How MHA help clients with their ESG needs

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MHA Pillar 2 comprises the ESG and sustainability services suite offered to our clients.

Our aim is to provide a comprehensive suite of services to address both mandated and voluntary ESG compliance. We are different to other accountancy and business advisory firms: we believe that meeting your ESG and sustainability aspirations should add value to your business, not simply cost. We call this ‘Purpose with Profit’.

We term our approach to ESG as ‘Dynamic’. This is a reflection of the ever-changing nature of ESG commitments through increased intelligence, consequent impacts and evolving regulation.

MHA Dynamic ESG comprises:

Reporting & Assurance

Including ISAE3000, compliance with regulatory and voluntary reporting standards (including TCFD and TNFD disclosures, SECR and ESOS).

Advisory

The full Dynamic ESG service (including Scope 1, Scope 2 and Scope 3 emissions reporting) and for early-stage entities, our Activate assessment tool establishes an organisation’s current ESG status as well as identifying key next steps and actions.

Technical

Ensuring that all our audit and reporting practices are embedded with sustainable accounting and audit principles under TCFD, GRI and UNSDG.

Advisory

Sustainability & ESG

We are different to other accountancy and business advisory firms: we believe that meeting your ESG and sustainability aspirations should add value to your business, not simply cost.

We call this ‘Purpose with Profit’.

Your ESG strategy can future-proof your business

When we look at longevity of success for a company, the ability to adapt, to change and move with the times is essential. Investors and clients alike are looking to work with companies that are aware of larger world issues and have their fingers on the pulse of upcoming legislation.

There is a rapidly increasing amount of environmental and climate-change legislation coming that will affect all businesses, large and small.

Those who have made ESG a priority within their working culture and have kept up with regulation will find they are able to adapt and thrive amongst this new legislation, and that the daunting changes to be more sustainable are far easier than ever imagined. The ones that haven't focused on ESG will be quickly overwhelmed and find they fall behind competitors rapidly.

The values that underpin ESG are universal, focusing on protection of our planet, equality and acceptance in the workplace and strong governance systems ESG is the backbone of a healthy thriving business.

The values that underpin ESG are universal, focusing on protection of our planet, equality and acceptance in the workplace and strong governance systems, ESG is the backbone of a healthy thriving business.

ESG Programme: key stages & benefits

Assess

Scope for, and create, ESG Plan including roadmap and milestones. Quantify current status, establish baseline and assess deliverability reality.

Pilot

Use ESG Plan to deploy site-specific tactics. Build organisational capabilities and engage tactics to secure momentum.

Drive

Create cultural movement to maximise engagement and performance through ESG-focused implementation programme. Effect cultural change where needed.

Maintain

Creating an ESG programme is just the beginning.

As critical is maintaining momentum throughout the organisation through supporting internal resources, continuous improvement, communication and motivation. This leads to a differentiated culture, competitive advantage, value creation and business growth.

ESG and audit

At MHA, we provide a comprehensive approach to Sustainability and ESG audit and assurance. We understand that these priorities are central to compliance and risk management.

Our skilled team is here to help you build and safeguard the value created by how your organisation addresses the full spectrum of ESG issues and regulations. Companies that prioritise the well-being of their staff and contribute positively to society are more likely to be resilient and sustainable in the long term. By effectively managing and mitigating ethical and sustainability risks, your organisation can enhance its appeal and value to investors and stakeholders.

Our team can help your business maintain stakeholder confidence in your non-financial ESG reporting by reviewing ESG-related company disclosures and providing limited or reasonable assurance over ESG and sustainability metrics in accordance with AICPA standards.

The evolving landscape of reporting, governance, and regulatory requirements, coupled with increasing demands from stakeholders and investors, is driving significant market transformation. New regulations now encompass areas such as assurance, supply chain transparency, and reporting frameworks. Existing reporting obligations include the Task Force on Climate-related Financial Disclosures (TCFD), UK Climate-related Financial Disclosures (CFD), Streamlined Energy and Carbon Reporting (SECR), the EU Taxonomy Regulation, the EU Corporate Sustainability Reporting Directive (CSRD), and the European Sustainability Reporting Standards (ESRS). We are seeing increasing number of our clients choosing to voluntarily report ESG-related disclosures, acknowledging the fact that there is a growing volume of material, decision-useful information embedded within the company’s ESG performance.

