Case study: Corporate climate disclosures — a leading organization's implementation and lessons learned

Only 38% of UK FTSE 350 companies achieved "good" or better ratings for climate disclosure quality in 2024, according to the Climate Disclosure Standards Board's annual assessment—despite mandatory TCFD-aligned reporting being in force since 2022. This gap between compliance and quality reveals a fundamental challenge: producing climate disclosures that satisfy regulatory requirements while delivering decision-useful information demands rigorous materiality assessment, robust assurance processes, enterprise-grade data controls, and a reporting operating model capable of sustained execution. This case study examines how leading UK organisations have approached these challenges, drawing lessons from Unilever, SSE plc, and NatWest Group to provide actionable guidance for policy and compliance professionals.

Why It Matters

The UK's climate disclosure regime has evolved from voluntary best practice to enforceable obligation. The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 require over 1,300 UK-registered companies and financial institutions to disclose climate-related risks and opportunities aligned with the Task Force on Climate-related Financial Disclosures (TCFD) framework. The Financial Conduct Authority's Listing Rules extend these requirements to premium-listed companies, while the Sustainability Disclosure Requirements (SDR) introduce additional obligations for asset managers.

Regulatory enforcement is intensifying. The Financial Reporting Council (FRC) issued 45 challenge letters relating to climate disclosures in its 2023-24 review cycle—a 67% increase from the prior year. The FRC's thematic reviews have specifically criticised inadequate materiality assessments, absence of quantified scenario analysis, and insufficient linkage between climate risks and financial statements. Companies receiving supervisory attention face reputational damage, investor concern, and potential enforcement action.

Beyond compliance, disclosure quality affects capital access. Research by the London Stock Exchange Group found that companies with comprehensive climate disclosures achieved 12-18 basis points lower cost of debt compared to peers with minimal reporting. Institutional investors managing over £14 trillion in UK assets have signed the Net Zero Asset Managers initiative, committing to engage with portfolio companies on climate disclosure quality.

For policy and compliance professionals, the imperative is clear: climate disclosure must transition from a box-ticking exercise to an integrated function supported by governance structures, data systems, and operating processes capable of delivering auditable, decision-useful information year after year.

Key Concepts

Materiality Assessment for Climate Disclosures

Materiality determines which climate-related risks, opportunities, and metrics warrant disclosure. The UK regime requires companies to assess materiality through both a financial lens (impacts on enterprise value) and, increasingly, an impact lens (effects on the environment and stakeholders).

Double materiality—assessing both inward financial risks and outward environmental impacts—is embedded in the European Union's Corporate Sustainability Reporting Directive (CSRD), which affects UK subsidiaries of EU parent companies and will influence UK standards as convergence progresses. The International Sustainability Standards Board (ISSB) IFRS S1 and S2 standards, which the UK government has committed to endorsing for use, focus primarily on financial materiality but require consideration of sustainability matters that could reasonably be expected to affect future cash flows.

Effective materiality assessment requires structured processes: stakeholder mapping, sector-specific risk identification, quantification of potential financial impacts, and threshold-setting aligned with financial reporting standards. Leading organisations conduct materiality assessments annually, involve cross-functional teams (sustainability, finance, risk, legal), and document methodology transparently.

Assurance of Climate Information

Assurance provides independent verification of climate disclosures, enhancing credibility and identifying control weaknesses. The UK currently requires no mandatory assurance of climate information, though ARGA (the Audit, Reporting and Governance Authority) proposals and CSRD requirements for affected entities are changing expectations.

Assurance levels range from limited (negative assurance based on inquiry and analytical procedures) to reasonable (positive assurance based on substantive testing). The International Auditing and Assurance Standards Board (IAASB) is developing ISSA 5000, a comprehensive standard for sustainability assurance expected to shape global practice.

Current practice among FTSE 100 companies shows 72% obtaining some form of external assurance over GHG emissions data in 2024, but only 31% extending assurance to forward-looking climate commitments or scenario analysis. Assurance scope and level should be risk-based, focusing on metrics material to investor decisions and areas where data quality concerns are highest.

