60% of UK businesses can't meet EU's carbon reporting regulations

A recent survey has found that 60% of UK companies within the scoping range for the Corporate Sustainability Reporting Directive (CSRD) don't feel that they will meet the legislation's requirements. The CSRD is a game-changing piece of legislation that requires much-improved Scope 3 emissions reporting by the start of January 2024.

The survey was conducted by Censuswide on behalf of 7bridges. It asked 800 businesses with more than 250 employees spread across a variety of sectors, including retail, manufacturing, pharmaceuticals and logistics. Alongside the headline stat here are some other key insights from the survey:

• 96% of businesses have heard of the CSRD legislation
• 71% have started carbon auditing
• 45% of businesses will utilise internal expertise while 45% will look to hire a specialist to join the team
• 40% are exploring the opportunity of working alongside an external auditor

What is the CSRD?

The CSRD is an initiative from the EU which ensures the same credence is given to sustainability reporting that legislation demands of financial reporting. It increases the scope of the previous regulation, the Non-Financial Reporting Direction (NFRD), to cover an estimated 50,000 businesses. The NFRD covered around 12,000.

Who must comply?

Post-Brexit, we are no longer bound by EU legislation, but this changes if you want to trade within the EU. CSRD applies to UK companies that generate a net turnover of more than EUR 150 million from the EU and have at least one subsidiary or branch within the EU.

For EU countries, including the UK's neighbours Ireland and France, the requirements are similar to the ESOS regulations:

• Employ at least 250 people during the financial year 
• A balance sheet with at least EUR 20 million
• A net turnover of at least EUR 40 million

Businesses underneath this scoping criteria will have a phased introduction to the regulations, having to comply by the start of 2026.

Does your organisation have complete visibility of its Scope 3 emissions?

Scope 3 emissions are by far the most challenging to document, so it's vital businesses invest in carbon reporting software capable of understanding emissions across the full value chain. The threat of legal fines also has the potential to impact financially elsewhere through damaged consumer trust.

Gaining complete carbon clarity does come with advantages. You can read these in our article Calculating Scope 3 emissions – challenges and opportunities.

Are you prepared for all your organisation's legislative requirements? Head to our energy compliance section for more info.