With new sustainability reporting deadlines on the horizon, the charity sector has a unique opportunity to proactively prepare, ensuring that its work not only improves the world but is also conducted sustainably.

Charities engage with property in various ways, typically as occupiers of office, retail, or industrial spaces and as investors. Many utilise leased shops to enhance public awareness of their cause and generate income through the resale of donated goods. Additionally, charities may own or lease properties to facilitate their core community or charitable activities. Some charities hold properties as income-generating assets and the evolving legislative landscape will affect all these areas of property management within the charity sector.

Sustainability reporting and transparency can provide multiple benefits in the charity sector including; showcasing an organisations’ values to funders; enhancing bid proposals; driving operational efficiency improvements; and fostering partnerships with corporate entities. As the importance of sustainability continues to rise in public perception, integrating sustainability reporting into organisational operations is no longer a ‘nice to have’ and becoming more of a ‘need to have’.

Currently only a small number of the largest charities are subject to sustainability reporting requirements under frameworks like Streamline Energy and Carbon Reporting (SECR), SO 50001 Energy Management System (ESOS), and Taskforce on Climate-related Financial Disclosures (TCFD). For those who are subject to SECR under the Companies Act 2006, certain guidelines provide sector specific support for filing energy and carbon information in their director’s report. While these reporting frameworks loom large for listed companies their impact in the charity sector remains limited due to qualification thresholds.

The Charity Governance Code is a practical tool to help charities and their trustees develop high standards of governance by establishing seven core principles. The code is not a legal or regulatory requirement, but it can facilitate the voluntary integration of sustainability considerations. The overarching principle is ‘organisational purpose’ – which means that a charity is clear about its aims and ensures that these are being delivered effectively and sustainably.

The charities’ Statement of Recommended Practice (SORP) gives a framework for accounting and reporting, and is designed to help charity trustees meet their legal requirements for their accounts to give a consistent and true and fair view in charity annual reporting. The majority of charities must use the SORP to prepare their accounts.

The current SORP lacks explicit environmental impact or sustainability requirements. However, forthcoming updates signal a significant shift. In January 2025, revised SORP requirements, coinciding with updates to Financial Reporting Standard (FRS) 102, are considering introducing enhanced disclosure mandates. Although specific details are yet to be released, the engagement strand focuses on environmental related reporting.

This shift is poised to revolutionise the charity sector, particularly through increased reporting on energy usage and carbon emissions across their real estate portfolios. Consequently, charities must bolster their knowledge and refine data management processes to effectively comply with the impending regulations.

In navigating the evolving landscape of sustainability reporting, the emphasis is on charities to proactively adapt to both forthcoming regulatory changes and higher expectations on voluntary reporting. Looking ahead, carbon emissions reporting and sustainable investment policies are expected focal points, alongside ethical procurement and evolving employee practices.

By embracing enhanced disclosure requirements now and integrating sustainability considerations into their operations, charities can not only be ready to meet incoming compliance standards, but they can also strengthen their societal impact and stakeholder trust. As the sector prepares for this paradigm shift, proactive measures will be instrumental in driving positive outcomes for both charities and the communities in which they operate.

Further information

Contact Tanya Broadfield or Daisy Ash

How charities differ from corporate occupiers and how real estate can help their strategies