ESG reporting

ESG reporting that stands up in energy and resources

If you’re in energy, mining, waste, utilities, or a related supply chain, ESG reporting has moved from a “nice to have” to something boards and investors expect to hold up under pressure. Even where the law doesn’t force full sustainability disclosure yet, the direction is clear. UK regulators want consistent, decision-useful information that links climate and wider ESG factors to financial performance. And buyers, lenders, insurers, and joint-venture partners are already using ESG reporting to screen projects and counterparties.

The broader UK picture explains why. Total UK greenhouse gas emissions were provisionally 476 MtCO2e in 2024, about 43% below 1990 levels, driven mainly by changes in the energy system (ONS, 2025). For energy and resources firms this creates two simultaneous pressures – to show how your business contributes to the transition, and to show how you’ll stay profitable as policy, prices, and technology shift. London’s markets and sector events are putting a bright light on this, and weak ESG reporting is easy to spot.

In this article we set out what’s required now, what’s likely to change from 2026, and how to prepare.

The aim is simple – to help you produce ESG reporting that supports investment, satisfies stakeholders, and stands up to scrutiny.

Why ESG reporting is tightening in the UK

Steven Johnson, our Head of audit added “Large companies in scope already face mandatory climate-related financial disclosures aligned to TCFD. These rules apply to entities with more than 500 employees that are listed, AIM-traded, banking or insurance companies, and to large private companies or LLPs with turnover above £500m (FRC, 2025). Disclosures sit in the strategic report and must cover governance, strategy, risk management, and metrics and targets. The Financial Reporting Council’s first thematic review found quality was mixed, with too many reports relying on generic statements and thin scenario analysis.

Alongside that, many mid-sized groups are already reporting under Streamlined Energy and Carbon Reporting (SECR), and lenders are using SECR data as a minimum baseline. For the sector, SECR often highlights a mismatch between operational data and financial reporting, which in our experience is exactly what stakeholder assurance teams look for.

From 2026, the UK is expected to adopt UK Sustainability Reporting Standards based on the ISSB’s IFRS S1 and S2. Implementation is not finalised, but the expected effective date is for accounting periods beginning on or after 1 January 2026 at the earliest (ICAEW, 2023). UK SRS is designed to pull sustainability disclosure into the same discipline as financial reporting – clearer materiality, tighter controls, and more assurance-ready evidence”.

So, whilst you might not be legally required to publish full ESG reporting today, the sector is already moving to that standard. The practical question is whether your reporting is building credibility or leaving gaps you’ll have to fix later.

ESG reporting for energy and resources – what’s required now

Start with a clear view on scope. In practice, we see three overlapping reporting prompts:

Statutory compliance: For in-scope large entities, your TCFD-aligned climate disclosures must be complete, company-specific, and linked to the strategic report. That means stating your principal climate risks and opportunities, time horizons, impacts on strategy, and how you measure progress (FRC, 2025).

Market expectations: Even for SMEs, customers and partners increasingly ask for ESG reporting as part of tendering and supplier onboarding. Energy-intensive customers want supply-chain carbon data to meet their own targets. Mining and infrastructure clients want evidence on community impact and governance in permitting and delivery.

Capital access: Banks and investors are now baking transition risk into pricing. If your ESG reporting doesn’t show clear operational and financial levers for emissions reduction, projects can look riskier than they really are.

A practical way to keep control is to align your ESG reporting to your business model, not to a generic checklist. We suggest you map ESG topics to how you make money and where value could be lost. For example:

• A minerals producer might treat water use, land rehabilitation, and tailings management as material because they directly affect licence-to-operate and long-term reserves.
• An upstream energy group might prioritise methane management, electrification of operations, and decommissioning obligations because they affect unit costs and asset life.
• A services firm supporting the sector might focus on workforce safety, skills, and supply-chain integrity because those shape delivery risk and insurance terms.

If you want a simple starting point for emissions data, our earlier piece on knowing your emissions values sets out the building blocks and typical pitfalls in measurement and audit readiness.

Getting Scope 1, 2 and 3 right without drowning in data

Energy and resources firms live or die on credible Scope data. Under most frameworks:

• Scope 1 is direct emissions from owned or controlled sources.
• Scope 2 is indirect emissions from purchased energy.
• Scope 3 is other indirect emissions across your value chain, including product use and supply chain impacts (ONS, 2025).

