UK ESG Reporting Requirements Post-Brexit: What Businesses Must Know
- Gasilov Group
- Apr 3
- 5 min read
Environmental, Social, and Governance (ESG) reporting is no longer peripheral. For UK businesses, especially post-Brexit, it sits squarely at the intersection of compliance, capital access, and long-term value creation. The shift away from EU-aligned policy frameworks has created a distinct regulatory path that businesses must now navigate with precision.
While the EU’s Corporate Sustainability Reporting Directive (CSRD) grabs headlines, UK firms are operating under a different set of evolving mandates. Understanding those differences is not just about compliance. It is about strategic positioning in an environment where investors, regulators, and consumers are demanding real transparency.
The UK’s ESG Reporting Landscape: Where We Are Now
Post-Brexit, the UK has chosen not to align with the CSRD. Instead, it is building its own architecture, with a focus on materiality and investor relevance. The Financial Conduct Authority (FCA) requires premium-listed companies to disclose climate-related risks in line with the Task Force on Climate-related Financial Disclosures (TCFD). From 2022 onward, these disclosures became mandatory for over 1,300 of the largest UK companies and financial institutions.
Importantly, the UK Sustainability Disclosure Requirements (SDR)—first outlined by the Treasury—are beginning to take form. They aim to streamline ESG reporting across sectors and tie closely to the International Sustainability Standards Board (ISSB) framework, particularly IFRS S1 and S2. These standards will likely replace or absorb existing TCFD requirements.
The key difference from CSRD is scope. While the EU directive demands dual materiality and mandatory assurance for a much wider array of firms, the UK’s approach is currently narrower, prioritising financial materiality and leaving more discretion to the private sector. This divergence creates both flexibility and risk.
Strategic Takeaway: Firms should not assume CSRD exemptions mean lower disclosure burdens. Investors operating across jurisdictions will still expect alignment with global best practice.
What This Means in Practice
For UK companies operating domestically, the lack of harmonisation with the EU increases complexity. Businesses with European operations or supply chains cannot afford to ignore CSRD requirements simply because they are UK-based. Many will need to report in line with both frameworks, particularly in sectors like manufacturing, energy, and financial services.
Key areas UK businesses should focus on now:
Climate risk disclosures, including scenario analysis, transition plans, and governance structures
Value chain data collection, especially Scope 3 emissions
Internal controls for ESG data, preparing for potential future assurance requirements
Cross-jurisdictional mapping of regulatory obligations
While the UK is setting its own pace, pressure from capital markets and multinational clients means ESG maturity is still expected. The London Stock Exchange has made it clear that sustainability reporting is central to long-term market attractiveness. In December 2023, the FCA reaffirmed its intention to roll out further sustainability reporting rules in 2025, consistent with IFRS S2.
We are now in a transitional phase. The frameworks are moving quickly. But businesses cannot afford to wait for perfect clarity.
Assessing Readiness: What Your Business Should Be Doing Now
The most effective UK businesses are treating ESG not as a reporting obligation but as a lever for strategic advantage. That begins with a readiness assessment that covers three core areas:
Data Infrastructure: Many firms are underestimating the complexity of gathering reliable ESG data. Start with a full mapping of your data sources—both internal and across your supply chain. Pay particular attention to Scope 3 emissions, which often represent the majority of a company’s carbon footprint but are the least controlled.
Governance and Accountability: Who owns ESG within your organisation? If responsibility sits solely with sustainability or comms teams, that is a red flag. Leading firms are embedding ESG into finance, risk, and audit committees. Investor-grade disclosures demand CFO-level involvement.
Cross-Market Alignment: If you have operations or investors in the EU, the US, or Asia, you’ll need to ensure interoperability between UK standards and CSRD, SEC climate disclosure rules, and other local frameworks. This requires cross-functional collaboration and scenario planning—not just policy awareness.
Strategic Takeaway: You don’t need a perfect ESG report now, but you do need a roadmap.
Where Regulation is Headed
In 2025, we expect two key developments that will shift ESG expectations for UK firms:
The rollout of SDR: The Financial Conduct Authority will clarify sustainability labeling and disclosure rules for investment products. While not directly aimed at corporates, this will influence how investors assess ESG performance—and what they expect from portfolio companies.
Adoption of ISSB-aligned disclosures: The UK government has signaled support for IFRS S1 and S2, which will eventually replace TCFD. These new standards will require companies to articulate not just climate risks, but broader sustainability issues in financial terms.
Meanwhile, regulators are beginning to demand forward-looking metrics, not just historical data. For example, the UK’s Transition Plan Taskforce is finalising guidance that could make transition plans mandatory for large businesses across sectors.
Looking Ahead
This is not just about ticking boxes. Businesses that treat ESG as a strategic lens will outperform on capital access, customer trust, and regulatory agility. But to do so, leadership teams must integrate ESG into core decision-making—from boardroom to operations.
We are advising clients across the UK on how to move beyond compliance and turn ESG into competitive advantage. This includes ESG maturity assessments, reporting readiness strategies, and executive coaching tailored to sector-specific challenges.
Let’s make ESG a strength, not a scramble.
Frequently Asked Questions
What is the difference between the UK’s ESG reporting rules and the EU’s CSRD?
The UK focuses on financial materiality through frameworks like TCFD and ISSB, while the CSRD requires dual materiality and broader stakeholder-focused disclosures. UK rules currently cover fewer companies, but investor pressure is driving expectations higher.
Are Scope 3 emissions mandatory for UK companies to report?
Not for all firms, but many voluntary disclosures, investor demands, and supply chain pressures make Scope 3 reporting increasingly unavoidable. The ISSB standards will expect companies to disclose Scope 3 if material.
Will the UK adopt ISSB standards fully?
Yes, the UK has signaled strong alignment with IFRS S1 and S2. These will become the backbone of future ESG reporting standards, likely replacing TCFD in the UK regulatory regime.
How can SMEs prepare if they are not yet required to report?
Start by building internal awareness, gathering data where feasible, and preparing for future assurance requirements. Supply chain pressure means that many SMEs will be indirectly affected even if not directly regulated.
Do I need separate ESG reports for the UK and EU if my business operates in both?
Possibly. You may need to produce CSRD-compliant reports for EU entities and TCFD or ISSB-aligned reports for UK operations. Mapping the overlap and divergence is critical to avoid duplication and ensure compliance.
