UK businesses risk fines for missing emissions reporting deadline

The European Corporate Sustainability Reporting Directive comes into force in 2024

Almost two-thirds (60%) of UK companies are set to miss an upcoming Scope 3 emissions reporting deadline, according to a survey, putting them at risk of fines and losing customers.

Scope 3 emissions are those not produced by a company itself, or the result of its activities, but by companies it’s indirectly responsible for, up and down its value chain.

The research, undertaken by Censuswide, surveyed 800 businesses of 250 employees or more in sectors including retail, pharma, manufacturing, logistics and construction, as well as 2,000 consumers, to understand how prepared businesses are for new regulations around Scope 3 emissions, and what impact non-compliance might have on their customers.

It found that although nearly all businesses (96%) have heard of the European Corporate Sustainability Reporting Directive (CSRD) coming into force in 2024, there is uncertainty around measurement and reporting.

More than a quarter of leaders in the companies surveyed (27%) reported feeling worried, particularly if they have a turnover of under £1m where 49% of leaders are concerned.

Alongside this, customer loyalty looks to be tested as nearly a half (49%) of consumers will look to buy from other brands if those they shop with are fined for non-compliance and 17% will never buy from them again.

The CSRD requires companies to report on the impact of corporate activities on the environment and society, namely Scope 3 emissions, and requires the audit of reported information.

Qualifying large businesses will need to disclose a CSRD report according to a first set of sustainability reporting standards for their 2024 financial year. All EU Member States need to comply with the CSRD by 6 July 2024.

Organisations need to start putting in place ESG reporting capabilities and infrastructure in 2023 to prepare their CSRD reporting for the following year. But research by 7bridges, an AI-powered supply chain management platform, suggested businesses are ill-prepared.

However the data paints a bright picture that 84% of businesses have offsetting carbon emissions as part of their strategy right now, and 71% say auditing has helped to reduce their carbon footprint so far. But the incoming Scope 3 regulations are much stricter.

Learn more: ESG Clarity