These definitions look straightforward, but the sector challenges are specific.

Scope 1 in the field: Fugitive methane, flaring, diesel fleets, and process emissions can be significant and variable. You need consistent boundaries and a repeatable approach to conversion factors. The UK’s 2025 conversion factors are the reference point for reporting in 2025/26 (DESNZ, 2025).

Scope 2 in complex operations: Power purchase agreements, grid-connected versus off-grid sites, and embedded generation often lead to inconsistent Scope 2 treatment. Your ESG reporting should explain the approach clearly and reconcile it to energy cost lines in the accounts.

Scope 3 that passes a sense check: For many in the sector, Scope 3 dominates. Think sold-product combustion, contractor emissions, shipping, and embedded carbon in purchased equipment. The key is to avoid over-precision in the first year. Use robust estimation where needed, disclose assumptions, then tighten the data year on year. A useful test is whether your Scope 3 narrative explains the commercial levers you actually control – procurement, product mix, logistics, joint-venture standards.

To keep this manageable we usually recommend a staged approach:

Baseline: Use SECR and operational data to establish consistent Scope 1 and 2 totals first.

Hotspots: Identify the few Scope 3 categories that drive most of the total. In mining, this is often transport and processing. In oil and gas it’s typically sold products.

Controls: Put basic governance around data definition, ownership, and sign-off. That’s what external assurance providers will look for later.

Transition plans and narrative that auditors can test

Good ESG reporting is not just a pile of metrics. It’s a clear explanation of how your strategy adapts to transition risk and opportunity. The FRC has been clear that weak disclosures tend to share the same flaws – generic language, unclear assumptions, and climate risks described separately from the business.

What “decision-useful” looks like in this sector:

Governance: Name who owns ESG risks at board level, what information they see, and how often. If remuneration links to performance, say how.

Strategy and resilience: Describe how different climate scenarios affect your asset portfolio and project pipeline. For example, you might show how carbon pricing assumptions change project IRRs, or how a policy-driven drop in demand affects reserve life. Qualitative scenario analysis is acceptable, but it must be specific to your sites and products.

Targets with a route map: Targets without delivery plans read as marketing. Investors want to see milestones, capex allocation, and operating changes. Make the link to your financial statements explicit where you can – depreciation and impairment assumptions, decommissioning provisions, or expected carbon costs.

Wider ESG factors: In energy and resources, social and governance issues often drive real business risk. Community engagement failures delay permits. Safety incidents hit production and insurance. Corruption exposure blocks projects. Your ESG reporting should treat these as business issues, not as separate CSR text blocks.

If you need a reference for how the UK standards are expected to tighten narrative requirements, the ISSB-based UK SRS direction of travel is summarised here.

Making ESG reporting work for your strategy

John Black, our Head of Energy and Natural Resources added “The bar for ESG reporting in energy and resources is rising quickly. Large entities already face mandatory TCFD-aligned disclosures, and the UK SRS framework is expected to move that approach across a wider set of companies from 2026. At the same time, supply-chain and capital-market pressure means even mid-sized businesses are being judged on the quality of their ESG reporting now.

The upside is real. Strong ESG reporting can lower your cost of capital, help secure contracts, and reduce friction in permitting and partnerships. The risk of getting it wrong is also real – investors discount boilerplate, and regulators are paying more attention to consistency between sustainability claims and financial reporting. With national emissions down 43% versus 1990 and energy industry emissions down 66% over that period (ONS, 2025), stakeholders expect the sector to show measurable progress and credible plans”.

Next steps are about control and clarity.

Build a reliable emissions baseline, focus on the material issues that drive value, and join the dots between strategy, targets, and numbers. If you’d like an outside view on whether your ESG reporting is assurance-ready and aligned to what’s coming next, we can help you shape a practical plan and support delivery. Learn more about how we approach ESG in our own work here.

If you would like to speak to a member of our audit team or our head of Energy and Natural Resources about anything contained in this article please contact us or telephone us on 020 7870 9050. 

John Black

Head of Energy and Natural Resources