Data Controls and Information Architecture

Climate disclosure requires data sourced from operational systems (energy consumption, fleet mileage, refrigerant losses), supply chain partners (Scope 3 categories), and external providers (emission factors, climate scenarios). This data ecosystem presents control challenges distinct from traditional financial reporting.

Key control considerations include:

• Data lineage and traceability: Can disclosed figures be traced to source systems with documented transformations?
• Estimation methodology governance: Are assumptions for Scope 3 calculations documented, approved, and consistently applied?
• System interface controls: Are automated data feeds validated for completeness and accuracy?
• Segregation of duties: Are data collectors independent from those approving disclosed metrics?
• Temporal alignment: Do disclosed metrics use consistent reporting periods across business units?

Enterprise resource planning (ERP) integrations, dedicated carbon accounting platforms, and standardised data collection templates address these challenges, though implementation maturity varies widely across UK companies.

Reporting Operating Model Design

Sustainable climate disclosure requires an operating model—the combination of people, processes, technology, and governance—capable of producing reliable information on recurring cycles. Operating model considerations include:

• Organisational placement: Where does climate reporting sit—sustainability, finance, or risk? What coordination mechanisms exist?
• Capability requirements: What technical skills (carbon accounting, scenario modelling, regulatory interpretation) are needed?
• Process integration: How do climate reporting workflows connect to financial close, annual report production, and assurance cycles?
• Technology enablement: What systems support data collection, calculation, workflow management, and audit trails?
• Governance oversight: What committee structures review and approve climate disclosures?

Leading organisations increasingly embed climate reporting within finance functions to leverage existing controls, reporting disciplines, and assurance relationships while maintaining specialist sustainability expertise.

What's Working

Integrated Reporting Functions

Organisations achieving high-quality disclosures have moved beyond siloed sustainability teams producing standalone reports. Unilever's Climate Transition Action Plan demonstrates integrated governance: the Chief Financial Officer co-sponsors climate commitments alongside the Chief Sustainability Officer, climate metrics feed into quarterly business reviews, and finance teams participate in Scope 3 calculation processes. This integration improved data reliability—Unilever achieved reasonable assurance over Scope 1 and 2 emissions and limited assurance over material Scope 3 categories in 2024.

SSE plc embedded its net-zero transition plan within mainstream financial reporting, presenting capital allocation decisions through a climate lens and obtaining reasonable assurance over all emissions categories. SSE's approach—treating climate data with the same rigour as financial data—enabled it to achieve the highest score in the Climate Action 100+ Net Zero Company Benchmark among UK utilities.

Systematic Materiality Processes

NatWest Group's Climate and Sustainable Funding and Financing Report illustrates systematic materiality assessment. The bank identified climate-related financial risks across credit, market, operational, and strategic dimensions, quantified potential impacts under multiple temperature scenarios, and disclosed concentration risks in carbon-intensive sectors. NatWest's materiality matrix, updated annually with input from investors and subject matter experts, determines disclosure scope and depth.

Effective materiality processes share common features: cross-functional working groups, documented thresholds aligned with financial materiality (often 5% of relevant financial statement line items), stakeholder input mechanisms, and governance approval.

Technology-Enabled Data Controls

Organisations investing in carbon accounting platforms report improved data quality and reduced manual effort. Persefoni, Watershed, and SAP Sustainability Control Tower deployments among UK multinationals have enabled automated data collection from ERP systems, standardised calculation methodologies, audit trail maintenance, and real-time progress monitoring.

SSE's implementation of enterprise carbon accounting software reduced disclosure preparation time by 40% while improving accuracy—third-party verification identified 23% fewer data queries compared to prior manual processes. The investment case for technology enablement strengthens as disclosure scope expands to cover transition plans, Scope 3 categories, and product-level carbon footprints.

