Charity statement of recommended practice (SORP) 2026 is coming. How will your charity’s ESG story evolve?

The charity sector is entering a new phase of accountability and transparency. With the revised Charity SORP 2026 coming into effect for financial periods starting on or after 1 January 2026, trustees and finance teams need to prepare for enhanced reporting requirements.

One of those changes is around environmental, social and governance (ESG) disclosures.  

What the revised SORP says

The new SORP sees the introduction of a ‘Sustainability’ section to the Trustees’ Annual Report disclosures. As explained in our full article on the Charity SORP here, there are now three tiers of charities.  

For tier 3 charities, there is now a mandatory requirement to disclose a summary of how the charity is responding to and managing environmental, social and governance matters. 

For tier 1 and 2 charities, trustees may choose to explain how the charity is responding to the same matters and are encouraged to consider the needs of stakeholders when reporting in this area. 

This seems a broad requirement for charities to navigate. 

The SORP does not provide detailed ESG metrics for charities to follow. Instead, it sets principles and leaves flexibility for charities to tailor disclosures to their size, activities and stakeholder expectations.  

This broad approach reflects the diversity of the sector but means management, and ultimately trustees, must exercise judgement in deciding what is material and relevant. 

For many, this will require a cultural shift from compliance-driven reporting to purpose-driven storytelling.

Connecting ESG to charitable purpose

Your ESG narrative should start with your mission. For example, if you are an environmental charity, stakeholders will expect robust reporting on environmental impact and climate-related risks. If your focus is social welfare, disclosures on diversity, inclusion and governance will likely be key. Aligning ESG reporting with your charitable purpose ensures it is not a tick-box exercise but a demonstration of how you deliver public benefit responsibly. 

This alignment also helps trustees answer a fundamental question – how do our activities contribute to a sustainable future? By framing ESG within your purpose, you create a narrative that resonates with donors, beneficiaries, staff and regulators.

Funding expectations are changing

Local authorities and grant providers increasingly include weighted ESG criteria in procurement and funding decisions. Some contracts now require disclosure of what a charity is doing on ESG as part of the scoring process. Charities that can demonstrate strong ESG credentials through transparent reporting and measurable actions, are better positioned to secure contracts and grants.  

If you are funded largely by the public, then the opportunity to connect with your purpose and demonstrate what you are doing will likely appeal to your more purpose driven audience. 

In short, there is an opportunity to differentiate, and it would be worthwhile reviewing recent tenders, contracts and talking to funders to identify if this information is going to be required.

Carbon reporting

Charities above Streamlined Energy Carbon Reporting (SECR) thresholds (typically more than 250 employees, turnover above £36m or balance sheet over £18m) must report on energy use and greenhouse gas emissions.  

For charities below these thresholds, voluntary disclosure of Scope 1 and 2 emissions can demonstrate leadership and transparency. Tracking energy usage can also support financial planning, helping charities manage costs and identify efficiency opportunities. 

The nature of this reporting is simple and can be a great way of demonstrating the importance you place on tracking and reporting progress, while remaining proportionate to the size of your charity.

Practical steps for charities

• Review governance frameworks – Ensure ESG responsibilities are defined at board level and embedded in risk management processes. 
• Update reporting templates – Decide where you are going to disclose your ESG information – you can provide a link to the location on your website in your Trustees’ Annual Report if you would rather keep a more accurate, live version of your ESG action. This could be appealing to reduce the length of the report and the usability to users. 
• Determine what is of material importance – Connected back to your purpose, determine what is of material importance to your beneficiaries, your staff and your donors. Decide what seems morally correct for you. 
• Collect relevant data early – Start tracking environmental and social objectives now to avoid scrambling for information later. Seek help where required. 
• Communicate results – Build awareness amongst your stakeholders of your ESG work. 

Looking ahead

The revised SORP 2026 signals a clear shift. ESG reporting is no longer optional for large charities, and it is increasingly expected across the sector. By embedding ESG into governance and aligning disclosures with your charitable purpose, you can meet regulatory requirements, strengthen stakeholder trust and improve funding prospects. 

Charities that start preparing now will not only comply with the new rules but also position themselves as leaders in a sector where purpose and responsibility go hand in hand. 

If you are unsure where to start with reporting or want to understand how the new SORP requirements apply to your charity, we can help. Please do get in touch for a free, no obligations call to start the conversation and make ESG a strength for your organisation.