SORP 2026: What do charities need to know about the new ESG reporting requirements?
UK charities with an income over £15 million must report how the charity is responding to and managing ESG matters.
The recently updated Charities Statement of Recommended Practice (SORP) creates new mandatory Environmental, Social and Governance (ESG) disclosure requirements for charities with an income over £15 million from 1 January 2026.
What is SORP?
The SORP gives an accounting and reporting framework to UK charities. The Charities SORP has been recently updated, and SORP 2026 will apply to reporting periods starting on or after 1 January 2026. The key changes include:
- Three new tiers to ensure reporting is more proportionate to the charity’s size:
- Tier 1: Income up to £500,000.
- Tier 2: Income between £500,000 and £15 million.
- Tier 3: Income over £15 million.
- Social investments – simplified accounting and reporting requirements.
- Provisions and contingencies – ‘easier to understand’ reporting requirements.
What are your sustainability reporting requirements as part of SORP 2026?
Tier 3 charities must summarise how the charity is responding to and managing ESG matters. For example, this could include:
- Details of the key performance indicators used to assess progress against targets to manage climate-related risks and realise climate-related opportunities.
- Description of the calculations these key performance indicators are based on.
- Social matters may include information on employee engagement and wellbeing, board diversity and inclusion and how a charity supports its local community.
- Governance matters may include details of privacy, cyber security, data security and business ethics.
- Where the charity is already reporting on these matters, but the detail is not included in the trustees’ annual report, details on where to find the information should be included, for example, via a website link.
For Tier 1 and 2 charities, trustees reporting on how the charity is responding to and managing environmental, governance and social matters is currently voluntary.
What are the penalties for non-compliance?
As SORP is the required framework for charities preparing accounts in accordance with the Financial Reporting Standard, failing to follow the updated reporting requirements constitutes as a failure to meet statutory reporting obligations.
Non-compliance could result in serious consequences, such as regulatory action and reputational damage.
How can Inspired help?
Charities provide vital help and awareness in an overburdened environment of depleting resources, evolving regulations and a continuous need to fundraise.
Understandably, you may struggle to allocate internal resources to gather the necessary data and draft your disclosures. Any new reporting requirements on top of this may seem like a formidable task.
But ensuring your reporting stands up to scrutiny creates advantages beyond compliance. Applying for grants and bidding for contracts are increasingly competitive spaces. Lack of sustainability reporting could impact your funding eligibility, especially from the government or ESG-conscious investors.
Impactful sustainability reporting ensures the information you provide stands up to scrutiny from regulators and potential investors alike and distinguishes you from your peers.
Inspired’s ESG experts can help your charity create powerful disclosures for your SORP 2026-compliant reporting and beyond. Start the conversation how our experts could best support you by emailing us at [email protected]
