How UK universities are impacted by climate and sustainability reporting requirements

Within the UK, existing climate reporting legislation has mostly originated from recommendations first developed in 2017 by the G20-backed Task Force on Climate-Related Financial Disclosures (TCFD). Across the global economy, there is expected to be a shift from reporting of climate-related risks and opportunities, to reporting on sustainability in a broader sense. One such pressure in this shift comes after publication of international standards on sustainability disclosures by the International Sustainability Standards Board (ISSB) in 2023 – standards that, in UK terms, the previous government said will form the basis of mandatory sustainability reporting requirements. The new UK rules are expected to be outlined in early 2025.

The UK’s sustainability reporting requirements are expected to impact large UK corporates across the economy.

UK universities are not currently subject to TCFD-aligned mandatory reporting, though some institutions in Scotland do face other climate-related reporting duties, and a number of higher education providers are required to report their energy use and greenhouse gas emissions through their annual reports under the Streamlined Energy and Carbon Reporting framework (SECR) where providers meet criteria for corporate form and size. Many providers have also signed up to the 'Race to Zero’, bringing a degree of voluntary disclosure. As the UK legal and regulatory regime shifts to align with the ISSB standards, UK universities can expect to face external pressures to make further or additional climate and sustainability disclosures.

The existing climate reporting regime in the UK

The UK’s TCFD-aligned regimes aim to shed light on how climate-related risks and opportunities are likely to impact an organisation’s current and future financial position.

UK companies that operate within the EU also face separate EU climate and sustainability-related reporting requirements. They must consider legislation such as the Corporate Sustainability Reporting Directive (CSRD), the Sustainable Finance Disclosure Regulation (SFDR), the Taxonomy Regulation, the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Green Bond Standard.

For central UK government bodies, there are mandatory sustainability requirements set out in the Financial Reporting Manual (FReM) and a phasing in of the TCFD recommendations. There are currently no legislative duties, from a UK government perspective, on other public bodies for mandatory reporting, however there is a patchwork of voluntary reporting and guidance – see more details below.

The position is different, however, in Scotland – under the Climate Change (Duties of Public Bodies: Reporting Requirements) (Scotland) Order 2015, 44 Scottish colleges and universities are classed as ‘major players’ and are subject to mandatory reporting, known as public bodies climate change duties.

Globally, there is movement to adopt a climate-related disclosures standard for the public sector.

On 31 October, the International Public Sector Accounting Standards Board (IPSASB), the public sector equivalent of the International Accounting Standards Board (IASB), issued a draft climate-related disclosure standard for public comment by 28 February 2025. The standard is designed to be used by governments and other public sector entities around the world and proposes public sector specific guidance which builds on the ISSB’s global baseline. Once launched in final form, the IPSASB standard could have a similar impact on the public sector to that which the ISSB’s sustainability disclosure standards are expected to have in the private sector.

Universities’ reporting requirements

To the extent that a UK university’s legal structure is not caught under the Companies Act, it will likely not be subject to the same mandatory climate and sustainability reporting requirements that impact UK large private companies or public sector organisations. Despite this, there are voluntary disclosure frameworks that are highly relevant to the sector, while some universities can also find themselves subject to disclosure duties indirectly through funding or investment arrangements.

Voluntary disclosures

In Wales, universities are required, under the Higher Education (Wales) Act 2015 and through the Higher Education Funding Council for Wales, to collect certain environmental information pertaining to their properties. This information, known as the estates management record (EMR), is aggregated by the Higher Education Statistics Agency (HESA), which is part of not-for-profit body Jisc – the UK digital, data and technology agency that operates in UK higher education.

Maintenance of the EMR used to be mandatory for universities in England up to and including the 2018-19 data submission. The move to a voluntary model, in England at least, reflects the limited powers the sector regulator, the Office for Students, has to require action by higher education providers that accords with the UK’s wider ‘net zero’ commitments.

Notwithstanding this, the Department for Education (DfE) in 2022 commissioned the Environmental Association for Universities and Colleges (EAUC) to develop a standardised carbon emissions reporting framework for further and higher education (FE and HE) institutions. Launched in January 2023, the EAUC framework sits alongside the Jisc EMR framework and other statutory responsibilities for reporting emissions. It is hoped that the framework will be widely adopted throughout the further education (FE) and higher education (HE) sectors and will help institutions benchmark emissions baselines and reductions against other similar institutions.

The EAUC framework was commissioned by the DfE in the context of the department’s sustainability and climate strategy for education. That strategy states: “By 2025, all education settings will have nominated a sustainability lead and put in place a climate action plan.” This includes early years settings, schools, multi-academy trusts, colleges, and universities. This strategy envisages all universities and colleges reporting their carbon emissions by 2024 and, in FE and HE from 2025, publishing targets and institutional progress.

Additional disclosure requirements may come from voluntary programmes or treaties that a university has signed up for.

For example, Under the Race to Zero for Universities programme, a partnership programme between EAUC, UN Environment Programme and Second Nature, participating institutions commit to a series of voluntary disclosures aimed at promoting transparency and accountability in their climate action efforts. These disclosures include publicly reporting progress against both interim and long-term targets for achieving net-zero greenhouse gas emissions. Universities are expected to publish annual reports detailing the actions they are taking to meet these targets, including measures to reduce ‘scope 3’ emissions, which cover indirect emissions from activities such as travel and procurement. 

Similarly, while not an exclusive climate sustainability initiative, the UN Global Compact is a voluntary initiative that encourages businesses and organisations worldwide to adopt sustainable and socially responsible policies. Participating universities commit to annual disclosures through the Communication on Progress (COP) report. This report details their efforts to integrate the 10 principles of the UN Global Compact into their strategies and operations, covering areas such as human rights, labour, anti-corruption, and the environment.

While voluntary in nature, universities are facing increasing pressures from students to make these voluntary sustainability disclosures and commit to measurable climate change goals, including through reduced investment in fossil fuel businesses, and as to the way in which campuses are built and operated. We expect significant pressure from students for universities to report on sustainability and ESG matters within their annual reports. QS rankings will also be on the minds of many institutions.

Trickle-down reporting

Many universities seek support from the private sector, through arrangements such as public private partnerships (PPPs), to achieve decarbonisation goals. Universities also often enter into private and public debt arrangements, to fund specific projects and/or general operations.

As larger financial institutions such as banks and other institutional investors become subject to increasing regulation on climate and sustainability reporting, they will expect universities wishing to partner with them, or obtain funding or investment, to disclose to them climate- or sustainability-related information. Financiers will require that information to meet their own reporting duties.

For example, most financial institutions, as large and systemically important businesses within the UK economy, will soon be required to report on their financed emissions. This will impact customers of such financial institutions, including universities, which will be asked to provide data on their emissions to their funders.  

The direction of travel towards more mandatory sustainability disclosure requirements across the UK economy is clear – although some universities may not fall directly in scope depending on their size and corporate form, they would be well advised to horizon scan for sustainability disclosure requirements which will impact large corporates and prepare, from a data gathering and resourcing perspective, for reporting on a voluntary basis to meet the expectations of their stakeholders.

Co-written by Ryan Karlstedt-Smith of Pinsent Masons.