SMEs · What applies
SME sustainability reporting UK: requirements for small and medium enterprises
SME sustainability reporting in the UK is, for most small and medium enterprises, voluntary.
The one regime that can reach a larger SME is SECR, and only once it exceeds two of the three limits in Schedule 7 paragraph 20B.
The short answer
What reaches an SME, and what does not
SME sustainability reporting in the UK is, for most small and medium enterprises, voluntary: no sustainability reporting regime is mandatory for them.
That does not make the subject irrelevant.
An SME in a large company’s supply chain is routinely asked for the same data, and the wider landscape of sustainability reporting is where those requests originate.
There are some exceptions, and some voluntary opportunities.
| Regime | Does it reach an SME? |
|---|---|
| SECR | Only once a company exceeds at least two of the three exemption limits; quoted companies regardless of size |
| Companies Act s414CB climate disclosures | No — more than 500 employees plus traded, banking, insurance or high-turnover status |
| UK SRS S1 and S2 | Voluntary only; no requirement proposed for SMEs or private companies |
| Customer data requests | Often — especially for Scope 3 |
Mandatory
Current mandatory requirements for SMEs
SECR — larger SMEs only
The SECR size test is drafted as an exemption: an unquoted company is exempt where it meets two or more of turnover not more than £36m, balance sheet total not more than £18m and not more than 250 employees (Schedule 7 paragraph 20B).
So a company is in scope where it exceeds at least two of those limits, and must then comply with SECR.
Quoted companies report their global Scope 1 and 2 emissions regardless of size (Schedule 7 Part 7).
These thresholds were not uprated by the April 2025 Companies Act size changes: SI 2024/1303 raised the accounts thresholds in section 465 but left Schedule 7 Part 7A untouched.
A company reclassified as medium-sized for accounts purposes can therefore still be caught by SECR.
Directors’ Report disclosure
Large unquoted companies must include energy and carbon information in their Directors’ Report, including UK energy consumption and the associated greenhouse gas emissions.
Climate-related financial disclosures
The Companies Act 2006 section 414CB duty reaches only companies with more than 500 employees that are traded, banking, insurance or high-turnover (over £500m) companies — no SME is in scope.
Supply chain requests
SMEs may need to provide sustainability data to larger customers subject to mandatory reporting, especially for their Scope 3 calculations.
SECR exemption limits — meet two and you are exempt
Inserted by SI 2018/1155; not uprated in April 2025.
Voluntary
Voluntary adoption opportunities
UK SRS voluntary use. Any UK entity can adopt UK SRS S1 and S2, published by the Department for Business and Trade on 25 February 2026, and available for voluntary use immediately.
Customer requirements. Many SMEs adopt sustainability reporting to meet customer or investor expectations, particularly when supplying large corporations subject to mandatory disclosure.
Access to finance. Some lenders and investors require ESG information from SME borrowers, especially for sustainability-linked loans and green financing.
For the private-company position in full, see private companies and UK SRS; for the case for adopting early, see voluntary UK SRS reporting.
No UK SRS reporting requirement has been proposed for SMEs, or for private companies of any size.
The Modernising corporate reporting consultation of 7 September 2026 (closing 30 November 2026) says only that the government “will consider how UK SRS should be reflected in the Companies Act 2006”.
It seeks views on a possible “very large” company category without proposing any figure.
Getting started
Sustainability reporting for SMEs: simplified approaches
An SME that chooses to report can use proportionality and reliefs that are built into the standards themselves.
Proportionality
An entity uses reasonable and supportable information available without undue cost or effort, with an approach commensurate with its skills, capabilities and resources (UK SRS S1 ¶¶37–39).
It may omit quantitative financial-effect information it lacks the resources to produce.
Untimed reliefs for voluntary reporters
A voluntary adopter may report climate-only under UK SRS S1 ¶E3 and omit Scope 3 under UK SRS S2 ¶C4, both without a time limit.
It must disclose that it has used the relief.
Build over time
Start with basic climate disclosures and Scope 1 and 2 emissions, then expand to Scope 3.
Professional help, or free tools
Work with consultants familiar with SME reporting.
Or start from the free GHG Protocol Corporate Standard and the DESNZ conversion factors for a first Scope 1 and 2 footprint.
The comply-or-explain mechanism sometimes attributed to UK SRS is the FCA’s listing rule for listed companies — final since 30 September 2026 (PS26/19), after the CP26/5 consultation.
It is not a feature of the standards, and it does not apply to an SME.
An SME planning expansion should consider whether growth could bring it into scope of a mandatory requirement.
Adopting voluntary standards early builds capability before any requirement is introduced.
Sources
Primary sources
Every figure, date and status on this page traces to the instrument’s owner. Secondary commentary is never the source for a number.
- Department for Business and TradeUK SRS S1 and UK SRS S2
Published 25 February 2026; available for voluntary adoption by any UK entity, including SMEs.
- legislation.gov.ukThe Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 (SI 2018/1155)
The instrument that inserted SECR into the accounts regulations.
- Department for Business and TradeUK Sustainability Reporting Standards — guidance
Confirms the standards are available for voluntary use by any entity.
- legislation.gov.ukSI 2008/410, Schedule 7, paragraph 20B
The SECR exemption test: not more than £36m turnover, £18m balance sheet total, 250 employees — meet two and you are exempt.
- legislation.gov.ukSI 2024/1303, regulation 5
The April 2025 Companies Act size uplift, which left Schedule 7 Part 7A (SECR) untouched.
- legislation.gov.ukCompanies Act 2006, section 465
The medium-sized company accounts thresholds that SI 2024/1303 raised.
- legislation.gov.ukCompanies Act 2006, section 414CB
The climate-related financial disclosure duty for companies with more than 500 employees; no SME is in scope.
- Department for Business, Innovation, Science and TradeModernising corporate reporting — consultation
Published 7 September 2026, closes 30 November 2026; no UK SRS threshold or date proposed for private companies.
- Department for Business and TradeUK SRS S1 General Requirements — final standard (PDF)
Paragraphs 37–39: proportionality — reasonable and supportable information without undue cost or effort.
- GHG ProtocolCorporate Accounting and Reporting Standard
The free methodology for a first Scope 1 and 2 footprint.
- Department for Energy Security and Net ZeroGreenhouse gas reporting: conversion factors 2026
UK activity-data factors for Scope 1 and 2.
Continue reading
Read next
What is UK SRS?
An introduction to the UK Sustainability Reporting Standards and their availability to all UK entities.
SECR thresholds
When energy and carbon reporting becomes mandatory for companies meeting the size criteria.
Voluntary UK SRS reporting
The benefits and pathways for adopting UK SRS voluntarily.
Who must comply with UK SRS
The scope of the FCA’s final rules for listed companies, and who sits outside it.