SORP 2026 and ESG Reporting
What Scottish-based, Tier 3 Charities Need to Know
What Scottish-based, Tier 3 Charities Need to Know
For many charities, environmental, social and governance reporting has historically been something they’ve chosen to do rather than something they’ve been required to do.
That changes under Charities SORP 2026.
SORP 2026 applies to accounting periods beginning on or after 1 January 2026 and introduces a three-tier reporting structure. Tier 3 covers charities with gross income above £15 million, and these organisations must now include sustainability reporting within their Trustees’ Annual Report.
For larger Scottish charities, that means ESG is becoming more closely connected with mainstream governance and annual reporting.
But there is an important distinction.
SORP 2026 asks Tier 3 organisations to provide a summary explaining how the charity is responding to and managing environmental, social and governance matters. The guidance is deliberately non-prescriptive, allowing charities to develop an approach proportionate to their activities, stakeholders and risks.
That flexibility is welcome, but it also creates practical questions for trustees and management teams:
Tier 1 and Tier 2 charities may choose to explain how they are responding to ESG matters but Tier 3 charities must provide a summary of how they are responding to, and managing them in the annual submission.
For trustees, ESG therefore shouldn’t be viewed as a separate environmental exercise undertaken once a year to complete the annual report. Done properly, it becomes part of the way the organisation understands risk, makes decisions and demonstrates long-term value to beneficiaries, funders, employees and other stakeholders.
Charities frequently have good sustainability initiatives already underway, from reducing energy consumption and improving recycling to changing procurement practices or installing renewable technologies. The difficulty is turning those individual activities into a coherent and measurable picture.
SORP 2026 does not introduce a mandatory carbon-reporting framework for all Tier 3 charities. It does, however, suggest consideration of matters including climate-related risks and the use of KPIs.
A sensible first step is therefore to establish a carbon baseline and that could include:
This reflects the approach we already use through Boxfish Carbonbaseline projects. Our reporting assesses Scope 1 and 2 emissions and, where data allows, relevant Scope 3 categories, before identifying improvement opportunities and establishing a dataset that can be developed over subsequent reporting periods.
Importantly, the first assessment doesn’t need to be perfect.
Our experience is that organisations rarely have every piece of Scope 3 information available in year one. The better approach is often to establish what data exists, identify the gaps and create a process for improving data quality year-on-year. That prevents the pursuit of perfect data delaying practical action.
Measurement should ultimately lead somewhere. Once an organisation understands its baseline, it can begin setting meaningful environmental objectives and KPIs.
These might include reductions in:
Targets should then connect to deliverable projects.
For estate-intensive charities, this could involve energy efficiency audits, heating and lighting improvements, building-fabric measures, better controls, electrification or renewable generation. Through our existing work with Scottish third-sector organisations, Boxfish already combines utility management, carbon reporting and technical energy-efficiency support in this way. For example, our work with Turning Point Scotland has brought together utility management, SECR, ESOS and implementation of measures to reduce energy consumption, carbon emissions and utility expenditure.
The important point is that reporting becomes the starting point for improvement, rather than the end product.
Because carbon is relatively easy to measure, discussions around ESG can become heavily weighted towards the E.
SORP 2026 is broader.
Examples identified within the new reporting framework include areas such as employee engagement and wellbeing, board diversity and inclusion, support for local communities, privacy, cybersecurity, data security and business ethics.
For charities, much of the Social element may already sit naturally within their purpose and activities.
The challenge may therefore be less about creating new initiatives and more about identifying what is material, setting appropriate measures and bringing the evidence together within a consistent framework.
Governance provides the structure around all of this.
Our experience at Boxfish suggests there is considerable overlap between sustainability compliance, carbon management and day-to-day operational efficiency.
We already support Tier 3 charities and third-sector organisations such Carr Gomm across utilities, carbon and legislative compliance, with the underlying objective of reducing the resources they need to devote to these activities so that more can remain focused on their core charitable mission.
Across our wider sustainability work, this approach extends from Carbonbaseline assessments and energy-efficiency audits through to net-zero roadmaps and ongoing strategic support. Our roadmap methodology, for example, translates emissions information into defined actions, timelines, expected benefits and measurable reduction targets rather than leaving clients with a carbon figure but no practical route forward.
For organisations that don’t have dedicated internal sustainability resource, our Fractional Sustainability Manager service provides ongoing access to sustainability expertise without requiring a full-time appointment. The service was developed specifically to provide flexible resource that can become an extension of the client’s internal team.
That model could be particularly relevant to Tier 3 charities adapting to SORP 2026, because the requirement is ongoing, not a one-off compliance exercise.
Perhaps the most reassuring message for charities approaching SORP 2026 is that they are unlikely to be starting from zero.
Energy invoices, utility consumption data, travel expenses, HR information, sustainability policies, risk registers, staff initiatives, community programmes and existing carbon or SECR reports can all contribute.
The initial task is to bring that information together, identify the gaps and decide what is genuinely material to the organisation.
SORP 2026 should therefore be seen as more than another compliance burden.
Used constructively, it provides Tier 3 charities with an opportunity to understand their environmental and social impacts more clearly, introduce stronger governance around sustainability and demonstrate to funders, beneficiaries, employees and other stakeholders how responsible management supports their charitable purpose.
The objective shouldn’t simply be to produce a compliant ESG statement. It should be to build the evidence and management processes that make the statement worth reading.
Boxfish support charities at different stages of this process, from an initial SORP 2026 ESG gap assessment, through Carbonbaseline and carbon-footprint reporting, energy and water efficiency audits, net-zero planning, utility management and renewable feasibility work, to ongoing Fractional Sustainability Manager support.
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