companies, investors, and policymakers understand which activities genuinely contribute to environmental goals.
By providing clear criteria, the Taxonomy reduces greenwashing and supports consistent sustainability reporting.
For organisations, this means reporting on which activities meet the standard, helping investors compare and make informed decisions.
It's mainly aimed at environmentally sustainable economic activities, not all ESG reporting.
Key Differences Between UK and EU ESG Reporting
Feature | UK | EU |
Main Frameworks |
|
|
Who Does It Apply To | Primarily UK companies and financial market participants | EU companies and certain non-EU companies with EU operations |
Reporting Focus | ESG risks and opportunities affecting the business, product disclosures, anti-greenwashing | ESG impacts on business and wider society, sustainability of financial products, environmental classification of activities |
Prescriptive Level | Less granular and more principles-based, while still including mandatory disclosure requirements aligned with ISSB | Highly prescriptive; detailed ESRS metrics and disclosures required |
Purpose | Improve transparency, comparability, and accountability in the UK | Ensure detailed, standardised reporting across EU to support policy goals and investor transparency |
Status | Active and evolving with phased implementation | Active and mandatory with phased implementation |
FAQ
Q: What are the requirements for ESG reporting?
A: ESG reporting requirements ask organisations to disclose clear, comparable information on their environmental, social and governance impacts, risks and performance as part of structured sustainability reporting. In the UK, this is shaped by UK ESG regulations and ISSB aligned standards, while the EU follows European sustainability reporting standards under CSRD.
Q: Who needs to do ESG reporting?
A: ESG reporting is required for many large companies, listed businesses and financial institutions, with the exact scope depending on local regulations. Smaller organisations may not be legally required to report yet, but many still produce sustainability reporting to meet investor, client and supply chain expectations.
Q: Is ESG reporting mandatory in the EU?
A: In the EU, ESG reporting is mandatory for companies that fall under the Corporate Sustainability Reporting Directive (CSRD). These organisations must follow detailed European sustainability reporting standards when disclosing ESG information as part of their reports. Smaller companies outside the CSRD scope are not yet required to report, though expectations are increasing.
Q: In which countries is ESG reporting mandatory?
A: ESG reporting is mandatory in all EU member states for companies that fall under CSRD. In the UK, certain large companies and financial market participants must report under UK ESG regulations, including the SDR and associated standards. Other countries increasingly introduce their own mandatory ESG or sustainability reporting rules, so requirements can vary by jurisdiction and company size.
ESG Compliance Software
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