UK Sustainability Reporting Standards are coming for your contracts

The UK Sustainability Reporting Standards are often talked about as a challenge that only applies to large corporates. In reality, many SMEs will feel the impact just as quickly, not because they are directly affected by the rules, but because of where they sit in the supply chain.

If you sell to larger customers, raise external finance or plan to scale, sustainability reporting is becoming a commercial issue that affects deals, relationships and risk. Understanding how this plays out now puts you in control when those conversations land on your desk.

Why this matters commercially

From 2026, large UK companies will need to report sustainability information using the new standards. A significant part of that reporting relates to supply chains, including emissions data and governance practices.

That information must come from somewhere. In practice, it will come from suppliers.

This means sustainability questions will increasingly be built into tenders, onboarding processes and contract renewals. What starts as a questionnaire can quickly turn into contractual obligations if it is not handled carefully.

How this shows up in contracts

We are already seeing sustainability requirements appear more often in commercial agreements. Common examples include:

• obligations to provide emissions or ESG data on request
• warranties that sustainability information is accurate and complete
• audit rights allowing customers to verify data
• termination rights linked to sustainability breaches

Agreed in isolation, these clauses can feel harmless. The risk arises when businesses commit to obligations they are not operationally set up to meet, or where the wording gives customers wide discretion with little protection on the supplier side.

Once these terms are signed, they are not theoretical. They affect how the contract is managed and what happens if something goes wrong.

The risk of waiting

Many businesses assume they can deal with sustainability reporting when a customer insists on it. The problem with that approach is timing.

When sustainability requirements arrive late in a deal, they are often treated as non-negotiable. The commercial pressure to sign can lead to commitments that are unclear, unrealistic or one-sided. That creates ongoing compliance risk and can damage otherwise strong trading relationships.

It can also slow deals down. If you cannot quickly explain what data you can provide and how, negotiations stall and confidence drops.

A more commercial approach

The businesses in the strongest position are those that treat sustainability reporting as part of their commercial readiness.

That starts with understanding what your key customers are likely to ask for and how that aligns with how your business actually operates. From there, you can:

• put proportionate processes in place to capture relevant data
• decide what you are comfortable committing to contractually
• push back on obligations that go beyond your control or capability
• frame sustainability commitments in a way that supports the deal, rather than derails it

Handled well, this can become a differentiator. Customers want reliable suppliers who understand their obligations and can support them without creating additional risk.

Getting contracts right early

Sustainability reporting is not just a compliance exercise. It is becoming part of how businesses assess risk, choose suppliers and allocate responsibility.

The key is to engage early and commercially. That means treating sustainability clauses like any other material contract term, understanding their impact and negotiating them with confidence.

Getting this right now will make future deals smoother, protect your position and help ensure sustainability expectations support growth rather than restrict it.