ESG Reporting Obligations for Finance Teams: What CFOs Need to Know in 2026

ESG Reporting Obligations for Finance Teams: What CFOs Need to Know in 2026

Environmental, social, and governance (ESG) reporting has moved from voluntary disclosure to regulatory obligation. CFOs and Finance Directors managing reporting functions in 2026 face a complex and fast-moving set of requirements spanning EU legislation, UK-specific mandates, and global standards that are reshaping what finance teams need to know, produce, and assure.

This article sets out the core ESG reporting obligations relevant to finance teams, the updated timeline for compliance following the EU omnibus simplification package, the specific role of finance professionals in ESG reporting, and how to upskill your team to meet these demands.

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What Is ESG Reporting?

ESG reporting is the formal disclosure of an organisation's performance and strategy on environmental matters (climate, biodiversity, resource use), social matters (workforce, human rights, supply chain), and governance matters (board composition, anti-corruption, risk management). ESG reporting enables investors, regulators, lenders, and other stakeholders to assess non-financial risks that affect long-term value.

Historically, ESG disclosures were largely voluntary and inconsistent. The regulatory landscape in 2026 makes them mandatory for a significant segment of UK and EU companies — with finance teams at the centre of data collection, assurance, and disclosure.

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The Corporate Sustainability Reporting Directive (CSRD)

The EU's Corporate Sustainability Reporting Directive (CSRD) is the most significant ESG reporting regulation in force for European companies. It replaces the Non-Financial Reporting Directive (NFRD) and dramatically expands the scope and detail of sustainability disclosures required.

Important update — EU Omnibus simplification (2026): The EU's Omnibus I Directive (EU) 2026/470, in force from March 2026, together with the "Stop-the-Clock" directive (EU) 2025/794, has significantly revised the CSRD timeline and scope. Finance teams must use the updated timelines below, not the original phased schedule.

CSRD Scope and Timeline (as updated by Omnibus I)

• From financial year 2024 (reporting in 2025) — unchanged: Large EU companies and EU-listed companies previously subject to the NFRD — approximately 11,000 companies — must comply with CSRD and report under the European Sustainability Reporting Standards (ESRS). This Wave 1 obligation is unaffected by the omnibus changes.
• From financial year 2027 (reporting in 2028) — delayed from original FY2025: The "Stop-the-Clock" directive has delayed Wave 2 by two years. The revised scope also raises the threshold significantly: companies must now have more than 1,000 employees AND above €450 million net annual turnover (up from the original 250 employees / €40 million turnover criteria). Approximately 5,000 companies are now expected to be in scope, down from the original estimate of 50,000+.
• Listed SMEs — removed from scope: Under Omnibus I, listed SMEs on EU regulated markets have been completely excluded from CSRD requirements. Small and non-complex credit institutions and captive insurance undertakings are also excluded under the revised scope.
• From financial year 2028 (reporting in 2029): Non-EU companies with significant EU turnover (above €150 million) and at least one EU subsidiary or branch remain subject to CSRD reporting obligations, though member states are required to transpose the updated rules by March 2027.

Finance teams should work from the revised timelines above. Wave 1 companies are already reporting. Wave 2 companies should use the additional time to build robust data infrastructure and internal controls rather than deprioritising CSRD preparation.

What CSRD Requires

CSRD requires companies to report under the European Sustainability Reporting Standards (ESRS), which cover 12 topic areas across environment, social, and governance. Reporting must be integrated into the annual management report (not a separate sustainability report) and must be prepared in XHTML format for filing in the European Single Electronic Format (ESEF). Crucially, CSRD requires limited assurance from an independent auditor — escalating to reasonable assurance in later years — which means finance teams must ensure ESG data is audit-ready.

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TCFD Requirements for UK-Listed Companies

In the United Kingdom, the Taskforce on Climate-related Financial Disclosures (TCFD) framework has been mandated for:

• UK premium and standard listed companies (on a comply-or-explain basis since 2021, mandatory from 2022)
• Large UK-registered companies and LLPs with more than 500 employees and £500 million turnover (mandatory from 2023 under the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022)
• UK-authorised FCA-regulated entities meeting size thresholds (phased in from 2022)

TCFD requires companies to disclose across four pillars: governance, strategy, risk management, and metrics and targets. Finance teams are typically responsible for the metrics and targets pillar — specifically Scope 1, Scope 2, and (where material) Scope 3 greenhouse gas emissions data, and financial exposure to climate risk.

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IFRS S1 and IFRS S2: The Global Baseline

The International Sustainability Standards Board (ISSB) — a body of the IFRS Foundation — published its first two sustainability standards in June 2023:

• IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information — establishes the overall framework and principles for sustainability disclosure
• IFRS S2: Climate-related Disclosures — requires disclosure of climate-related risks and opportunities, building on TCFD

The UK government has confirmed its intention to adopt IFRS S1 and S2 into UK-endorsed Sustainability Disclosure Standards (UK SDS). Many jurisdictions outside the EU are also moving towards ISSB adoption, making these standards increasingly important for multinational finance teams.

