Sustainability regulations and compliance overview

A guide to your compliance obligations

There are a number of different regulations and standards that apply to different industries, sectors, and geographical locations.

This page outlines the most common, with an overview of which business must comply, and how compliance is achieved.

ESG

ESG stands for Environmental, Social, and Governance.

It is a framework used by investors and stakeholders to measure a company’s long-term sustainability, ethical impact, and risk management beyond traditional financial metrics. Companies use ESG to demonstrate responsibility in environmental stewardship, social relationships, and corporate governance,

Why ESG Matters:

• Risk Management: Identifies non-financial risks (e.g., climate change impacts or poor labor practices) that could affect long-term performance.
• Investment Screening: Investors use ESG scores to screen potential investments and align portfolios with ethical values.
• Transparency: It helps companies avoid “greenwashing” by disclosing verified data on their operations.
• Reputation & Talent: Improves brand perception and aids in attracting/retaining staff through demonstratable ethical practices.
• Compliance: Reduces risks of regulatory penalties by ensuring compliance with increasing UK government sustainability mandates.

Here at Carbon Neutral Group, we can advise on ESG

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UK SRS

The UK Sustainability Reporting Standards (UK SRS) are the UK’s mandatory framework for corporate reporting on sustainability and climate-related risks and opportunities.

Adopted in February 2026, they are based on global ISSB standards (IFRS S1/S2) but tailored for UK requirements, eventually replacing TCFD and SECR, with mandatory reporting starting for many in 2027.

• Purpose: The goal is to provide consistent, comparable, and reliable data for investors, lenders, and stakeholders to assess financial resilience.
• Adoption and Timeline: Formalized in early 2026, the FCA (Financial Conduct Authority) is adapting Listing Rules, with mandatory reporting expected for listed companies for reporting years starting on or after January 1, 2027.
• Alignment: While based on the International Sustainability Standards Board (ISSB) standards, UK SRS includes tailored, UK-specific provisions.

Here at Carbon Neutral Group, we can advise on UK SRS

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ISO 14064-1

ISO 14064-1:2018 is an international standard that provides a detailed, organized framework for organizations to quantify, monitor, and report their greenhouse gas (GHG) emissions and removals.

It focuses on the organizational level, setting requirements for defining boundaries, calculating Scope 1, 2, and 3 emissions, and managing a verified carbon footprint inventory.

Key Aspects of ISO 14064-1

• Purpose: Enables organizations to establish a consistent, transparent, and accurate GHG inventory, allowing for credible reporting to stakeholders and regulators.
• Scope: Covers the entire organization, including direct emissions (Scope 1), energy indirect emissions (Scope 2), and other indirect emissions (Scope 3).
• Key Requirements: Specifies requirements for designing, developing, managing, and reporting an organization’s GHG inventory.
• Relation to Others: It is Part 1 of the ISO 14064 series, focusing on organizational footprints, while Part 2 deals with project-level emissions, and Part 3 covers verification.

Here at Carbon Neutral Group, we can advise on ISO 14064-1 compliance.

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SECR

Streamlined Energy and Carbon Reporting (SECR) is a UK government mandatory reporting framework introduced on April 1, 2019, requiring quoted companies, large unquoted companies, and LLPs to disclose their energy use and greenhouse gas emissions in annual reports. It replaced the Carbon Reduction Commitment (CRC) scheme, aiming to increase energy efficiency awareness. 

Key Details About SECR

• Purpose: Encourages businesses to monitor and reduce energy consumption and carbon emissions.
• Applicability: Applies to UK companies, LLPs, and large unquoted companies/LLPs that meet at least two of the following: 250+ employees, £36m+ turnover, or £18m+ balance sheet.
• Requirements: Companies must report on energy use (including transport) and emissions, usually within the Directors’ Report.
• Scope: Includes electricity, gas, and fuel for transport (scope 1 and 2 emissions).
• Synonyms/Related Terms: Often referred to as “Carbon Reporting,” “Energy Usage Disclosure,” or “Mandatory Environmental Reporting”

SECR was designed to be simpler than previous regulations (like CRC) while providing transparency on environmental impact.

Here at Carbon Neutral Group, we can advise on SECR compliance.

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ESOS

The Energy Savings Opportunity Scheme (ESOS) is a mandatory UK energy assessment scheme for large businesses, requiring them to audit energy usage across buildings, transport, and industrial processes every four years. Managed by the Environment Agency, it aims to reduce carbon emissions by identifying cost-effective energy-saving measures

Key Aspects of ESOS:

• Qualification: Applies to companies with 250+ employees, or a turnover exceeding £44m+ and a balance sheet over £38m+.
• Compliance: Audits must be reviewed by an accredited Lead Assessor.
• Process: Companies must measure total energy consumption, identify areas of high usage, conduct audits, and report compliance to the Environment Agency via GOV.UK.
• Phases: The scheme runs in four-year phases; Phase 3 compliance is ongoing, with Phase 4 targeting a December 2027 deadline.

Purpose: The primary purpose is to help companies gain visibility into their energy usage to reduce costs and carbon emissions, supporting the UK’s net-zero transition.

Here at Carbon Neutral Group, we can advise on SECR compliance.

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EcoVadis

EcoVadis is the world’s most trusted provider of business sustainability ratings, assessing over 130,000 companies across 180+ countries.

It evaluates performance on environmental, social, and ethical impacts (ESG/CSR) through a tailored, evidence-based scorecard, helping companies monitor, improve, and demonstrate sustainability maturity within their supply chains.

Key Aspects of EcoVadis:

• Industry-Specific: Unlike one-size-fits-all systems, EcoVadis tailors assessments to a company’s industry, size, and geographic location.
• The Scorecard and Medals: Companies receive a scorecard (0–100) and may earn medals (Bronze, Silver, Gold, Platinum) if they are in the top percentage of performers.
• Mechanism: It is a voluntary, commercial platform where large organizations, such as Nestle or Schneider Electric, use it to assess their supplier base.
• Purpose: To improve transparency, reduce environmental impact, ensure ethical practices, and mitigate risk in supply chains

The process involves completing a questionnaire and submitting supporting evidence, which is then verified by EcoVadis analysts. This rating helps businesses gain a competitive advantage and prove their sustainability credentials, avoiding “greenwashing”.

Here at Carbon Neutral Group, we can advise on EcoVadis compliance.

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