EXPERT SECTION 172 REPORTING
S.172 REPORTING COMPANIES ACT COMPLIANCE.
WHAT IS S.172 AND
DOES IT APPLY TO YOU?
Section 172 Statements are required to accompany the annual reports of all companies with a turnover of more than £36m and 250 employees.
This part of the Companies Act (2006) compels directors to document how their strategic decision-making recognises employee and stakeholder interests, as well as stating the business’ approach to the environment.
Important: s.172 reporting is not an accounting function. For example, materiality assessments and SECR carbon reporting are specialist non-finance activities. That’s where ESG Pro comes in.
Our caution is simple: a mere confirmation that s.172 has been considered is inadequate. The directors must explain how they have executed their duties in accordance with the Companies Act. The structure of your report and how it is published must be precise.
We’re ready to help. Speak to one of our s.172 specialists.
HOW s.172 LINKS TO
ENVIRONMENT.
AND WHY YOUR ACCOUNTANT CAN’T DO IT.
Environmental considerations are central to your reporting duties, ensuring directors make decisions that support long-term sustainability and business resilience. Addressing areas such as carbon reduction and resource efficiency strengthens governance and compliance.
Integrating environmental impact into strategy helps reduce risk, enhance efficiency, and align company goals with stakeholder expectations. It shows that directors are proactive in managing sustainability challenges. Highlighting environmental responsibility in your statement builds trust, demonstrates ethical leadership, and positions the company as a forward-looking, environmentally conscious organisation.
Incorporating your SECR and ESOS reporting, and your broader environmental obligations are the specialist activities best left to the ESG Pro experts.
s.172 REPORTING
REQUIREMENTS.
BEGIN WITH A MATERIALITY ASSESSMENT.
To meet Section 172 requirements, directors must identify and understand all stakeholders who influence or are affected by the company’s actions. Stakeholders include anyone impacted by business decisions, such as employees, customers, suppliers, investors, regulators, and local communities.
We begin with a materiality assessment to prioritise key ESG topics according to what matters most to stakeholders and what is most significant to the business. From here, your business can make informed, sustainable decisions that align with both stakeholder expectations and long-term corporate strategy.
3-STEP s.172 COMPLIANCE
MATERIALITY
ASSESSMENT
STAKEHOLDER ENGAGEMENT.
The materiality assessment ensures you can evidence the priorities of your employees, customers, suppliers, and others. This is a fully hosted survey inclusive of all analysis. The insights offer remarkable business insight.
PREPARE A
CASE STUDY
EXAMPLE OF ENGAGEMENT.
The Financial Reporting Council (FRC) & BEIS advise detailing the matters, things, and parties that the directors think are important for adhering to section 172(1)(a)-(f), along with their reasoning. Substance required!
SUPPLIER
ENGAGEMENT
SHOW GOOD SUPPLIER RELATIONS.
Compliance is best achieved through an ESG-focussed supply chain assessment. s.172 places emphasis on how your business treats its suppliers. This also is a hosted process with many positive outcomes.
ENSURE s.172 COMPLIANCE
FOR BUSINESS SUCCESS.
If you believe that regulatory compliance is no accident, let’s talk!
Section 172 Reporting – FAQs
Are you faced with s.172 reporting for The Companies Act (2006) compliance? Whether you’re starting from scratch or aiming to improve your approach, we’ve compiled answers to the most common questions businesses ask about s.172 — including how ESG Pro supports you every step of the way.
A Section 172 statement is a legal requirement under the Companies Act 2006. It explains how company directors promote long-term success by considering stakeholders, the environment, employees, suppliers, and the community. The statement demonstrates responsible governance, transparency, and sustainable decision-making.
Companies that must publish a Section 172 statement are large organisations and qualifying public interest entities under the Companies Act 2006. This applies to businesses with more than 250 employees, over £36 million in turnover, or more than £18 million in total assets. These companies must explain how directors consider stakeholders, the environment, and long-term sustainability in their decisions.
Section 172 reporting is required under the Companies Act 2006. This legislation sets out directors’ duties to promote the success of the company while considering stakeholders, employees, suppliers, the community, and the environment. The Act requires eligible companies to publish a Section 172 statement explaining how these duties influence their decisions and long-term strategy.
A Section 172 statement should include how directors consider stakeholders, employees, suppliers, customers, the environment, and community impact in their decisions. It must explain how these factors influence strategy, risk management, and long-term sustainability, demonstrating compliance with the Companies Act 2006.
Section 172 reporting connects corporate governance with environmental, social, and governance (ESG) principles. It shows how directors integrate sustainability, ethics, and stakeholder engagement into decision-making, supporting transparency and trust in ESG disclosures.
Section 172 reinforces sustainability by requiring directors to consider environmental and social impact when promoting business success. Embedding these considerations in strategy helps companies meet ESG standards and demonstrate responsible, long-term growth.
Section 172 statements are reviewed by shareholders, regulators, and stakeholders interested in corporate governance and ESG performance. Clear, evidence-based reporting helps companies meet compliance expectations and enhance stakeholder confidence.
ESG Pro supports businesses in drafting Section 172 statements that meet legal, governance, and ESG requirements. Our audits identify key stakeholder priorities, environmental risks, and social impacts, helping clients produce credible and compliant disclosures.
Section 172 underpins good corporate governance by ensuring directors act in the best interests of the company while considering wider stakeholder and environmental impacts. It promotes accountability, ethical leadership, and transparent decision-making.
Companies must update their Section 172 statement annually as part of their strategic report. Regular updates ensure ongoing compliance with the Companies Act 2006 and reflect new ESG commitments, stakeholder feedback, and sustainability progress.
Section 172 requires directors to consider the environmental impact of their decisions. Addressing areas such as carbon reduction, energy use, and waste management demonstrates sustainable governance and strengthens a company’s ESG performance.
Section 172 supports modern slavery compliance by ensuring directors assess ethical and social risks within their operations and supply chains. Reporting on supplier due diligence and fair labour practices shows alignment with both ESG and human rights standards.
Social impact reporting under Section 172 demonstrates how the company supports employees, communities, and customers. Highlighting initiatives such as wellbeing, diversity, and local engagement aligns governance practices with ESG values.
Including carbon management in Section 172 reporting highlights how directors address emissions and climate impact. Linking strategic decisions to net-zero or energy-efficiency goals strengthens both ESG credentials and stakeholder confidence.
Section 172 promotes supply chain transparency by requiring directors to evaluate supplier relationships and sustainability performance. Disclosing how responsible sourcing and ethical procurement influence decisions enhances trust and meets ESG expectations.
Strong Section 172 reporting reassures investors that environmental, social, and governance factors are built into corporate strategy. Transparent disclosures reduce risk, demonstrate accountability, and support long-term sustainable growth.
ESG Pro helps companies align Section 172 statements with ESG goals by auditing policies, supply chains, and environmental data. Our experts ensure disclosures meet legal requirements while showcasing sustainability achievements and responsible business leadership.
