Sustainability Reporting for SMEs in the UK - Everything You Need to Know

July 2023

What do the experts think...

In this blog, we’ll look at sustainability reporting and why it’s a game-changer for UK small and medium businesses. From retaining key clients to accessing green funding and pleasing stakeholders to driving innovation and supporting national goals, sustainability reporting can shape the future of these businesses while helping create a more sustainable world. Let's explore this transformative opportunity and see the potential sustainability reporting offers UK small and medium businesses.

What is Sustainability Reporting?

Sustainability reporting is company reporting that highlights performance on carbon emissions measurement and reduction. Rather than just financial figures, sustainability reports share information on non-financial aspects for example carbon emissions reporting. This allows businesses to communicate their sustainability efforts, achievements, and future goals. In doing so, companies can build trust with stakeholders like customers, employees, and investors.

UK Sustainability Reporting Rules

The UK has strong sustainability reporting rules to increase transparency and environmental responsibility in business. These include:

  • Streamlined Energy and Carbon Reporting (SECR): Requires large UK companies to disclose energy use, emissions, and climate strategies in yearly financial reports.
  • Financial Conduct Authority (TCFD) Reporting: Mandates climate risk disclosures from listed companies and financial institutions using the Task Force on Climate-Related Financial Disclosures (TCFD) framework.
  • Climate-Related Financial Disclosure (CRFD): Requires eligible large companies to make TCFD-aligned disclosures on climate risks and opportunities.
  • Sustainability Disclosure Requirements (SDR) (upcoming): Will combine UK sustainability reporting into one regime covering sustainability topics beyond just climate.

As you can see many of these reporting requirements and frameworks are aimed at large businesses today, so what does this mean for SMEs?

Why Sustainability Reporting Matters for UK Small and Medium Businesses

Sustainability reporting is important for UK small and medium businesses for several reasons.

Impact of Larger Company Reporting on UK Small and Medium Businesses

As larger companies are now mandated to report sustainability data, they set benchmarks that small and medium businesses must follow if they are to continue to work with larger companies.  For example an agency that works with a large consumer brand will likely be asked for emissions reporting that complies with a certain framework by X date. If the agency doesn’t achieve this level of reporting they are at risk of losing the contract. At Trace we hear this all the time. 

As of April 2022, TCFD reporting became mandatory for UK companies with over 500 employees, indicating a clear direction toward requiring sustainability reporting for all businesses. 

Sustainability reporting is now essential for UK small and medium businesses to retain contracts with larger organisations, comply with regulations, access financing, and build a responsible reputation. Embracing sustainability reporting strengthens businesses amid evolving responsible practices and contributes to positive change. As larger companies lead the way in reporting, small and medium businesses will be required to follow suit whether it be mandatory or not in the near future. 

Stakeholder & investor transparency 

There are  growing expectations from stakeholders like consumers and investors who want more transparency and sustainable practices, building trustworthiness. Many investors now require emissions reporting of the businesses in their portfolios.

Green finance

Sustainability reporting provides access to green financing options by showing progress to impact investors. It helps identify and manage environmental and social risks, increasing resilience and creating cost savings through efficiencies.


Sustainability reporting drives innovation in operations, technology, and business models catering to changing market demands. Participating aligns businesses with national decarbonization goals like Net Zero 2050 while advocating for supportive policies. 

Overall, sustainability reporting gives small and medium businesses a competitive edge while establishing them as responsible sustainability contributors.

Need help with your sustainability reporting? Reach out to our team.

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