Adopting a strategic, tech-powered, and data-driven approach to sustainability reporting — beyond mere compliance and box ticking —can drive business transformation and facilitate critical change. Whether you need assistance with TCFD analysis, CSRD readiness, navigating government regulations, or addressing gender pay gap reporting, we can support you. By taking this approach, you’ll become more agile in responding to risks and opportunities, more appealing to investors, and earn greater trust within your market.

How MHA helps businesses on the road to net zero

To enable greenhouse gas emissions to reach net zero by 2050, businesses must take action now to set out their decarbonisation plan for how they will lower their impact. Innovation will be the driver in creating a low-carbon future, and adapting business models and practices to fit a greener approach is business critical.

It is essential that businesses become fluent in the language used by the Greenhouse Gas Protocol standards to best calculate emissions data and produce an effective carbon reduction plan, which aligns with the Science Based Target initiative (SBTi).

Creating this decarbonisation strategy and understanding how to embed this into the culture of the organisation will be integral to creating a truly sustainable business for profit, people and planet.

Creating decarbonisation strategy and understanding how to embed this into the culture of the organisation will be integral to creating a truly sustainable business for profit, people and planet.

How we help clients with Activate

Our ESG planning process typically begins with deployment of our proprietary Activate tool. This digital program enables us to assess your ESG progress to date, together with a gap analysis that will feed into our ESG planning on your behalf.

Activate is a proprietary MHA ESG assessment and identification tool that enables organisations to establish their current ESG status and identify gaps.

Activate will also identify easily-achieved mitigation steps which will form a part of our ESG plan for the organisation. Activate is often deployed as a first-stage in creating a comprehensive beneficial Dynamic ESG Plan (DESGP).

Following deployment of Activate, and assessment of results, together with subsidiary interrogation, we will develop a comprehensive ESG plan, or feed into your existing ESG planning.

Our aim will be to ensure your ESG program is not only comprehensive but also:

Bought into at every level including supply chain and stakeholders
Of practical value when reporting to customers/clients
Properly cascaded and supported
Monitored and regularly tuned to account for changes in legislation and associated business practices

We recommend an annual review of progress in any event to ensure your organization is up-to-date with its ESG commitments and we do so under the principle of ‘Purpose with profit’ whereby your ESG actions are an integral element of your organisation’s profitable and sustainable future.

Activate will also identify easily-achieved mitigation steps which will form a part of our ESG plan for the organisation.

Activate is often deployed as a first-stage in creating a comprehensive beneficial Dynamic ESG Plan (DESGP).

How we help clients with their journey to net zero

MHA Dynamic ESG Lite

For those organisations at an early stage of their journey, investigating how ESG might benefit their business, we have created Dynamic ESG Lite.

How renewable technologies can help your business

Green tech savings make a strong case for investment—now is the time for businesses to act for sustainable cash flow and a greener future.

DESG: Your questions answered

We have answered some of the most common questions we receive from clients on DESG.

ESG - why should businesses do it?

As more stakeholders base their engagement decisions on a company's ESG performance, your ESG programme can provide a competitive advantage.

DESG in detail

How MHA integrate regulation in advisory services for competitive advantage.

The Detail behind Activate

Our ESG planning process typically begins with deployment of our proprietary Activate tool.

ESG reporting: Simplifying compliance for UK businesses

Keeping up with ESG reporting standards can be complex, but we’re here to guide you every step of the way. We provide expert support to help your business navigate and comply with a range of essential regulations, including:

UK Climate-related Financial Disclosure (CFD): Helping you assess and disclose climate-related risks as required by law.
Energy Savings Opportunity Scheme (ESOS): Assisting with energy audits and actionable plans to boost efficiency and meet regulatory demands.
Streamlined Energy and Carbon Reporting (SECR): Supporting transparent reporting on energy use, carbon emissions, and reduction initiatives.
Climate Change Agreements: These voluntary agreements made between UK industry and the Environment Agency are aimed at reducing energy use and carbon dioxide (CO2) emissions in return for a discount on the Climate Change Levy.

We simplify these requirements, breaking them down into actionable steps tailored to your organisation’s goals. By working with us, you’ll ensure compliance while strengthening your sustainability credentials and achieving your ESG ambitions.

ESG Reporting & Regulation

What is UK Climate-related Financial Disclosure (CFD)?

