The questionnaire you get even when nothing obliges you to report.
In short
Most UK companies raising £3–15m sit below every mandatory sustainability reporting threshold, and are asked for ESG data anyway. The request comes from the lender's own obligations rather than the borrower's: banks report on their lending books, and credit funds have made commitments to their own investors, so a standard due diligence questionnaire covers energy and emissions, governance, policies, incidents and sector-specific exposures. A second route runs through customers, because a large buyer subject to the EU's CSRD asks its suppliers for data. Gaps are rarely a reason to decline. They are treated as an information risk and handled through conditions and information undertakings, or by a lender simply pricing the uncertainty, which is why the gaps are worth closing before a process starts rather than during one.
Written by Gregory Elgunov, Managing Director · Last reviewed 27 September 2026
A company raising £3–15m is, in most cases, below every mandatory sustainability reporting threshold in the United Kingdom. It is under the SECR tests, under ESOS, outside the UK Sustainability Reporting Standards, and far outside the European regime. It will still be sent an ESG questionnaire during credit diligence, and the answers will still be read. The reason is that the obligation being discharged is not the borrower’s. Banks report on the emissions of their lending books, and credit funds have made commitments to the investors who gave them the money, so both need data from the companies they lend to. A second, less visible route runs through your customers, because a large buyer inside the European reporting regime has to describe its value chain, and the value chain is you. This guide sets out which regimes catch a company of this size, where the questions come from, what they contain, and what a missing answer does to a credit paper.
Written for the borrower’s side of the table. This is general guidance on how lenders approach the subject, not legal advice on your own reporting obligations, which turn on your company’s own figures. It deepens the shorter answers in our working guide.
Because the obligation belongs to the lender, and it travels down the loan.
A bank that has published a target for the emissions financed by its lending has to build that number out of its borrowers. It cannot report what it has not collected, so collection becomes part of origination and part of the annual information cycle thereafter. A credit fund is in a similar position for a different reason: its investors, typically pension schemes and insurers, asked questions at fundraising and expect answers during the fund’s life. The questionnaire arriving in your data room is the last link in a chain that starts several institutions away, which is why it often reads as though it were designed for a much larger company. Frequently it was.
The private-credit end of the market has at least standardised the request. The Alternative Credit Council and the Principles for Responsible Investment maintain a private-credit ESG due diligence questionnaire that many managers use as their base document, and the loan trade associations publish equivalents for borrowers and for managers. That standardisation is useful to a borrower, because it means the same underlying pack answers most lenders in a process rather than each lender inventing its own form. Preparing once and answering many is the whole trick.
None of this makes ESG a credit test in the way leverage or interest cover is a credit test. It is diligence, and it behaves like every other diligence stream: complete answers move quickly, incomplete answers generate follow-ups, and follow-ups consume the time that competitive tension needs.
Probably not, and the boundary is closer than most boards think.
The first regime a growing company meets is SECR. A large unquoted company or LLP is in scope if it satisfies two of three tests: turnover of £36m or more, a balance sheet total of £18m or more, or 250 or more employees, and in scope it must publish its energy use, its greenhouse gas emissions, an intensity ratio, its methodology and the efficiency measures it has taken, in the directors’ report, every year. A low-energy exemption applies below 40MWh of annual consumption, which in practice covers very few trading businesses. The second is ESOS, which qualifies differently and can therefore catch a company that SECR misses: 250 or more employees, or turnover above £44m together with a balance sheet above £38m, measured on 31 December 2026 for Phase 4, with the audits and the notification due by 5 December 2027.
Where the reporting regimes start, against the turnover of a company borrowing £3–15m.
| Category | Range |
|---|---|
| A company borrowing £3–15m | ≈£10–60m |
| SECR, turnover test | From £36m |
| ESOS, turnover test | From £44m |
The turnover test only. Both SECR and ESOS also have an employee-count route in at 250 staff, so a labour-intensive company can be caught well below these turnover figures while a capital-intensive one clears them and stays out. The European regime sits far off this axis, at €450m of net turnover. The borrower band is indicative of the range Solon sees at this facility size, not a rule.
