Sustainability reporting has taken centre stage in the UK’s business landscape, driven by regulatory frameworks such as the International Sustainability Standards Board (ISSB) and the Task Force on Climate-related Financial Disclosures (TCFD). But as regulatory pressures increase, the question arises: are organisations truly embedding ESG (Environmental, Social, and Governance) principles into their culture, or are they simply complying to “look good” or avoid penalties? Our latest report provides insights into this complex issue and suggests a mixed picture.
Compliance or Commitment? The Current State of ESG Reporting
Our findings indicate that 71% of finance leaders across the Thames Valley are aware of sustainability reporting frameworks, yet only 11% describe themselves as “very familiar” with the details. While awareness is growing, deep expertise remains limited, especially in small and medium-sized organisations.
- Large Firms: Leading the way, with 71% producing formal Corporate Sustainability Reports (CSRs), showcasing structured approaches to ESG as part of their governance and stakeholder strategies.
- Medium Firms: These organisations show promise, rating the importance of sustainability at 7.3 out of 10 in their decision-making. However, only 34% produce CSRs, suggesting their ESG efforts are still evolving.
- Small Firms: Only 7% of small businesses produce formal sustainability reports, and many rely on basic practices such as tracking energy use via invoices.
This disparity suggests that while larger firms are using ESG to build trust and align with long-term strategies, smaller organisations may be responding to regulatory demands rather than embedding sustainability as a core value.
Motivations: Cultural Integration vs External Pressures
The report shows that 58% of ESG policies are managed by senior leadership or boards, indicating that sustainability is often driven from the top down. This leadership involvement can reflect genuine commitment but may also be driven by reputational considerations or investor pressure.
For medium and smaller businesses, limited resources and competing priorities create barriers to deeper ESG integration. Some businesses may perceive sustainability reporting as a costly exercise rather than a strategic enabler. The low percentage of highly familiar finance leaders underscores a gap in expertise, reinforcing the need for clearer guidance and support.
What We See Happening (and Not Happening)
What’s Happening:
- Larger firms are embedding ESG into their strategy to maintain competitive advantage and meet stakeholder expectations. Their structured sustainability initiatives often extend beyond compliance to address long-term resilience and innovation.
- Medium-sized firms are balancing ambition with pragmatism. While they recognise the importance of ESG, resource constraints often mean they implement selective rather than comprehensive reporting.
What’s Not Happening:
- Smaller organisations are struggling to view sustainability as more than a regulatory burden. Only 64% of small businesses reported familiarity with reporting standards, reflecting an uphill battle against knowledge gaps and financial pressures.
- Cross-functional integration remains limited. Despite increased awareness, many firms still lack robust data systems to capture ESG metrics accurately, which hinders decision-making and transparency.
Bridging the Gap: Turning Compliance into Commitment
To create lasting cultural change, organisations of all sizes must see ESG not as a compliance tick-box but as a means of enhancing resilience and competitive advantage.
- Leadership and Governance: Boards and senior leaders must continue to embed sustainability within decision-making frameworks and create accountability structures.
- Capacity Building: Smaller and medium-sized firms should seek partnerships, training, and grants to overcome resource limitations. Engaging with regulatory consultations can also ensure they stay ahead of changes.
- Data Infrastructure: Implementing reliable, consistent ESG data collection systems will be critical for robust reporting and long-term planning.
A Tale of Two ESG Journeys
Our report reveals that while larger firms are setting the pace with structured policies and stakeholder-driven reporting, smaller businesses are often focused on meeting minimum standards. This divide highlights the importance of leadership, support, and collaboration to foster a culture of sustainability that goes beyond compliance.
For finance leaders, the road ahead presents both challenges and opportunities. By embedding ESG into core financial operations and championing it as a growth enabler, organisations can build trust, enhance resilience, and secure long-term success. Now is the time to ask: are we doing this because we have to—or because we believe in the value it brings?
By answering that question honestly and aligning actions with purpose, organisations can create sustainable value for stakeholders, the planet, and their bottom line.