As we move into the second quarter of 2025, the pressure on businesses in the UK to report on their Environmental, Social, and Governance (ESG) performance continues to grow. With regulatory changes, shifting market dynamics, and increasing expectations from investors and consumers, understanding how to report on ESG performance is no longer optional—it’s a business necessity.

In this article, we’ll break down the basics of ESG reporting, highlight the key reporting frameworks you need to be aware of, and explain why transparent reporting can build trust and drive long-term success as we head into the second half of the year.

Why ESG Reporting is Crucial for the Second Quarter of 2025 and Beyond

As we enter Q2 of 2025, it’s clear that ESG reporting has evolved from a niche consideration to a central element of business strategy. Here’s why it’s so important in the current climate:

• Regulatory Pressures Are Intensifying: With 2025 marking significant deadlines for businesses to align with climate-related financial disclosures, UK businesses are now facing tighter regulations. The need to comply with frameworks like the Task Force on Climate-related Financial Disclosures (TCFD) is critical to avoid fines and reputational damage.
• Growing Investor Scrutiny: Investors are placing increasing importance on ESG factors. Nearly 80% of UK institutional investors now prioritise ESG disclosures, and companies that fail to meet these expectations may find themselves at a disadvantage. In Q2 2025, the demand for transparent ESG reporting is expected to peak as investors and stakeholders look for businesses that are leading in sustainability.
• Consumer Expectations Are Rising: Today’s consumers are more conscious than ever about the ethical practices of the companies they support. Transparent ESG reporting signals to customers that your business is committed to sustainability, diversity, and governance practices, which can improve brand loyalty and consumer trust.

Key ESG Reporting Frameworks for Q2 2025

Navigating the ever-expanding ESG reporting landscape can be daunting, but using the right frameworks will help you ensure compliance and provide clarity for your stakeholders. Here are the key reporting frameworks you should be focused on as we move into the second quarter of 2025:

1. Global Reporting Initiative (GRI)

The GRI remains one of the most widely adopted frameworks for comprehensive ESG reporting. It’s designed to help businesses disclose the full extent of their environmental, social, and governance impacts in a consistent, standardised way.

• What it covers: Environmental sustainability, social impact, ethical business practices, and governance.
• Why it matters in 2025: As more businesses embrace sustainability, GRI reporting will remain vital for communicating your long-term commitment to environmental and social goals. For those preparing to report in Q2 2025, it’s important to have GRI in place for comprehensive ESG disclosures.

2. Task Force on Climate-related Financial Disclosures (TCFD)

With the UK’s increased focus on climate change and sustainability, TCFD has become a must for businesses facing potential climate-related risks. The framework requires businesses to disclose how climate change impacts their operations and financial performance.

• What it covers: Governance, strategy, risk management, and metrics related to climate change.
• Why it matters in 2025: The UK government has made it clear that TCFD disclosures will become mandatory for more businesses, especially those with significant exposure to climate risks. As we approach Q2 2025, aligning with TCFD will be essential for businesses seeking to future-proof their operations and enhance transparency.

3. Sustainability Accounting Standards Board (SASB)

SASB provides industry-specific reporting standards, focusing on the most financially material ESG issues that are likely to affect a company’s performance. These standards allow businesses to report on ESG metrics that are of particular interest to investors.

• What it covers: Industry-specific ESG issues, such as energy management, water use, data security, and workforce health and safety.
• Why it matters in 2025: As investment in sustainable practices grows, SASB enables companies to present financial materiality in a way that resonates with industry-specific investors. In Q2 2025, more businesses will be expected to provide these industry-specific disclosures to maintain investor confidence.

Benefits of Transparent ESG Reporting as We Move Into Q2 2025

As the demand for transparency and accountability grows, businesses that embrace ESG reporting will benefit from increased trust and enhanced long-term prospects. Here are the key advantages:

1. Building Trust with Stakeholders

Transparent ESG reporting helps businesses build stronger relationships with stakeholders, from investors to customers. By clearly showcasing your ESG efforts, you can demonstrate your commitment to social responsibility and sustainability, which is increasingly important in today’s marketplace.

2. Attracting Investment

As we enter Q2 2025, investors are focusing more on companies with strong ESG credentials. Transparent reporting can help attract ethical investors who align with your values and ensure you stay competitive in a crowded market.

3. Improving Compliance and Risk Management

With the regulatory landscape around ESG reporting tightening in 2025, businesses that proactively align with frameworks like GRI, TCFD, and SASB will be better positioned to meet legal requirements. This proactive approach also helps businesses better identify and mitigate risks before they become compliance issues.

4. Enhancing Employee Engagement

Employees are increasingly looking for companies with strong ESG commitments. By demonstrating transparency in your ESG practices, you can improve employee morale, increase engagement, and attract top talent who want to be part of a socially responsible organisation.

Prepare for Q2 2025 with ESG Reporting Support

Navigating the complexities of ESG reporting requires expertise and a clear strategy. As we head into Q2 2025, it’s essential to ensure that your business is aligned with the latest reporting standards and regulations. Whether you’re just beginning your ESG reporting journey or looking to refine your existing efforts, it’s never too late to make improvements.

Need Help Navigating ESG Reporting?

At ESG REC Limited, we are here to support UK businesses in successfully navigating the evolving ESG reporting landscape. Our team of experts can guide you through the various reporting frameworks, ensuring that you remain compliant and transparent in your ESG disclosures.

From GRI to TCFD and SASB, we can help tailor an ESG reporting strategy that aligns with your business goals and meets regulatory requirements.

Visit www.esgrec.com today to learn more about how we can assist you in preparing your business for transparent, compliant, and effective ESG reporting as we move into the second quarter of 2025.