What's Not Working

Superficial Materiality Assessments

The FRC's 2024 thematic review found that many companies describe materiality processes in generic terms without explaining how specific risks were assessed as material or immaterial. Vague statements such as "we considered climate risks in our materiality assessment" fail regulatory expectations and investor needs.

Common failures include: conflating stakeholder importance rankings with financial materiality, omitting quantitative thresholds, failing to reassess materiality as climate science and policy evolve, and not documenting the connection between identified material matters and disclosure content.

Scope 3 Data Limitations

Scope 3 emissions—often 80-95% of a company's carbon footprint—remain problematic. Spend-based estimation methods, while acceptable as starting points, produce uncertainty ranges of ±40% or more. Supplier-specific data collection is resource-intensive and coverage remains limited: CDSB found that only 18% of FTSE 350 companies disclosed Category 1 (purchased goods and services) emissions with primary supplier data in 2024.

NatWest Group's disclosures acknowledge these limitations explicitly, presenting financed emissions with confidence intervals and explaining methodology constraints. Transparency about data quality—rather than false precision—builds credibility, though investors increasingly expect improvement trajectories.

Assurance Gaps and Inconsistency

Limited assurance over selected metrics—typically Scope 1 and 2 emissions only—remains the norm. Forward-looking commitments, scenario analysis outputs, and transition plan milestones rarely receive assurance attention. This creates asymmetric credibility: historical emissions data carries external validation while strategically significant forward-looking statements do not.

Assurance provider capability also varies. ICAEW research found that 28% of UK climate assurance engagements were performed by practitioners with limited sustainability expertise, raising questions about assurance quality. The IAASB's ISSA 5000 development addresses capability requirements, but implementation will take years.

Operating Model Fragility

Many organisations lack sustainable operating models for climate disclosure. Reliance on individual expertise rather than documented processes, manual data collection creating single points of failure, and inadequate resourcing for expanding disclosure requirements (transition plans, nature-related disclosures) threaten sustained compliance.

The FRC observed instances where staff turnover led to methodology changes or data discontinuities, undermining comparability. Building resilient operating models requires process documentation, capability development, succession planning, and technology investment—commitments that compete for resources against other corporate priorities.

Key Players

Established Leaders

• Unilever — Integrated climate governance with reasonable assurance over emissions; Climate Transition Action Plan rated highly by Climate Action 100+.
• SSE plc — Net-zero aligned capital allocation with comprehensive emissions assurance; top-ranked UK utility on net-zero benchmarks.
• NatWest Group — Leading financed emissions disclosure under PCAF methodology; transparent Scope 3 uncertainty quantification.
• Legal & General — Portfolio decarbonisation disclosure with explicit investment exclusion criteria and engagement outcomes.
• Tesco — Scope 3 supplier engagement programme covering 70% of product emissions with improvement trajectories.

Emerging Startups

• Persefoni — Carbon accounting platform enabling CSRD, SEC, and ISSB-aligned disclosures with automated data collection.
• Watershed — Enterprise climate platform used by multinationals for Scope 1-3 measurement and decarbonisation planning.
• Normative — AI-powered emissions calculation automating Scope 3 estimation and audit trail generation.
• Plan A — Sustainability management platform integrating carbon accounting, ESG reporting, and supply chain engagement.
• Emitwise — Supply chain emissions tracking with supplier-specific data collection and benchmarking.

Key Investors & Funders

• Legal & General Investment Management — Active engagement on disclosure quality; Climate Impact Pledge targeting disclosure laggards.
• Aviva Investors — Voting policy explicitly addressing climate disclosure adequacy.
• Brunel Pension Partnership — Collaborative engagement through CA100+ and UK Investor Stewardship Framework.
• UK Infrastructure Bank — Disclosure requirements embedded in financing terms for infrastructure investments.
• British Business Bank — Sustainability disclosure guidance for smaller companies accessing growth capital.

