Welcome to Consultus Sustainability
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Across the UK and internationally, businesses are facing increasing regulatory requirements to disclose their environmental, social and governance (ESG) impacts, climate-related risks, and sustainability performance. As regulations continue to change, transparency and accurate reporting are now essential components of corporate compliance.
Failing to meet sustainability reporting obligations can have serious consequences, and organisations may face fines and other penalties for non-compliance.
In this guide, we explore the potential fines and penalties associated with sustainability reporting non-compliance and outline practical steps your business can take to ensure accurate, timely, and compliant reporting.
Sustainability reporting for businesses is the process of measuring, managing and communicating environmental, social and governance performance. This covers key topics such as carbon emissions, energy use, waste production and processing, water consumption and supply chain impacts.
Many of the current compliance reporting requirements have been introduced as part of the UK government’s net zero targets. The aim is to create transparency around businesses’ environmental impacts, risks and opportunities, as well as highlighting areas for improvement and forming a strong foundation for progress towards their goals. Sustainability reporting can also help organisations meet stakeholder and consumer expectations.
The exact sustainability reporting requirements that your business will need to comply with largely depends on factors such as business size, sector and nature of operations.
The consequences of sustainability reporting non-compliance can vary depending on the size of your business, the type of reporting you have failed to comply with, and the nature of your non-compliance. Some of the common fines include:
Companies that fail to meet SECR reporting requirements may face enforcement under the Companies Act. If non-compliance leads to late or non-compliant annual accounts, Companies House late filing penalties range from £150 to £1,500 for private companies and £750 to £7,500 for public companies, depending on how late the accounts are submitted.
If ESOS is not followed, Compliance Notices, Enforcement Notices, and Civil Penalties, may be issued. This may include a civil penalty of up to £50,000 and a daily penalty of £500 for each day the organisation is found to be in violation (up to a maximum of 80 days).
Under Chapter 3 of Part 4 of the ESOS Regulations, organisations that fail to undertake a required energy audit may be subject to these penalties, including an initial penalty of up to £50,000, daily penalties, publication of the breach, and any required steps to remedy non-compliance, such as completing an ESOS assessment. Failure to undertake an energy audit is considered a significant breach, and the statutory maximum penalty will normally apply, except for new ESOS entrants, where a lower initial penalty of up to £5,000 may be imposed during their first compliance period.
Non-compliance fines may incur penalties determined by the relevant national authority in the EU member state where they are regulated. Although there are no published figures for these penalties, the CSRD cites that they can issue ‘effective, proportionate, and dissuasive’ financial penalties, as well as public statements identifying non-compliance, and orders requiring corrective action.
Although there are no fixed financial penalties specified for non-compliance with the UK’s Sustainability Disclosure Requirements, The Financial Conduct Authority (FCA) may take enforcement action on a case-by-case basis. This can include unlimited financial penalties, restrictions on business activities, and requirements to amend or withdraw misleading sustainability-related disclosures.
There are no standalone financial penalties specifically for failing to comply with the TCFD framework. However, if your business falls under the mandatory scope of TCFD, you may face enforcement action for non-compliance. This may include FCA sanctions, financial penalties, public censure, or enforcement under the Companies Act for incomplete or inaccurate reporting. As the UK transitions to the new UK Sustainability Reporting Standards (UK SRS), it is important that your business continues to meet any TCFD-related obligations that apply to you.
Beyond fines and penalties, organisations that fail to comply with mandatory sustainability reporting requirements may face a range of wider business impacts. Non-compliance can damage your businesses’ reputation and reduce investor, customer and supplier confidence. It may also lead to greater regulatory scrutiny and missed opportunities to improve operational efficiency through better management of sustainability data.
As reporting requirements continue to change, staying compliant is becoming an important part of risk management for your business.
Understanding the most common causes of sustainability reporting non-compliance can help your business identify potential risks before they result in regulatory action or financial penalties.
