How to prepare governance disclosure in ‘ESG’ reports

12 May 2026

Tags Accounting & reporting Reporting & assurance Insights

UK listed companies face increased expectations under the 2024 UK Corporate Governance Code to provide clear, meaningful disclosures on succession planning, with a stronger emphasis on governance, diversity and future ready boards.

What’s the issue?

Companies are encouraged or required to disclose their governance arrangements in ESG reporting, as many investors seek insight into the governance and risk management of these risks and opportunities.

This article provides an overview of what companies need to include in their governance disclosures when preparing the Non-Financial and Sustainability Information Statement (NFSIS), Task Force on Climate-related Financial Disclosures (TCFD), and the IFRS sustainability standards.

Background

The content of ESG-related governance disclosures depends on the size of a company, company type and the number of employees it has. The table below sets out requirements of UK companies for ESG-related disclosures. When preparing governance disclosures, preparers should describe the governance arrangements their boards have in place to oversee climate- or sustainability-related risks and opportunities.

Disclosure	Quoted companies	Traded, banking, insurance companies	AIM companies	High turnover companies
Non-financial and sustainability information statement (NFSIS) the climate-related financial disclosures	✓ (employees > 500)	✓ (employees > 500)	✓ (employees > 500)	✓ ((1) turnover > £500m, and (2) employees > 500)
NFSIS environmental matters (including the impact of the company’s business on the environment) the company’s employees social matters respect for human rights anti-corruption and anti-bribery matters	✓ (employees > 500)	✓ (employees > 500)
Task Force on Climate-related Financial Disclosures	✓

Companies may voluntarily adopt IFRS sustainability standards S1 and S2. Many of the governance disclosure requirements here overlap with those required under NFSIS, TCFD and the UK Corporate Governance Code.

To avoid duplication, companies may consider providing consolidated content and use cross-referencing to other parts of annual report, when preparing NFSIS, TCFD, IFRS S1 and S2, and UK Corporate Governance Code disclosures.

Overview of the requirements

Governance disclosures describe the way a company controls and manages, such as board oversight, management roles, and procedures that help mitigate and manage risks or decision-making. Both governance structures and their disclosure should reflect the size and complexity and nature of the company concerned.

To avoid boilerplate reporting preparers should consider focusing, where possible on outcomes or illustrative examples to demonstrate the governance-related impacts on managing risks and opportunities rather than repeating extracts of standards, codes or frameworks.

General considerations

Preparers should consider producing an overview of matters considered by relevant committees or the board to help readers to understand how board and its committees took risks and opportunities into account when making decisions, how they oversee the strategic planning, development and implementation related to risks and opportunities, and how they review and monitor the risk management of these risks and opportunities. Below is an overview of governance disclosures to be included in annal reports.

Governance mechanism	Nature of the disclosure
Sustainability-related duties and responsibilities of board and its committees	Overview of the terms of reference and delegation of authority, and how risks and opportunities are overseen. This includes the roles delegated from the board or its committees to management, as well as the methods and frequency of management reporting to the board or its committees to facilitate their oversight.
Committee composition	Overview of how committee members’ experience, knowledge, and skills contribute to its oversight and decision-making processes.
Duties and responsibilities of the board chair, senior independent director(s) (SID), committee chairs, management	Overview of how the board, its committees, or individual members oversee the setting of targets and monitor progress related to managing and mitigating risks and opportunities.
Policies	Descriptions of governance, strategic, and risk management policies for sustainability-related risks and opportunities.
Stakeholder considerations	Descriptions of how these risks and opportunities impact stakeholders, such as employees, customers, and suppliers.

Practical Considerations:

When preparing governance disclosures, here are some practical tips for making your reporting useful and informative:

Present the information either in the corporate governance report or in the climate/sustainability report. To avoid duplication in the climate or sustainability report, preparers should consider providing a cross-reference to the corporate governance report.
Describe how the board and/or its committees (and management) oversee climate- or sustainability-related risks and opportunities, and how these governance arrangements are integrated into the overall governance framework, strategy and risk management process. Consider how long-term risks are integrated with the rest of the risk framework.
Preparers may also consider disclosing the key performance indicators related to climate- and sustainability-related risks and opportunities that the board, its committees, and management use to monitor these risks and opportunities.
Use tables, graphics or examples to make the report more readable.

Where can I get more guidance?

Guidance related to Non-Financial and Sustainability Information Statement (NFSIS), Task Force on Climate-related Financial Disclosures (TCFD), and IFRS S1 and S2 can be found in Section 414CB Companies Act 2006, on the TCFD website and on the IFRS website.

The Financial Reporting Council has also published its findings on climate-related and TCFD disclosures, including governance disclosures, in the thematic review of climate-related financial disclosures by AIM and large private companies, and the CRR thematic review of TCFD disclosures and climate-related information in the financial statements, respectively.