Sustainability regulations are quickly becoming more relevant to UK business & professional services firms, even those not directly involved in high-emissions industries. Understanding and responding to these rules is essential for compliance, client trust, and market competitiveness.

One of the most prominent regulations is the Streamlined Energy and Carbon Reporting (SECR) framework. Large UK companies - defined as having at least 250 employees, £36 million in turnover, or £18 million in balance sheet total - must disclose their energy use and carbon emissions in their annual reports. This affects thousands of service firms, especially in legal, financial, and consulting sectors(1).

In addition, UK-listed companies with over 500 employees are required to report under the Task Force on Climate-related Financial Disclosures (TCFD). These reports must outline how the company identifies and manages climate risks, its governance structure around these risks, and potential financial impacts. This has expanded from large corporations to include many professional services providers(2).

The UK Green Finance Strategy is also influencing the sector. Firms involved in investment, finance, or advisory services must ensure that products labelled as “green” or “sustainable” meet specific criteria. Misleading claims may lead to regulatory penalties or reputational damage(3).

While not regulation in the strict sense, public sector procurement requirements now include ESG considerations. Under the UK’s social value model, public contracts are awarded in part based on a bidder’s environmental and social credentials-raising the bar for legal, consulting, and IT service firms competing for government work.

Firms that serve clients in the EU are also impacted by incoming rules like the Corporate Sustainability Reporting Directive (CSRD). Even if headquartered in the UK, firms with substantial operations or clients in the EU may need to align with EU reporting standards(4).

The UK is developing its own system of sustainability reporting, known as the UK Sustainability Disclosure Standards (UK SDS). These standards are expected to be based on the IFRS Sustainability Disclosure Standards(5).

Understanding and acting on these regulations is not just a legal requirement - it’s fast becoming a business necessity.

Bibliography

1 Environmental reporting guidelines: including Streamlined Energy and Carbon Reporting requirements (Accessed May 2025) https://www.gov.uk/government/publications/environmental-reporting-guidelines-including-mandatory-greenhouse-gas-emissions-reporting-guidance

2 Task Force on Climate-related Financial Disclosure (TCFD) -aligned disclosure application guidance (Accessed May 2025) https://www.gov.uk/government/publications/tcfd-aligned-disclosure-application-guidance/task-force-on-climate-related-financial-disclosure-tcfd-aligned-disclosure-application-guidance

3 Green finance strategy (Accessed May 2025) https://www.gov.uk/government/publications/green-finance-strategy

4 Corporate sustainability reporting (Accessed May 2025) https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en

5 UK Sustainability Reporting Standards (Accessed May 2025) https://www.gov.uk/guidance/uk-sustainability-reporting-standards