In most cases, no: small businesses are not legally required to report their carbon emissions in 2026. The main mandatory rules in the EU, the UK and California apply to large companies. Small businesses are still affected, because large customers, banks and public buyers increasingly ask their suppliers for a footprint.
This article summarises the rules as of October 2026, explains why requests reach smaller companies anyway, and sets out what to prepare. It is general information, not legal advice.
Who has to report: the main rules
| Rule | Where | Who is covered |
|---|---|---|
| CSRD | European Union | Companies with more than 1,000 employees and more than €450 million net turnover |
| SECR | United Kingdom | Quoted companies, plus large unquoted companies and LLPs |
| SB 253 | California, USA | Companies with over $1 billion annual revenue that do business in California |
None of these thresholds is close to a typical small business. The detail of each is below.
European Union: CSRD
The Corporate Sustainability Reporting Directive requires in-scope companies to publish detailed sustainability information, including greenhouse gas emissions, alongside their annual report.
Its reach was narrowed by the EU’s Omnibus simplification package, which was published in the Official Journal in February 2026 and entered into force in March 2026. A company now has to meet both tests, more than 1,000 employees and more than €450 million net turnover, to be in scope. Under the revised rules, EU companies in scope report for financial years starting on or after 1 January 2027, with first reports due in 2028. Non-EU groups with large EU operations follow a year later.
The same package added a value-chain cap. Large reporting companies are limited in what sustainability information they can demand from business partners with fewer than 1,000 employees. A voluntary reporting standard for smaller companies is meant to define that limit. In practice, this means a small supplier can expect requests to stay within a known, standard set of questions.
United Kingdom: SECR
Streamlined Energy and Carbon Reporting applies to all quoted companies and to large unquoted companies and limited liability partnerships. Large means meeting at least two of these three: turnover above £36 million, balance sheet total above £18 million, more than 250 employees.
Unquoted companies in scope report their UK energy use, the emissions from gas, transport fuel and purchased electricity, at least one intensity ratio, the method used, and the energy efficiency actions taken during the year. The information goes in the directors’ report. Companies that use 40,000 kWh or less of energy in the UK in a year can state that and omit the figures.
California: SB 253
The Climate Corporate Data Accountability Act covers companies with more than $1 billion in annual revenue that do business in California, wherever they are based. The first Scope 1 and 2 reports are due by 10 November 2026, covering the previous financial year. Scope 3 reporting and assurance requirements start in the 2027 cycle.
Because the law reaches into Scope 3, companies covered by it will be collecting data from their suppliers, including small ones outside California.
Want the number without the spreadsheet? Enter four figures from your bills and get your monthly CO₂e split by scope. Open the free Business Carbon Calculator
Why small businesses are still asked
The reason is Scope 3. A large company’s footprint includes the emissions of everything it buys, and those emissions are its suppliers’ Scope 1 and 2. To finish its own report, it has to ask. Our guide to Scope 1, 2 and 3 explains how the scopes connect one company to the next.
The requests arrive in several forms:
- Customer questionnaires. Sent directly, or through supplier platforms that score your answers and share them with several customers at once.
- Tenders. Public and corporate buyers often score bids on environmental data. Some public bodies require a published carbon reduction plan before a company can bid for larger contracts.
- Finance. Lenders and investors ask for emissions figures because they report on the footprint of what they finance.
- Insurance and landlords. Less common, but growing.
What a typical request asks for
Most supplier questionnaires cover the same ground. If you can answer these, you can answer nearly all of them:
- Do you measure your greenhouse gas emissions?
- What were your Scope 1 and Scope 2 emissions in the last reporting year, in tonnes of CO₂e?
- Which method and emission factors did you use?
- Do you measure any Scope 3 categories?
- Do you have a reduction target, and what progress have you made?
- What share of your electricity is renewable?
What to prepare if you are asked
- Your Scope 1 and 2 emissions for the last full year, in tonnes of CO₂e. Our step-by-step guide shows how to calculate a business carbon footprint.
- The method. State the period, what is included, and the source and year of your emission factors.
- One intensity figure, such as tonnes of CO₂e per employee or per unit of revenue.
- Your energy use in kWh, split into electricity, gas and transport fuel.
- Reduction actions taken or planned, with dates. See ten ways to cut a small business carbon footprint.
Put these on one page and update it once a year. The same page answers most questionnaires, so you do the work once, not once per customer.
Voluntary reporting: is it worth it?
For a small business, a simple voluntary report has practical benefits. It makes tenders and supplier questionnaires quicker. It gives lenders the figure they need. It shows where energy and fuel are being wasted, which is money. And if thresholds change or the business grows, the process is already in place.
Keep it proportionate. A small company does not need the hundreds of data points required of a large one. Scope 1 and 2, an intensity figure, a short description of method and a few actions are enough.
What happens if you cannot answer
Usually nothing immediate. A customer may estimate your emissions from an industry average, which is often higher than your real figure. Over time, though, some buyers favour suppliers who can provide data, and a few make it a condition of contract. A basic footprint is a small cost against that risk.
If you do answer, be accurate. Do not guess, and do not describe the business as carbon neutral or net zero unless you can show the evidence. Saying what you have measured, what you have not, and what you plan to do next is a credible answer.
Frequently asked questions
Is carbon reporting mandatory for SMEs in the EU?
Not under the CSRD as revised in 2026. It applies only to companies above 1,000 employees and €450 million net turnover.
Can a customer force me to provide data?
A customer can make it a condition of a contract. In the EU, the value-chain cap limits what large reporting companies can require from smaller partners.
Do I need an auditor to check my footprint?
Not for a voluntary report. Independent assurance is a requirement for large companies under some rules. Keep your bills and calculations so the figure can be checked if a customer asks.
Do I have to report Scope 3?
Small businesses answering customer requests are usually asked for Scope 1 and 2 first. Adding business travel and commuting is a sensible next step.
Which year should I report?
Your most recent complete financial or calendar year. Use the same twelve-month period each time.
Do the rules change?
Yes, often. Thresholds and deadlines in all three regimes have changed in the last two years, so check the current position before you rely on it.
Sources
- Latham & Watkins: The conclusion of the EU Sustainability Omnibus process (April 2026)
- SECR thresholds: UK energy and carbon reporting criteria
- BDO: California guidance for 2026 SB 253 GHG reporting (September 2026)
About the author
Georgi Todorov is an eco activist and entrepreneur. He runs Ecoki, where he builds free tools and guides that help small businesses measure and cut their carbon footprint.