ESG – Environmental, Social and Governance

The next big thing at the heart of UK corporate reporting in the drive to net zero

ESG reporting is the disclosure of environmental, social and corporate governance data, shedding light on a company’s ESG activities, improving investor information

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The ESG timeline in the UK

2022

ESG reporting begins

Since 2022, all UK large and or listed companies were required to start ESG reporting

2024

Large and listed UK companies

Only large and listed UK companies are currently impacted by ESG reporting

2027

ESG reporting trickles down to small and medium sized UK companies?

The timetable is subject to change, but in a net zero future, ESG reporting will become relating foe all UK businesses over the next 5 years

How will ESG reporting impact my UK company?

As of January 2024, only large and listed UK companies are currently impacted by ESG carbon reporting requirements. However over the next few years this will undoubtedly trickle down to SMEs.

Now is the time to assess the impact on your business and plan ahead

Digitalisation, including AI will almost certainly drive the way forward for small and medium sized UK companies when they are ultimately requited to undertake sustainability reporting, possibly in 2027 or 2028.

This will almost certainly be heavily reliant upon API plus-ins to accounting software, driving the shift away from spreadsheets to the next generation of cloud accounting software,

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Environmental (E)

This aspect focuses on a company’s impact on the environment. Investors assess how a company manages its resource use, energy consumption, pollution, waste, and its overall carbon footprint.

Companies with strong environmental practices may implement sustainable and eco-friendly initiatives, such as renewable energy adoption, waste reduction, and conservation efforts.

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Social (S)

The social dimension looks at a company’s relationships with its employees, customers, suppliers, and the communities in which it operates. Social factors include labor practices, employee relations, diversity and inclusion, human rights, customer satisfaction, and community engagement.

Companies that prioritise social responsibility often foster a positive work culture, promote diversity and equality, and contribute to social development.

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Governance (G)

Governance focuses on the systems and structures that guide how a company is directed and controlled. It involves examining a company’s leadership, executive pay, shareholder rights, board structure, and internal controls.

Strong governance practices ensure transparency, accountability, and ethical decision-making within the organisation.

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The latest on ESG

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ESG criteria are increasingly important for investors and other stakeholders who want to align their investments with sustainable and responsible business practices. Many companies are now reporting on their ESG performance to demonstrate their commitment to these principles. ESG considerations are seen as a way to promote long-term sustainability and reduce risks associated with environmental and social issues, as well as poor governance.

The ESG specialists at Dafferns

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Brian Jukes

Corporate Tax Partner

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Lucy Hatton

Corporate and Charity Services Director

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Martin Gibbs

Managing Partner

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Emily Ball-Goldfinch

Corporate Services Senior Manager

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Diagnostics

ESG Diagnostic

Use this diagnostic to ascertain gaps in your planning to implement ESG principles within your organisation.

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