Sustainability reporting anxiety mounts among UK firms

UK companies are overwhelmed about sustainability reporting, unsure what they are expected to report on and concerned that this may harm their reputation and finances, according to a new survey.

More than half (55%) of sustainability heads think current reporting requirements are too complex in the UK, with 46% reporting to three or more different frameworks, among which the Carbon Reduction Plan (CRP) and the Energy Saving Opportunity Scheme (ESOS). This rises to as many as eight frameworks for firms in heavily regulated sectors like professional services, financial services, healthcare, and technology.

Worryingly, 38% of the 500 sustainability decision makers surveyed by facilities management and professional services company Mitie admit they are “not clear” on what they should be reporting on.

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“Reporting requirements have intensified in recent years and the legislation labyrinth is here to stay. For sustainability leaders this means grappling with multiple reporting frameworks, stricter multi-jurisdictional regulation, and the intense scrutiny of stakeholders who expect to see reduction targets and their progress in the public domain,” said Catherine Wheatley, Head of Data Science and Energy Services.

Reporting concerns raise greenwashing fears

Because of this lack of certainty around reporting requirements, UK companies worry about the reputation and financial risks associated with poor disclosures: 60% are concerned about their reputation, with one fifth (20%) saying “the prospect of facing greenwashing accusations keeps them awake at night”. 

Another 59% are also worried about the potential impact of insufficient reporting on their finances including facing fines, falling profits and loss of shareholders.

Lack of confidence in reporting system

The survey is also a vote of no confidence for the current reporting system: only 13% of respondents believe the current approach to reporting works, while about a third (34%) say compliance with new ESG regulation has positively influenced their sustainability strategy.

Many UK firms are following overseas standards closely, but the majority (58%) do not believe adopting one international framework would be effective. Less than one-fifth (17%) plan to report under both the ISSB standard and the EU’s Corporate Sustainability Due Diligence Directive (CSDDD).

Meanwhile, over a quarter (28%) are not sure they would be able to meet enhanced expectations if UK legislation became stricter in the coming years.