UK Climate-related Financial Disclosure (CFD) is the UK government’s Task Force for Climate-Related Financial Disclosures (TFCD)-aligned climate disclosure, (approved as mandatory for certain sectors with reporting from FY 2022). These regulations are a part of the UK’s strategy to achieve Net Zero GHG emissions by 2050 and part of the wider Sustainability disclosure requirements aligning with global guidelines.

Government-provided guidance applies to non-mandatory disclosures for businesses that wish to complete disclosures by choice. The disclosures relate to UK public interest entities, Alternative Investment Market (AIM) companies and other UK companies and limited liability partnerships (LLPs) that have: more than 500 employees and £500m turnover

Understanding TCFD Climate Scenario Analysis

Mark Lumsdon-Taylor Partner

What is required for UK businesses when it comes to CFD?

CFD requires that: “the climate scenario analysis should normally be renewed at least every three years to ensure the user of the accounts is provided with up-to-date and relevant information.” It is also required by the Companies act that a CFD disclosure be made within the company’s annual report and is clearly defined within it. It is not permissible to cross-refer to a separate document outside the annual report.

Governance Governance encompasses the company's approach to assessing and managing climate-related risks and opportunities within its governance system. This includes a detailed description of the system and how it is integrated into the company's overall risk management processes to ensure a comprehensive and cohesive approach to addressing climate-related challenges.
Risk management The company provides a description of the primary climate-related risks and opportunities associated with its operations, including the time frames considered when assessing these factors. This includes an evaluation of the impacts these risks and opportunities have on the company’s business model and strategy, along with an analysis of the resilience of its business model and strategy in the face of these climate-related challenges.
Strategy The company outlines its strategy through a description of targets designed to mitigate and manage climate-related risks while seizing climate-related opportunities. This includes an analysis of the company’s performance against these targets, alongside a detailed explanation of the key performance indicators used to evaluate progress and the calculations underpinning these metrics.
Performance indication The company provides an indication of its performance under various climate scenarios, detailing how different risks may impact its operations. In line with TCFD recommendations, this includes assessments based on two scenarios: achieving the Paris Agreement target of limiting warming to 1.5 - 2 degrees Celsius and a "no change" scenario with warming exceeding 2 degrees Celsius.
Metrics The company provides data on its greenhouse gas (GHG) emissions and shares its climate-related targets, offering a clear insight into its environmental impact and commitments

TCFD vs UK CFD – what is the difference?

TCFD (Task Force on Climate-related Financial Disclosures) was established in 2015 by the Financial Stability Board (FSB) aiming act as a common international framework for climate related risk disclosure transparency. Its goal is to help companies understand what risks they may face in relation to climate change and how these risks may impact business.

The disclosure is voluntary but is particularly recommended in large public listed companies, large financial institutions, companies operating in high-risk sectors, premium-listed and standard-listed companies that are subject to the Financial Conduct Authority (FCA) Listing Rules.

How does TCFD differ from UK CFD?

TCFD disclosures are on a ‘comply or explain’ basis providing a level of flexibility. UK CFD on the other hand is a mandatory requirement by the Companies Act for those that fall into scope for disclosure. Some other key differences between the two include:

TCFD recommends scenario analysis to identify risks and opportunities but does not specify when or how often the analysis needs to be reported. Whereas CFD states: “the climate scenario analysis should normally be renewed at least every three years to ensure the user of the accounts is provided with up-to-date and relevant information.”
TCFD, as it is a listing rule, may be included as a separate report document and disclosed as a statement of compliance in the annual report. However, the CFD disclosure must be included in the company’s annual report as it is a Companies Act requirement, cross-referencing is not permitted.
CFD focuses more on explaining why specific scenarios, KPI’s, metrics and targets have been chosen. TCFD does not require as detailed reasoning behind the statements.
While TCFD has a broad focus on multiple sectors and the 4 pillars, CFD is more refined for the financial sector focusing on impacts of climate risk and opportunity for investments.

What is the Energy Savings Opportunity Scheme (ESOS)?

The Energy Savings Opportunity Scheme (ESOS) is a UK government-mandated reporting framework designed to improve energy efficiency in large organisations. Participation in ESOS is compulsory for all UK organisations with more than 250 employees or those exceeding £44 million in annual turnover and £38 million in gross assets.

ESOS Phase 3 deadline

The deadline for submitting notification of compliance for Phase 3 of ESOS was June 2024. If you missed this deadline, you must register on the MESOS system as soon as possible. Any organisation that qualifies for Phase 3 of ESOS and has failed to submit a notification of compliance is now at risk of enforcement action and should contact the Environment Agency immediately.

