The non financial and sustainability information statement

The non financial and sustainability information statement is a required part of the strategic report for large companies with more than 500 employees that are traded, banking, authorised insurance, insurance market or AIM companies, or that have turnover above £500 million. Every company in scope must give climate related financial disclosures; the traded, banking and insurance categories must also report on environmental, employee, social, human rights and anti bribery and corruption topics. The rules are in sections 414CA and 414CB of the Companies Act 2006.

Which companies must include the statement?

Section 414CA(A1) requires the strategic report of a company to which the section applies to include the statement. Under section 414CA(1) and (1A), a company is caught if at any time in the financial year it was:

• a traded company, meaning one with transferable securities admitted to trading on a UK regulated market (section 474);
• a banking company;
• an authorised insurance company;
• a company carrying on insurance market activity;
• a company with securities admitted to trading on AIM; or
• a high turnover company, meaning turnover of more than £500 million or, for a parent, a group aggregate turnover of more than £500 million net (section 414CA(2A)).

Three filters then narrow the list. The statement is not required if the company is subject to the small companies regime or qualifies as medium sized (section 414CA(3)). It is not required if the company had no more than 500 employees in the year, or, for a parent, if the group’s aggregate employees were no more than 500 (section 414CA(4)). Employees are a monthly average of persons employed under contracts of service (section 414CA(5) and (6)). The turnover figure is adjusted proportionately for a period that is not a year (section 414CA(2B)).

Can a subsidiary rely on its parent’s report?

Yes, if the conditions in section 414CA(7) and (8) are met. The statement is not required from a company that is a subsidiary undertaking at the end of its financial year and is included in a group strategic report of a parent undertaking that covers the company and its own subsidiaries, is prepared for a financial year ending at the same time as or before the company’s year end, and includes a group statement for all the undertakings in the consolidation. Where the report is a group strategic report, section 414CA(2) requires a consolidated group statement. Companies outside the scope may include a statement voluntarily (section 414CA(10)).

What must the statement contain?

Section 414CB sets the content in two layers.

Climate related financial disclosures. Under section 414CB(A1), every statement must contain the eight climate related financial disclosures listed in section 414CB(2A), covering governance, how climate risks and opportunities are identified, assessed and managed, how that process fits overall risk management, the principal risks and opportunities and the time periods used, their impact on the business model and strategy, resilience under different climate scenarios, targets, and the key performance indicators used. These are explained in climate related financial disclosures.

The wider non financial content. Section 414CB(1) applies only to companies in the first four categories: traded, banking, authorised insurance and insurance market companies. Their statement must give information, to the extent necessary for an understanding of the company’s development, performance, position and the impact of its activity, relating as a minimum to:

1. environmental topics, including the impact of the business on the environment;
2. the company’s employees;
3. social topics;
4. respect for human rights; and
5. anti corruption and anti bribery.

Section 414CB(2) requires that information to include a brief description of the business model; the policies pursued on each topic and any due diligence processes; the outcome of those policies; the principal risks on each topic arising from the company’s operations and, where relevant and proportionate, the business relationships, products and services likely to cause adverse impacts and how the risks are managed; and the non financial key performance indicators relevant to the business. Where the company has no policy on a topic, section 414CB(4) requires a clear and reasoned explanation. Section 414CB(5) requires references to, and explanations of, amounts in the annual accounts where appropriate.

Company type (with more than 500 employees, not small or medium)	Climate disclosures	Five non financial topics
Traded, banking, authorised insurance or insurance market company	Yes	Yes
AIM company	Yes	No
High turnover company (over £500 million)	Yes	No

What flexibility do directors have?

• Climate omissions. Under section 414CB(4A) and (4B), directors who reasonably believe that all or part of the disclosures on business model impact, scenario resilience, targets or key performance indicators is not necessary for an understanding of the business may omit it, but must give a clear and reasoned explanation.
• Existing frameworks. If information required by subsections (1) to (5) is published by the company under a national, EU or international reporting framework, section 414CB(6) says the statement must specify the framework used instead of including that information.
• Commercial sensitivity. Section 414CB(9) does not require disclosure of impending developments or anything still under negotiation if, in the directors’ opinion, disclosure would be seriously prejudicial to the company’s commercial interests, provided the omission does not prevent a fair and balanced understanding.

How does it fit with the rest of the strategic report?

A compliant statement also discharges several other strategic report duties. Section 414CB(7) treats the report as complying with section 414C(4)(b) (non financial key performance indicators, including environmental and employee information), section 414C(7) for quoted companies except as it relates to community issues, section 414C(8)(b) (the business model) and the related part of section 414C(12). That avoids writing the same material twice. The general content of the report is covered in the strategic report, and the separate statement on directors’ duties in the section 172 statement.

The climate element was added by the Companies (Strategic Report) (Climate related Financial Disclosure) Regulations 2022 (SI 2022/31) for financial years beginning on or after 6 April 2022. The UK sustainability reporting standards published on 25 February 2026 are available for voluntary use and do not replace these legal requirements; see UK sustainability reporting standards.

Who checks it, and who is liable?

Because the statement is part of the strategic report, section 496 requires the auditor to state whether the strategic report is consistent with the accounts and prepared in accordance with applicable legal requirements, and whether the auditor has identified material misstatements in it. Section 463 makes a director liable to compensate the company for loss caused by an untrue or misleading statement or an omission only if the director knew it was untrue or misleading, was reckless, or knew the omission was dishonest concealment of a material fact, and gives no liability to anyone other than the company.

How does this work in practice?

Illustration only. A private company with no listed securities has a 31 December year end. In 2026 its turnover is £620 million and it has an average of 1,200 employees. It is a high turnover company with more than 500 employees and is not small or medium, so its 2026 strategic report must contain the statement, unless a parent’s group strategic report covers it under section 414CA(7). Because it is not traded, banking or insurance, it gives the climate disclosures but is not required to report on the five wider topics. If its shares were later admitted to a UK regulated market, it would also need the business model, policies, outcomes, risks and key performance indicators on all five topics.

What mistakes come up most often?

• Testing turnover alone and forgetting the 500 employee condition, or counting only UK staff in a group when the aggregate covers the whole group.
• An AIM or high turnover company writing a full five topic statement because it assumes the content is the same for everyone.
• Omitting a topic without the reasoned explanation section 414CB(4) requires.
• A subsidiary relying on a parent’s report that ends after the subsidiary’s own year end.
• Omitting climate disclosures beyond the four that section 414CB(4A) permits, or without a reasoned explanation.
• Referring to a framework report without saying which framework was used.

The government’s Modernising Corporate Reporting consultation, open until 30 November 2026, includes proposals on non financial reporting, so the requirements may change in future.

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Related Accountapedia entries

• UK sustainability reporting standards
• The statement on disclosure of information to auditors
• Assurance on sustainability information: ISSA 5000
• The statement of capital explained
• The statement of financial activities (SoFA)

Sources

• legislation.gov.uk: Act 2006 c. 46, section 414CA
• legislation.gov.uk: Act 2006 c. 46, section 474
• legislation.gov.uk: Act 2006 c. 46, section 414CB
• legislation.gov.uk: Act 2006 c. 46, section 414C
• legislation.gov.uk: SI 2022/31, regulation 1
• GOV.UK: Uk sustainability reporting standards
• legislation.gov.uk: Act 2006 c. 46, section 496
• legislation.gov.uk: Act 2006 c. 46, section 463
• GOV.UK: Modernising corporate reporting

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.