The UK government is considering removing explicit strategic-report requirements covering environmental impacts, workforce matters, diversity, human rights, community engagement and anti-bribery measures. Companies would continue to disclose ESG matters where they are financially material, while existing climate-related disclosure requirements remain outside the current consultation. A proposed “very large” company category could significantly reshape the scope of non-financial reporting requirements for both public and private businesses. 

UK Targets a More Proportionate Reporting Framework 

The UK government has launched a broad consultation that could significantly reshape how companies report environmental, social and governance (ESG) matters under the Companies Act 2006. 

Published on 7 September 2026, the proposals aim to refocus annual reporting on information that is financially material and useful to investors and creditors. The government argues that the accumulation of reporting requirements has resulted in lengthy and complex annual reports, overlapping obligations and increased compliance costs. 

At the centre of the proposed reforms is the strategic report—the key section of an annual report where companies explain their performance, strategy, principal risks and other material matters. 

Explicit ESG Reporting Requirements Could Be Removed 

Under the proposed changes, companies could no longer face specific statutory prompts to report on: 

• Environmental matters and their impact on the environment 

• Employees, workforce engagement and diversity 

• Fair treatment, social responsibility and community relationships 

• Human rights across operations and supply chains 

• Anti-corruption and anti-bribery measures 

The government is also proposing to remove the Section 172(1) statement and the requirement to disclose the gender breakdown of directors, senior managers and employees. 

For boards, this could provide greater flexibility in determining what information is material enough to include. However, it may also place greater responsibility on companies to demonstrate sound materiality assessments. 

Investors could benefit from shorter and more focused reporting, but the removal of prescribed ESG disclosures could also reduce comparability and consistency across companies. 

Climate Disclosure Requirements Remain Under Review 

Existing climate-related financial disclosure requirements are not included in the proposed removals. The government is reviewing these requirements separately, with findings expected by spring 2027. Any resulting changes would be subject to a separate consultation. 

The review also intersects with the UK Sustainability Reporting Standards (UK SRS), published in February 2026 and closely aligned with the International Sustainability Standards Board (ISSB) framework. The government will consider how the UK SRS should be incorporated into company law. 

Separately, the Financial Conduct Authority is consulting on UK SRS-based requirements for listed companies. Under the proposed approach, Scope 3 emissions and non-climate disclosures would be subject to a comply-or-explain regime, with final listing rules expected in autumn 2026. 

Companies could also have greater flexibility over how climate and sustainability information is presented. Such information could be integrated throughout the strategic report or presented in a dedicated section within it. 

Streamlined Energy and Carbon Reporting (SECR) requirements would remain mandatory for companies within scope, although companies could have greater flexibility regarding where the information is presented. 

Reporting Scope Could Change for Large Private Companies 

Another significant proposal is the potential introduction of a single “very large” company threshold for certain non-financial reporting obligations. 

Currently, different requirements apply depending on factors such as quoted status, employee numbers and turnover. The government has not yet proposed a specific threshold and is seeking views on the most appropriate approach. 

The consultation will also examine whether mandatory non-financial disclosures from private companies remain necessary for assessing investment and credit risk. This is particularly relevant as private companies increasingly adopt complex financing structures and attract institutional investors. 

What This Could Mean for Businesses 

The proposed reforms could create a more proportionate and streamlined corporate reporting framework, reducing compliance costs and limiting repetitive or boilerplate disclosures. 

However, there is a potential trade-off. Removing prescribed ESG reporting requirements could lead to less consistency, comparability and transparency in corporate sustainability information. 

For companies, investors and other stakeholders, the consultation therefore raises an important question: how can the UK simplify corporate reporting without reducing the quality of information needed for effective governance, investment decisions and sustainable capital allocation? 

Stakeholders can submit responses until 11:59 p.m. on 30 November 2026. The outcome of the consultation could play an important role in determining the future direction of corporate ESG and non-financial reporting in the UK.