Missing deadlines/ late submissions – Many sustainability reporting frameworks have strict submission deadlines. Failing to submit reports on time can lead to fines, and enforcement action. Businesses should establish clear reporting timelines and assign responsibilities to ensure all reporting is completed and submitted within the required timeframe.
Publishing incomplete or inaccurate data- Sustainability data needs to be reliable, consistent, and verifiable. Reporting inaccurate emissions figures, omitting information, or publishing incomplete data can lead to penalties and damage trust. Robust data collection processes and verification processes are essential in helping to minimise compliance reporting errors.
Making unsubstantiated claims (greenwashing)- Businesses must be able to support any environmental or sustainability claims they make with credible evidence. Statements such as “carbon neutral”, “net zero”, or “environmentally friendly” must be backed by verified data. Unsubstantiated claims can result in regulatory investigations, legal challenges, and reputational damage to your business.
Neglecting modern slavery reporting – Many authorities require businesses to disclose the steps they are taking to address modern slavery risks within their operations and supply chains. Failing to publish a modern slavery statement when required or providing inadequate disclosures can lead to compliance breaches.
Misrepresenting climate-related risks – Climate change can present significant financial risks to businesses. Failing to accurately disclose these risks, or deliberately understating their significance, may lead to regulatory action.
Failing to conduct required supply chain due diligence – As part of many sustainability reporting compliance requirements, businesses are expected to assess and manage environmental risks throughout their supply chains. In some regions, these requirements are becoming mandatory. Failure to conduct appropriate assessments or address identified risks can expose businesses to penalties and reputational harm.
Breaching environmental permit conditions – Sustainability compliance goes beyond reporting obligations and also requires businesses to meet certain permit conditions relating to emissions, waste management, water usage, or pollution controls. By implementing effective environmental management systems, your business can better monitor compliance and reduce the risk of violations.
Streamlined Energy and Carbon Reporting (SECR) applies to quoted companies listed on the main market of the London Stock Exchange, a European Economic Area market, or admitted to trading on the New York Stock Exchange or NASDAQ. It also applies to large UK companies and large LLPs as defined by the Companies Act 2006; those with a turnover of £36 million or more, a balance sheet total of £18 million or more, or 250 or more employees. SECR requires organisations to report on their energy consumption and GHG emissions as part of their financial reporting for Companies House.
Energy Savings Opportunity Scheme (ESOS) is a mandatory energy assessment scheme for large UK organisations. ESOS applies to organisations with 250 or more employees, or those with an annual turnover exceeding €50 million (approximately £43 million) and an annual balance sheet total exceeding €43 million (approximately £37 million). Companies that qualify for ESOS must carry out energy audits every four years to identify cost-effective energy-saving opportunities across their buildings, industrial processes, and transport activities.
EU Corporate Sustainability Reporting Directive (CSRD) is the EU’s sustainability reporting framework that requires organisations to disclose information on their ESG matters. CSRD applies to large EU companies, listed SMEs, and certain non-EU companies generating significant turnover in the EU or with substantial EU operations. UK companies may also be in scope if they are part of an EU group or meet the relevant EU thresholds. Reports must be in line with the European Sustainability Reporting Standards (ESRS) and, in many cases, be independently assured. UK companies may be in scope if they are part of an EU group or meet certain EU reporting thresholds.
Sustainability Disclosure Requirements (SDR) is the UK’s sustainability disclosure framework designed to improve transparency and trust in sustainability-related claims including rules on sustainability-related labels, anti-greenwashing obligations, and entity-level disclosures. SDR applies primarily to UK FCA-authorised asset managers and certain investment product providers, with requirements being introduced in phases and expected to expand to additional firms over time.