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What Finance Teams Need to Know vs Sustainability Teams

A persistent misunderstanding among CFOs is that ESG reporting is primarily the responsibility of sustainability, communications, or CSR teams. While sustainability specialists play a critical role in gathering non-financial data, finance teams own or co-own several ESG reporting functions:

• Data governance and controls: Finance teams must apply the same rigour to ESG data (consistency, completeness, accuracy) as to financial data — particularly given mandatory assurance requirements under CSRD
• Integration into financial statements: Climate risk disclosures, impairment assessments, and useful life adjustments may affect financial statement assumptions under IAS 36, IAS 16, and IFRS 7
• ESEF/XHTML filing: Where CSRD requires machine-readable reporting, finance teams managing statutory filing processes will be directly involved
• Assurance readiness: External auditors will review sustainability data as part of limited assurance engagement — finance teams must ensure data trails and controls exist
• Metrics and targets: Under TCFD and IFRS S2, carbon metrics and financial exposure to climate risk sit squarely in finance's domain

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Key Skills Gaps in Finance Teams for ESG Reporting

Research consistently identifies significant knowledge gaps among finance professionals on ESG topics. Common deficiencies include:

• Limited understanding of ESRS structure and disclosure requirements
• Unfamiliarity with Scope 1, 2, and 3 emissions accounting methodologies (GHG Protocol)
• Insufficient knowledge of the double materiality concept required by CSRD
• Lack of understanding of how climate risk translates into financial statement adjustments
• Gaps in knowledge of IFRS S1/S2 versus TCFD versus ESRS — and how they interrelate

These gaps create real compliance risk. A CFO who does not understand double materiality cannot effectively oversee the CSRD materiality assessment process. A Financial Controller who does not know how Scope 3 emissions are calculated cannot assess the completeness of reported data.

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How to Upskill Finance Staff for ESG Reporting

Upskilling finance teams for ESG reporting should be structured around role-relevant knowledge:

• All finance professionals: Foundational ESG literacy — what ESG reporting is, why it matters, and how it intersects with financial reporting
• Financial Controllers and reporting managers: Deep knowledge of ESRS and IFRS S1/S2 requirements, double materiality, and data governance for sustainability
• CFOs and Finance Directors: Strategic understanding of CSRD and TCFD governance obligations, board-level ESG disclosure, and the link between sustainability risk and financial performance
• External reporting and audit teams: Assurance readiness — understanding what auditors will review and how to prepare ESG data for external scrutiny

Professional bodies are responding. ACCA, ICAEW, and CIMA have all developed ESG and sustainability CPD content, and ESG literacy is increasingly examined in professional qualifications. Online CPD platforms offer targeted ESG reporting modules that can be deployed quickly across a finance function.

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Frequently Asked Questions

What is the CSRD and does it apply to UK companies?

The Corporate Sustainability Reporting Directive (CSRD) is an EU regulation that mandates detailed sustainability reporting for large companies. It applies directly to EU-incorporated companies. UK companies are affected if they have an EU subsidiary or branch that meets reporting thresholds, or if they exceed €150 million in EU net turnover (from financial year 2028). UK companies listed on EU regulated markets are also in scope. Even UK-only companies trading with EU counterparties will face indirect pressure to comply as supply chain ESG requirements increase.

What are the updated CSRD timelines following the EU omnibus changes?

The EU Omnibus I Directive (EU) 2026/470 and the Stop-the-Clock directive (EU) 2025/794 significantly revised the CSRD timeline. Wave 1 (previously NFRD-subject companies, ~11,000) remains on track from FY2024. Wave 2 has been delayed by two years to FY2027 (first reports in 2028), with the scope threshold raised to more than 1,000 employees and above €450 million turnover. Listed SMEs have been completely excluded. Member states must transpose the revised rules by March 2027. Finance teams should plan around the FY2027 Wave 2 deadline, but should not pause CSRD data infrastructure work — the additional time is best used to build robust systems.

What is TCFD and is it mandatory in the UK?

The Taskforce on Climate-related Financial Disclosures (TCFD) is a framework for disclosing governance, strategy, risk management, and metrics related to climate risk. In the UK, TCFD-aligned reporting is mandatory for UK premium and standard listed companies, and for large registered companies and LLPs above 500 employees and £500 million turnover, under the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022. FCA-regulated entities above certain size thresholds are also required to report.

What are IFRS S1 and IFRS S2?

IFRS S1 and S2 are sustainability disclosure standards published by the International Sustainability Standards Board (ISSB) in June 2023. IFRS S1 sets general requirements for sustainability-related financial disclosures. IFRS S2 requires specific disclosures on climate-related risks and opportunities, building on TCFD. The UK government is in the process of endorsing these as UK Sustainability Disclosure Standards (UK SDS). Multinational finance teams should treat IFRS S1/S2 as the emerging global baseline for sustainability reporting.

Do finance teams or sustainability teams own ESG reporting?

Both, but finance teams have specific accountability that cannot be delegated to sustainability functions. Finance owns data governance and assurance readiness, integration of climate risk into financial statements, ESEF filing processes, and financial metrics under TCFD and IFRS S2. Sustainability teams typically lead on environmental data collection, stakeholder materiality assessments, and narrative disclosures. Effective ESG reporting requires close collaboration between both functions under CFO oversight.

What CPD is available for finance professionals on ESG reporting?

ACCA, ICAEW, CIMA, and CPA Ireland all provide ESG-related CPD content, including modules on CSRD, TCFD, and IFRS S1/S2. Online CPD platforms such as Learnsignal offer targeted ESG reporting courses designed specifically for finance professionals, covering the regulatory framework, practical reporting requirements, and the intersection of sustainability and financial reporting. Completing ESG CPD satisfies verifiable CPD requirements under all major professional body frameworks.

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Download the ESG Reporting Guide for Finance Teams from Learnsignal — covering updated CSRD requirements, TCFD obligations, IFRS S1/S2 guidance, and practical steps for upskilling your finance function. Access the guide at learnsignal.com/resources/.