How ready are UK businesses for new ESG rules?

The UK’s ESG regulatory landscape is set for a major shake-up in 2025. The government has been ramping up efforts to establish the country as a global leader in sustainable finance, and a big part of that strategy involves the introduction of Sustainability Reporting Standards (SRS). These new standards, modeled on the International Sustainability Standards Board’s (ISSB) IFRS S1 and S2, will likely replace the current Task Force on Climate-Related Financial Disclosures (TCFD) framework for large companies. The Financial Conduct Authority (FCA) is also expected to push for listed businesses to report under the SRS, and there’s talk of expanding the requirements to economically significant private companies as well.

But how prepared are UK businesses for this shift? To find out, YouGov Surveys: Serviced polled 520 business decision-makers across different company sizes. The results highlight a stark divide in awareness, readiness, and what businesses want from the government to help them comply.

Many businesses still in the dark

A regulatory overhaul of this scale should, in theory, be front of mind for businesses. But according to our survey results, awareness is far from universal. While 71% of large businesses and 67% of medium-sized businesses know about the government’s ESG efforts, awareness plummets among smaller firms. Just 41% of small businesses and only 19% of microbusinesses say they are aware of the upcoming changes.

This gap in awareness could create compliance risks, particularly for smaller businesses that may struggle to keep up with new requirements without early preparation. It also suggests that more government communication may be needed to ensure businesses don’t get caught off guard.

Preparedness varies by business size

Knowing about the regulations is one thing – being ready for them is another. Large and medium-sized businesses report being the most prepared, with 72% and 68%, respectively, saying they are ready to comply. In contrast, just 46% of small businesses and 28% of microbusinesses feel prepared. Meanwhile, more than half (52%) of microbusinesses admit they are not ready.

For smaller businesses, lack of awareness may be a key factor in lower preparedness. But it’s also likely that limited resources play a role, as compliance with ESG regulations often requires dedicated personnel and expertise.

Is the government doing enough?

Views on the government’s ESG regulatory approach are mixed. Among large businesses, 52% agree that the government is doing enough to regulate ESG and hold businesses accountable. That number rises slightly to 56% among medium-sized businesses.

Smaller businesses, however, are less convinced. Just 35% of small businesses and 25% of microbusinesses believe the government is doing enough. While disagreement levels remain relatively low across all business sizes, these figures suggest that many small firms may feel left behind in the ESG transition.

What businesses want from the government

When it comes to ESG adoption, businesses are clear on what kind of support they need. Financial incentives top the list, with tax incentives or credits being the most sought-after (43%-55% across different business sizes). Grants and funding opportunities are also high on the wish list, especially for medium-sized businesses (60%).

But financial aid isn’t the only thing businesses want. Regulatory clarity is also a major concern – 54% of large businesses and 46% of medium-sized businesses say clearer guidelines would help them adopt ESG practices. Other forms of support, such as public recognition programs and assistance with reporting, are seen as helpful but less critical.

What’s next?

With the UK’s ESG regulations set to evolve in 2025, businesses are preparing at different speeds. Large and medium-sized companies appear to be on track, but micro and small businesses may need more guidance and support to keep up. Our survey results point to a clear need for better communication and targeted incentives to ensure a smooth transition. As the government moves forward with consultations on the SRS, ensuring businesses of all sizes are ready will be key to the success of the UK’s sustainable finance ambitions.

Methodology: YouGov Surveys: Serviced provide quick survey results from nationally representative or targeted audiences in multiple markets. This study was conducted online on February 24 to March 2025, with a nationally representative sample of 520 business decision makers in Great Britain (aged 18+ years), using a questionnaire designed by YouGov. The figures have been weighted and are representative of British business size and region.