Navigating ESG Reporting: What UK Businesses Need to Know

In today’s business landscape, Environmental, Social, and Governance (ESG) reporting is essential. As stakeholders, regulators, and investors demand greater transparency, businesses must navigate an increasingly complex web of frameworks and regulations. Understanding these ongoing updates in the frameworks is crucial not only for compliance but also for building a sustainable and resilient future.

At Balance Power, we understand the challenges businesses face in this evolving area. In this blog, we break down the three ESG frameworks and a scheme affecting UK businesses and explore how we can support organisations in achieving their sustainability goals.

ESG Reporting: A Look at Key Frameworks and Schemes

The ESG landscape includes various frameworks and schemes designed to standardise sustainability reporting. Here’s a breakdown of them:

1. TCFD (Task Force on Climate-Related Financial Disclosures)

• Purpose: Provides a recognised framework for disclosing climate-related financial information. It focuses on governance, strategy, risk management, and metrics/targets, supported by 11 disclosures.
• Focus: Helps investors understand how climate-related risks impact financial performance.
• Applicability: Targets UK companies with over 500 employees and more than £500m turnover.
• Challenges: Aligning TCFD disclosures can be complex, making it difficult to identify actionable opportunities.

2. UK SDS (UK Sustainability Disclosure Standards)

• Purpose: Aims to implement the IFRS Sustainability Disclosure Standards in the UK, providing comprehensive climate-related and sustainability-related disclosures.
• Focus: Covers risks and opportunities tied to sustainability.
• Applicability: Broadly applies to listed and large companies, with formal standards expected by Q2 2025.
• Challenges: Businesses must prepare for comprehensive and detailed reporting standards.

3. SECR (Streamlined Energy and Carbon Reporting)

• Purpose: Mandates energy use, carbon emissions, and energy efficiency reporting for large businesses.
• Focus: Transparency in energy consumption and greenhouse gas emissions.
• Applicability: Applies to quoted companies, large unquoted companies and large LLPs. 1
• Challenges: Ensuring accurate reporting across multiple metrics.

4. ESOS (Energy Savings Opportunity Scheme)

• Purpose: Stimulates energy efficiency in large organisations through mandatory assessments.
• Focus: Auditing energy use and identifying cost-effective efficiency measures.
• Applicability: Companies with over 250 employees or companies with more than £44 million annual turnover and an annual balance sheet with a total value surpassing £38 million.
• Challenges: Aligning with phased compliance requirements and implementing recommended measures.

The Challenges of ESG Reporting

Navigating multiple frameworks can be overwhelming. Common hurdles include:

• Interpreting complex and overlapping disclosure requirements.
• Identifying actionable steps to meet compliance and improve scores.
• Keeping up with evolving regulatory expectations.
• Introducing new monitoring, reporting and auditing processes.

For businesses, these challenges underscore the need for expert guidance and robust strategies.

Looking Ahead: The Future of ESG Reporting

As the ESG landscape evolves, businesses must stay informed and proactive. Frameworks like TCFD and UK SDS are set to shape reporting standards for years to come.

At Balance Power, we’re committed to driving positive change—one renewable energy project at a time. Let us help you achieve compliance, improve your ESG scores, and excel in your sustainability journey.

Contact us today at enquiries@balancepower.co.uk

1 Companies and LLPs are considered large when they meet at least two or more of the following: a turnover of £36 million or more, a balance sheet of £18 million or more, or 250 employees or more.