The Task Force on Climate-related Financial Disclosures (TCFD) is a framework for organisations to report climate-related risks and opportunities in a consistent and transparent way, covering governance, strategy, risk management, and climate-related metrics and targets. Historically, mandatory TCFD reporting applied to premium-listed UK companies, large private companies and LLPs meeting specified size thresholds, and certain FCA-regulated financial institutions. Although the UK is transitioning from TCFD reporting to the new UK Sustainability Reporting Standards (UK SRS), with the changeover expected from 2027, TCFD remains relevant for organisations that are still reporting under the existing framework or preparing for the transition.
It’s easy for sustainability reporting compliance to feel overwhelming without a structured plan in place to tackle it.
Start by determining exactly which reporting applies to your business, as requirements may vary depending on the nature of your operations.
You can then create a clear compliance roadmap that outlines applicable regulations and frameworks and key submission deadlines. Having a structured plan in place helps reduce the risk of missed deadlines and last-minute reporting challenges.
If you’re unsure, reach out to our team, who will be happy to advise which reporting frameworks you may fall into.
One of the most common reasons businesses struggle with reporting processes is a lack of accountability. Ensure responsibility for sustainability reporting is clearly assigned, whether that’s through a dedicated sustainability manager, ESG team, finance department, or another designated employee.
Clearly defining ownership helps ensure data is collected consistently, deadlines are met, and reporting requirements are treated as a priority.
Accurate compliance reporting depends on accurate data. Businesses should establish systems for regularly monitoring, collecting, and validating sustainability information throughout the year rather than scrambling to gather data just before reporting deadlines.
Maintaining high-quality records can also simplify audits and assurance processes and support better business decision-making.
Whilst it’s important to meet mandatory requirements, your business can also benefit from adopting sustainability best practices that go beyond regulatory obligations.
For example, even if your business is not currently required to report Scope 3 emissions, understanding emissions generated across your supply chain can provide valuable insights into your overall environmental impact and help prepare for future regulatory changes.
Voluntary sustainability reporting can also help businesses strengthen transparency and demonstrate environmental commitment. By starting to measure and report sustainability performance early, you are often better positioned when regulations become more stringent.
Compliance reporting should not be viewed as a box-ticking exercise. Building sustainability reporting into your day-to-day business processes can not only save you time and stress for mandatory reporting, but also help you to identify opportunities to reduce emissions, improve resource efficiency and lower operating costs.
Regular reviews, internal audits, staff training, and continuous monitoring can help ensure reporting remains accurate and compliant; whilst the stronger your sustainability performance, the easier it becomes to demonstrate compliance and communicate progress to stakeholders, unlocking wider sustainability benefits.
Sustainability regulations are continually changing and being redefined by authorities, sometimes making it tricky for businesses to stay up to date.
Working with an energy or sustainability consultancy can provide access to specialist expertise, helping you understand your obligations, improve data quality, identify compliance gaps, and develop an effective long-term compliance reporting strategy.
At Consultus Sustainability, we work with businesses across all sectors to help them get the most out of their compliance reporting and overall sustainability, through a range of bespoke services.
We can support your business with all your sustainability reporting requirements, including ESOS and SECR. As part of our compliance services, we carry out on-site energy audits to build a clear picture of your energy use, ensuring your reporting is accurate, robust, and based on real operational data.
As well as supporting compliance, our business energy audits also uncover opportunities to improve energy efficiency, reduce costs, and lower carbon emissions. We use the insights gathered to provide practical, prioritised recommendations that can help your business make operational improvements. This means your compliance reporting forms the foundation for a longer-term sustainability strategy and a clear pathway towards reducing your environmental impact.
To take your sustainability a step further, our net zero pathway service helps you take proactive steps to reach your goals. Building on the data gathered through your carbon audit and reporting, we identify opportunities to reduce emissions and develop a practical, tailored roadmap for your business. We work with you to determine the most appropriate level of support, creating a clear, actionable plan that works with your commercial objectives.
To find out more about how Consultus Sustainability can support your business, or to explore our services in more detail, get in touch with our team today.