Sector-Specific KPI Table

Sector	Key Disclosure KPIs	Materiality Threshold (Typical)	Assurance Coverage (2024)	Data Quality Challenge
Financial Services	Financed emissions (tCO2e/£M invested); Portfolio alignment (°C); Transition finance (£M)	5% of AUM or RWA	45% limited assurance	PCAF data quality scores averaging 3.2/5
Utilities	Scope 1 intensity (gCO2/kWh); Renewable capacity (%); Methane emissions (tCH4)	3% of revenue or EBITDA	68% reasonable assurance	Fugitive emissions measurement uncertainty
Consumer Goods	Product carbon footprint (kgCO2e/unit); Scope 3 Cat 1 & 12 (tCO2e); Packaging recyclability (%)	5% of COGS	52% limited assurance	Supplier data coverage <40%
Real Estate	Building energy intensity (kWh/m²); Embodied carbon (kgCO2e/m²); EPC rating distribution (%)	2% of portfolio value	38% limited assurance	Tenant energy data access
Manufacturing	Process emissions intensity (tCO2e/unit); Scope 1 reduction trajectory (%); Circular material input (%)	5% of operating costs	61% limited assurance	Site-level measurement heterogeneity

Examples

Unilever's Climate Transition Action Plan Implementation: Unilever published its Climate Transition Action Plan in 2021 and has since disclosed annual progress with increasing rigour. In 2024, the company achieved 52% reduction in Scope 1 and 2 emissions from a 2015 baseline while growing revenue—demonstrating absolute decoupling. Critical to this performance: integration of carbon pricing (€70/tCO2e) into capital allocation decisions, supplier engagement covering 300 partners representing 60% of supply chain emissions, and reasonable assurance obtained over emissions metrics. Lessons learned: early integration of sustainability into financial planning enabled consistent execution; technology investment in data systems reduced disclosure effort by one-third; governance alignment between CFO and CSO prevented siloed decision-making.

NatWest Group's Financed Emissions Disclosure Journey: As a signatory to the Net Zero Banking Alliance, NatWest committed to aligning its lending portfolio with net-zero by 2050. The bank disclosed financed emissions across priority sectors (oil & gas, power, automotive, residential mortgages) using PCAF methodology, explicitly stating data quality scores for each sector. In 2024, NatWest reported that 78% of its in-scope lending met its defined transition criteria, with clear sector-specific decarbonisation pathways. The bank invested £4 million in climate data infrastructure, including third-party data providers and internal analytical capabilities. Key lesson: transparency about methodology limitations and data quality—rather than overstated precision—built credibility with investors and regulators.

SSE plc's Reasonable Assurance Achievement: SSE became one of the first UK companies to obtain reasonable assurance over its complete Scope 1, 2, and 3 emissions inventory. This required: redesigning data collection processes across 150+ sites, implementing system controls equivalent to financial reporting standards, training finance teams on carbon accounting, and engaging assurance providers with deep sector expertise. The investment—estimated at £2.5 million over three years—positioned SSE for incoming CSRD requirements and investor expectations. Outcome: SSE's disclosures received highest ratings from IIGCC and enabled green bond issuance at favourable terms. Lesson: treating climate data with financial-grade rigour delivered both compliance and commercial benefits.

Action Checklist

• Conduct formal materiality assessment with documented thresholds, cross-functional input, and governance approval—update annually
• Map current data flows for all disclosed metrics; identify manual processes, estimation dependencies, and control gaps
• Develop data quality improvement roadmap for Scope 3 categories, prioritising material value chain segments
• Extend assurance scope incrementally—target reasonable assurance over Scope 1 and 2, limited assurance over material Scope 3 categories
• Embed climate reporting within finance function processes; align disclosure calendar with financial close
• Invest in carbon accounting technology to automate data collection, standardise calculations, and maintain audit trails
• Establish governance oversight through audit committee or dedicated sustainability committee with disclosure review responsibilities
• Document operating model: roles, responsibilities, process workflows, system dependencies, and escalation procedures
• Build internal capability through training programmes covering regulatory requirements, carbon accounting, and scenario analysis
• Monitor regulatory developments: SDR implementation, ISSB endorsement, ARGA assurance requirements, and CSRD extraterritorial effects

