The sustainability tipping point: what 2026 holds for UK SMEs
2026 is unlikely to bring a brand new sustainability reporting law for UK SMEs. But your larger clients are facing a different reality, and they are increasingly likely to ask you for sustainability data that is consistent, credible and reusable.
Key takeaways
- Supplier sustainability data requests will increase as client reporting tightens.
- Your Scope 1 emissions can sit within your clients’ Scope 3 emissions.
- 2026 policy milestones change cost, risk and procurement expectations.
- Reusable evidence supports procurement and accelerates sales conversations.
Scope 1 and Scope 3 in plain English
Your Scope 1 emissions are the emissions you create directly through things you control, like fuel burned in company vehicles or on-site equipment.
For your client, those same emissions can sit within their Scope 3, which covers emissions across their value chain.
As reporting tightens, they need your data to calculate and report their own emissions accurately.
Read the GHG Protocol explainer of Scope 1, Scope 2 and Scope 3.
EU CBAM goes live on 1 January 2026
The Carbon Border Adjustment Mechanism (CBAM) is the EU’s tool to put a carbon price on emissions linked to certain carbon-intensive goods entering the EU. In 2026, it moves from reporting-only to compliance with associated charges.
EU importers will need verified emissions data from suppliers, which means that if you cannot evidence your carbon footprint, you can become a higher-cost supplier overnight.
See the European Commission overview of CBAM.
Carbon Reduction Plans are baked into procurement
Carbon Reduction Plans remain mandatory for certain major UK public sector contracts, and the knock-on effect is well established. Tier 1 suppliers increasingly require SMEs to provide carbon data and a reduction narrative to stay on preferred supplier lists. Even where a Carbon Reduction Plan is not formally required, procurement teams can use it as a proxy for credibility and risk.
Read more: UK government Procurement Policy Note (PPN 06/21) on Carbon Reduction Plans.
Packaging Extended Producer Responsibility fees are live
Packaging EPR applies to UK businesses above a turnover and packaging tonnage threshold.
In-scope businesses must collect and report data on the types and quantities of packaging they place on the UK market. That data supports a fee structure designed to fund recycling and waste management services that were previously covered by local authorities.
Official guidance: Extended Producer Responsibility for packaging (UK).
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Energy and carbon compliance keeps creeping down the supply chain
SECR continues for qualifying large organisations, and ESOS Phase 4 has a qualification date in 2026.
Even where SMEs are not directly in scope, their customers often are and that means more upstream data requests in tenders and supplier reviews. Read more about SECR guidance and ESOS guidance.
UK Sustainability Reporting Standards are coming
UK SRS are, for now, aimed at large, economically significant organisations. But when they arrive, large clients will need better data from suppliers, quietly resetting what “good enough” sustainability data looks like across the whole supply chain.
Read the UK government’s page on UK Sustainability Reporting Standards.
What UK SMEs should do now
Given the above, the direction of travel is clear: reusable evidence is now a must-have.
As a minimum, that should include an emissions baseline and a clear sustainability summary you can reuse everywhere. Add a Carbon Reduction Plan alongside this and you are not just meeting procurement requirements, you are equipping your sales team with credible proof points that can help fast-track your way onto preferred supplier lists.