The action plan must be signed off by a board level director (or equivalent) and should have been submitted via the compliance notification system by the action plan deadline for the third compliance period, which was 5th December 2024.

ESOS Phase 4

The future of ESOS reporting is Phase 4, introducing changes to more closely align regulations with UK Net Zero targets. Expected dates are as follows:

Qualification Date: 31st December 2026
4-year compliance dates 6th December 2023- 5th December 2027
Compliance deadline 5th December 2027
Action plan reporting deadline 1: 5th December 2028
Action plan reporting deadline 2: 5th December 2029

ESOS Phase 4 is likely to bring greater alignment with UK Net Zero targets

What is required in ESOS?

Appoint a Lead Assessor to conduct site visit and assessment
Report energy consumption (kWh) across the business and identify significant areas of consumption
Identify cost-effective energy efficiency recommendations
Report intensity ratios (required for building, transport, industrial processes and other energy uses)
Assessment should be based on 12 months’ verifiable data, beginning no earlier than 6 December 2018 for the phase 3
Report compliance to the Environment Agency using the “Managing your ESOS” system
An action plan must be signed off by the Board and submitted via the compliance notification by 5 December 2024
An annual progress update against action plan commitments must be submitted in the 2 subsequent years. The deadline for submitting the update is 12 months after the action plan deadline and then 12 months after the submission deadline for the first progress update. For Phase 3, the deadlines are 5th December 2025 and 5th December 2026.

Streamlined Energy and Carbon Reporting (SECR)

Streamlined Energy and Carbon Reporting (SECR) is a UK government issued reporting framework aimed at large companies, LLP’s and quoted companies. It focuses on energy usage and greenhouse gas emissions. It aims to encourage businesses to be more transparent and conscious of their climate impact.

Who does SECR apply to?

SECR is a mandatory disclosure for

All UK incorporated companies listed on: the main market of the London Stock Exchange, A European Economic Area market or whose shares are dealt on the New York Stock Exchange or NASDAQ.
All UK incorporated large unquoted companies and LLP’s, defined as meeting at least two of the following standards
- Annual turnover of £36million +
- Balance sheet (gross assets) of £18million +
- 250 or more employees

If a company meets any of the above criteria but has an annual energy consumption of below 40,000kWh, they can be excluded from SECR. There are no other exclusionary circumstances.

If a company meets any of the SECR Criteria but has an annual energy consumption of below 40,000kWh, they can be excluded from SECR.

There are no other exclusionary circumstances.

What is required in the disclosure?

A figure of total UK energy use, from company owned and controlled operations, in kWh
Greenhouse gas emissions broken down into Scope 1 and Scope 2 (Scope 3 is an optional inclusion)
A relevant ratio of emissions against a company activity related factor
Comparison figures (not applicable for first year of reporting)
Details of energy efficiency actions taken by the business within the reporting period
Methodology statement used in the calculation of the disclosures

Quoted vs private limited company

Quoted companies are required to report underlying global energy use and greenhouse gas annual emissions from company responsible activities. Large unquoted companies and LLP’s are required to report on UK energy usage and associated greenhouse gas emissions only.

Internal controls surrounding SECR figures are an important consideration when producing the disclosure. Completeness and accuracy of figures must be carefully regulated using reliable data sources, formalised reporting frameworks with consistent boundaries and assumptions, sufficient internal review and challenge from appropriately skilled and experienced people. External assurance may be obtained. While this is recommended it is not mandatory.

Scope type definitions

Scope 1 - Emissions from activities owned or controlled by your organisation
Scope 2 - Emissions associated with your organisation’s consumption of purchased electricity, heat, steam and cooling. A consequence of your organisations activities but at sources you do not own or control
Scope 3 - Emissions occurring at a source not owned or controlled by your organisations that are not classed as scope 2. For example, business travel by means not owned or controlled by your organisation

Climate Change Agreements

These voluntary agreements made between UK industry and the Environment Agency are aimed at reducing energy use and carbon dioxide (CO2) emissions in return for a discount on the Climate Change Levy – a tax added to electricity and fuel bills. The Environment Agency administers the scheme on behalf of the whole of the UK.

The Department for Business, Energy and Industrial Strategy (BEIS) extended the CCA scheme until March 2025 and the Environment Agency has updated the CCA operations manual to include guidance concerning the scheme extension.

