Sustainability Regulations for Businesses

With a legally-binding target to reach net zero by 2050, the UK government is rolling out policies to ensure that businesses and investors do their part.

Understanding and complying with these regulations can be complicated, so we've put together an easy-to-follow guide to help you understand the key sustainability regulations affecting businesses in 2024.

UK Sustainability Reporting

Streamlined Energy and Carbon Reporting (SECR)

What Is SECR?

SECR mandates large UK firms to report their energy usage, carbon footprint, and greenhouse gas emissions within their annual financial reports.

Who does SECR affect?

Large companies that operate in the UK, encompassing both public and private sectors.

What are the SECR’s key requirements?

Businesses must disclose detailed information about their energy consumption and carbon emissions. They also need to outline any significant energy efficiency actions taken over the reporting period.

Financial Conduct Authority TCFD Reporting (FCA CRFD)

What is the TCFD?

The FCA requires UK-listed companies, as well as regulated asset managers and owners, to submit annual reports aligned with the Task Force for Climate-Related Financial Disclosure (TCFD) guidelines.

Who does the TCFD affect?

Companies with UK-listed shares or assets and those under FCA regulation.

What are the TCFD’s key requirements?

Firms must answer a set of TCFD-aligned questions detailing their climate-related financial risks.

UK Sustainability Standards

Minimum Energy Efficiency Standard (MEES)

What is the MEES?

The Minimum Energy Efficiency Standard (MEES), effective from April 1, 2018, in England and Wales, mandates improved energy efficiency in private rental properties, barring leases for buildings with energy performance ratings below E.

Who does the MEES affect?

MEES regulations impact landlords of both residential and non-residential privately rented properties that are legally required to have an Energy Performance Certificate (EPC). This applies to buildings rented or marketed since 2008, necessitating an EPC valid for ten years, with certain exceptions.

What are the MEES’s key requirements?

Landlords must ensure properties meet at least an E rating on their EPC before leasing. This may involve upgrading energy efficiency of F or G rated properties. If costs exceed the £3,500 cap for self-funded improvements, landlords must provide quotes from three installers proving the higher costs for exemption.

UK Net Zero Carbon Buildings Standard (The NZCB Standard)

What is the NZCBS?

The NZCBS is a UK initiative setting standards for net-zero carbon in building construction and operation, backed by sustainability organisations. It provides net-zero carbon definitions and metrics for the construction sector.

Who does the NZCBS affect?

The NZCBS targets a wide range of building industry stakeholders, including developers, managers, investors, consultants, building professionals, and product suppliers. It's for those involved in creating, funding, or certifying net-zero carbon buildings.

What are the NZCBS’s key requirements?

The NZCBS establishes guidelines for evaluating the net-zero carbon performance tailored by building type. It merges carbon budgeting with data analysis from existing buildings to define performance standards for various building categories, focusing initially on common types to promote net-zero carbon adoption.

UK Sustainability Disclosure Requirements

Climate-Related Financial Disclosure (CRFD)

What is CRFD?

Following a restructuring of the Department for Business, Energy, and Industrial Strategy (BEIS), this new department mandates annual sustainability and climate disclosures based on TCFD guidelines.

Who does the CRFD affect?

Public and private UK companies with more than 500 employees or over £500 million in annual revenue.

What are the CRFD’s key requirements?

Companies must provide comprehensive reports on how they manage and plan for climate-related risks and opportunities.

UK Sustainability Disclosure Standards (SDS)

What is the SDS?

A set of comprehensive measures designed to curb greenwashing and standardise sustainability reporting across the UK.

Who does the SDS affect?

All businesses that are subject to UK sustainability reporting regulations.

What are the SDS’s key requirements?

Organisations must adhere to sustainable investment labels, meet specific disclosure requirements, and follow guidelines on the use of sustainability-related terms in product marketing. The complete standards will be aligned with International Sustainability Standards Board (ISSB) standards and published by July 2024.

Energy Savings Opportunity Scheme (ESOS)

What is the ESOS?

A mandatory energy assessment scheme requiring audits every four years to identify cost-saving energy efficiency measures.

Who does the ESOS affect?

UK organisations that meet certain criteria, such as large companies and LLPs.

What are the ESOS’s key requirements?

Eligible organisations must conduct detailed energy audits of their buildings, processes, and transportation to pinpoint energy-saving opportunities.

Incoming regulations could put your assets at risk.

Here at CQuel, we ensure that your properties stay ahead of the regulatory curve by preparing them for a net zero tomorrow, today. Explore our current openings and become a part of Team CQuel.
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You’ve got questions,
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Are regulations mandatory?

Yes, regulations are mandatory for the businesses they cover. Businesses which fail to comply risk financial and reputational penalties. The scope of these regulations can change as well, so it’s important to keep an eye out for updates and check if your organisation is now affected.

Can small businesses be exempt from any of these regulations?

Certain regulations, like SECR and ESOS, specifically target large companies and LLPs based on criteria such as turnover, balance sheet total, and number of employees. Small businesses may be exempt from some regulations but are encouraged to adopt sustainability practices to improve efficiency and reduce environmental impact.

How will these sustainability regulations impact my property portfolio?

The first step is to understand which regulations apply to your property portfolio, and how they relate to the current state of your assets. When it comes to the incoming MEES regulations, CQuel can help you identify your most vulnerable properties, and implement solutions that ensure compliance and prevent potential asset stranding. Drop a line to to find out more. 

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