FAQ

Q: What level of assurance should UK companies target for climate disclosures? A: Current best practice for FTSE 350 companies includes reasonable assurance over Scope 1 and 2 emissions and limited assurance over material Scope 3 categories. As ISSB adoption progresses and the Audit, Reporting and Governance Authority implements proposals, reasonable assurance across all material metrics will become expected. Companies should develop multi-year assurance roadmaps, progressively expanding scope and level as data quality and controls mature. Cost considerations favour phased approaches—limited assurance typically costs 40-60% of reasonable assurance engagements.

Q: How should companies approach materiality when financial and impact perspectives conflict? A: The UK regime currently emphasises financial materiality—matters reasonably expected to influence investor decisions. However, subsidiaries of EU parents must address double materiality under CSRD, and stakeholder expectations increasingly encompass impact considerations. Practical approaches include: conducting parallel assessments under both lenses, documenting where conclusions differ, and disclosing impact-material matters voluntarily where investor relevance exists. Governance should explicitly consider both perspectives, with clear rationale for disclosure decisions.

Q: What constitutes adequate Scope 3 disclosure given data limitations? A: The FRC and investor expectations accept that Scope 3 data involves estimation and uncertainty. Adequate disclosure includes: transparent methodology explanation, indication of data quality (primary vs. secondary data, spend-based vs. activity-based), confidence intervals or qualitative uncertainty assessment, and improvement trajectory. Avoid false precision—reporting Scope 3 emissions to spurious decimal places undermines credibility. Focus investment on material categories (often purchased goods, use of sold products, and investments) rather than comprehensive but low-quality coverage across all 15 GHG Protocol categories.

Q: How should climate disclosure connect to financial statements? A: Connectivity between climate disclosures and financial statements is an FRC priority. Best practice includes: cross-references between sustainability reports and relevant financial statement notes; consistency between scenario analysis assumptions and impairment testing or useful life assessments; disclosure of climate-related provisions, contingent liabilities, or commitments in financial statements; and integration of climate risks into audit committee discussions. Auditors increasingly query management about climate consideration in financial estimates—sustainability and finance teams must coordinate.

Q: What operating model design enables sustainable climate disclosure? A: Resilient operating models share common features: placement within or closely connected to finance functions; documented processes with clear roles and responsibilities; technology platforms providing data automation, calculation standardisation, and audit trails; training programmes building capability across the organisation; governance structures with explicit disclosure approval authority; and resource planning anticipating expanding requirements (transition plans, nature disclosures, product-level footprints). Avoid dependence on individual experts—process documentation and succession planning ensure continuity as requirements evolve.

Sources

• Climate Disclosure Standards Board. (2024). "TCFD Implementation Among UK FTSE 350 Companies: Quality Assessment and Benchmarking." CDSB Annual Review 2024.
• Financial Reporting Council. (2024). "Thematic Review of Climate-Related Disclosures: Findings and Recommendations." FRC Corporate Reporting Supervision.
• London Stock Exchange Group. (2024). "Climate Disclosure and Cost of Capital: Evidence from UK Listed Companies." LSEG Research Paper.
• International Sustainability Standards Board. (2024). "IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information" and "IFRS S2 Climate-related Disclosures." IFRS Foundation.
• Partnership for Carbon Accounting Financials. (2024). "Financed Emissions Standard: Technical Guidance for Banks." PCAF Global Core Team.
• Unilever plc. (2024). "Climate Transition Action Plan: Progress Report 2024." Unilever Annual Report and Accounts.
• SSE plc. (2024). "Net Zero Transition Report 2024: Emissions Assurance and Capital Alignment." SSE Sustainability Reports.
• NatWest Group. (2024). "Climate and Sustainable Funding and Financing Report." NatWest ESG Disclosures.