Contact us MHA has considerable experience in helping organisations to secure appropriate data in an efficient way, to complete CCA submissions and to deal with over and under usage. Get in touch

The Department for Business, Energy and Industrial Strategy (BEIS) extended the CCA scheme until March 2025 and the Environment Agency has updated the CCA operations manual to include guidance concerning the scheme extension.

How MHA supports organisations in meeting their UK ESG reporting requirements

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Find out the relevant information about Climate Change Agreements (CCAs)

How IFRS S1 and S2 affect your organisation

Discover how the IFRS S1 and S2 reporting standards effect your organisation.

What is the EU taxonomy?

The EU taxonomy for sustainable activities is a cornerstone of the EU’s sustainable finance framework and an important market transparency tool. It helps direct investments to the economic activities most vital to the transition underpinning the European Green Deal objectives; towards sustainable projects and activities.

The EU taxonomy is a classification system that defines criteria for economic activities aligned with net zero by 2050 and the broader environmental goals beyond climate.

The EU taxonomy allows financial and non-financial companies to share a common definition of economic activities that can be considered environmentally sustainable. The EU Taxonomy Regulation entered into force on 12th July, 2020, setting out 4 overarching conditions that an economic activity has to meet in order to qualify as environmentally sustainable:

Substantial contribution (to at least one of six* environmental objectives)
No significant harm (relating to environmental objectives)
Compliance with safeguards (such as international human rights and labour standards)
Compliance with technical screening criteria (set out in Taxonomy delegated acts)

The EU taxonomy is a classification system that defines criteria for economic activities aligned with net zero by 2050 and the broader environmental goals beyond climate.

EU Taxonomy relationship to other EU regulations

Non-Financial Reporting Directive (NFRD)

Adopted in 2014 and applicable to public interest companies with more than 500 employees, requiring them to disclose ESG-related matters

Corporate Sustainability Reporting Directive (CSRD)

This directive replaced and expanded the existing NFRD requirements (additional disclosure requirements & more companies required to report)

Sustainable Finance Disclosures Regulation (SFDR)

Additional reporting requirements for FMPs (Financial Market Participants) and FAs (Financial Advisors) offering investment products with environmental or social characteristics, or products with sustainable investment objectives within the European Union

Corporate Sustainability Due-Diligence Directive (CSDDD)

Due diligence steps companies must follow relating to human rights, and environmental impacts. In addition to CSRD (Corporate Sustainability Reporting Directive)

EU Taxonomy

A classification system for economic activities deemed environmentally sustainable. To be used by companies investors, policymakers, and members of the public for identifying environmentally sustainable economic activities and reducing greenwashing

Companies to which EU Taxonomy applies

Applicability of the EU Taxonomy is represented by the following groups:

Large public-interest companies already subject to the NFRD (Non-Financial Reporting Directive)
All large companies not presently subject to the NFRD, meeting 2 out of 3 CSRD criteria
Listed SMEs and other undertakings
Financial market participants, including occupational pension providers, that offer and distribute financial products in the EU (including from outside the EU)
Non-EU companies with a net turnover €150,000,000 in the EU, if they have at least one subsidiary or branch in the EU and exceed certain thresholds

The EU taxonomy helps to identify environmentally sustainable economic activities and reduce greenwashing

Fit for the future

The ‘Fit for 55’ package is a set of proposals for making the EU’s climate goal to reduce EU GHG emissions by at least 55% by 2030 a legal obligation.

EU countries are working on new legislation to achieve this goal and to make the EU climate-neutral by 2050. Many steps have already been taken towards achievement of the European Green Deal and Fit for 55. The European Green Deal is the foundation for Fit for 55. Approved in 2020, the European Green Deal is a set of policy initiatives from the European Union with the overarching goal of making the European Union climate neutral by 2050.

The package of proposals for Fit for 55 aims to provide a coherent and balanced framework for reaching the EU’s climate objective, whilst:

Ensuring a just and socially fair transition
Maintaining and strengthening the innovation and competitiveness of EU industry whilst ensuring a level playing field with regards to third country economic operators
Underpinning the EU’s position as leading the way in the global fight against climate change

Find out more information about Fit for Future

Approved in 2020, the European Green Deal is a set of policy initiatives from the European Union with the overarching goal of making the European Union climate neutral by 2050.