Source · GOV.UK (SECR and ESOS thresholds); Solon market read (borrower band)
Above those two, the picture is in motion rather than settled. The United Kingdom published its own sustainability reporting standards, UK SRS S1 and S2, on 25 February 2026, currently for voluntary use; the Financial Conduct Authority has consulted on making climate disclosure mandatory for listed companies, and private companies are the subject of a separate government consultation rather than an existing rule. The European regime, after the Omnibus revision, applies directly only to undertakings above 1,000 employees with net turnover above €450m, which removed roughly nine in ten of the companies the original directive would have caught. A UK company at this size is outside all of it, and should read the table below as a map of where the boundary sits rather than as a compliance checklist.
| Regime | Who it catches | Timing |
|---|---|---|
| SECR | Large unquoted companies and LLPs meeting two of three: turnover £36m or more, balance sheet £18m or more, 250 or more employees. Exempt if energy use is under 40MWh. | In force. Annual, in the directors’ report. |
| ESOS Phase 4 | 250 or more employees, or turnover above £44m together with a balance sheet above £38m, measured on 31 December 2026. | Energy audits and notification by 5 December 2027. |
| UK SRS S1 and S2 | Final standards published 25 February 2026 for voluntary use. The FCA has consulted on making climate disclosure mandatory for listed companies; private companies are the subject of a separate government consultation. | Voluntary now. Listed-company timetable from 2027. |
| CSRD (EU), after the Omnibus revision | Large undertakings above 1,000 employees with net turnover above €450m. A UK company is out of direct scope. | Reaches UK suppliers through customers, not directly. |
Because you are in their value chain, and there is a limit on what they may ask.
A large European customer reporting under CSRD has to describe emissions and impacts across its value chain, and it cannot do that without asking its suppliers. For a UK manufacturer or service business with a significant European customer, this arrives as a data request with a deadline attached and a commercial relationship behind it, which makes it considerably more compelling than any lender’s questionnaire. The Omnibus revision introduced a deliberate brake on exactly this behaviour. Where a supplier has fewer than 1,000 employees, the reporting company is expected to limit its request to the content of the voluntary standard for smaller undertakings, and a request going beyond that content must be flagged as such, with the supplier free to decline it.
That protection is written into European law and a UK supplier sits outside its jurisdiction, so the practical position is contractual rather than statutory: you are being asked by a customer, not compelled by a regulator, and the cap tells you what a reasonable request looks like. Used well, it is a useful piece of negotiating information. A customer asking for a full inventory of indirect emissions from a fifty-person supplier is asking for more than its own regime expects of it, and saying so politely, with the voluntary standard as the reference point, usually resets the request to something proportionate.
For a borrower this route matters for a second reason. Data assembled for a customer answers most of what a lender will ask, and data assembled for a lender answers most of what a customer will ask. Companies routinely build the same pack twice, in different formats, for different departments, in the same year.
Four groups of questions, and the first one is arithmetic.
The measurement questions come first and are the ones companies most often cannot answer. Energy consumed by site and by fuel. Direct emissions from what the company burns and the vehicles it owns, and indirect emissions from the electricity it buys. Then, usually with an acknowledgement that the answer will be incomplete, the emissions embedded in what the company purchases and sells. The first two are a data-collection exercise that meter readings and fuel invoices will settle in a few weeks. The third is an estimate in every company of this size, and a lender that understands the market expects an estimate with a stated method rather than a precise number.
The governance questions ask who owns the subject: which director is accountable, what the board sees and how often, whether targets exist and whether anyone is measured against them. The policy questions ask for documents, typically an environmental policy, a health and safety record with reportable incidents, modern slavery and anti-bribery statements, and a supplier code where one exists. The exposure questions are the sector-specific ones and the most commercially interesting: sites in flood zones, energy-intensive processes facing carbon cost, a customer or product concentrated in a market that regulation is moving against, or a workforce and supply chain in jurisdictions that carry their own risk.
The last group is the one a credit committee reads closely, because it is the group that connects to cash flow. A guide to what lenders look for in your accounts covers the financial half of the same assessment.
It becomes a condition, and it costs you weeks rather than the loan.
An ESG gap at this size is treated as an information gap, not a credit failure. A lender that cannot see a number does what lenders do with anything they cannot see: it asks again, then it writes a condition. In practice that means an undertaking to produce a baseline within a set period after completion, an annual information covenant requiring the data with the management accounts, or a condition precedent where the missing item is specific and obtainable, an EPC on a property being charged, for instance, or an environmental report on a site with a history. None of these is expensive. All of them are commitments the company then has to keep for the life of the facility, which is a reason to negotiate the wording rather than accept the first draft.
The real cost is time. A questionnaire that arrives mid-process and takes three weeks to answer is three weeks during which the other lenders in the process are waiting, and competitive tension decays while everyone waits. A borrower who can answer in three days keeps the timetable, and the timetable is what holds several lenders at the table simultaneously. Where a gap does affect terms, it tends to do so through this mechanism rather than through an explicit pricing adjustment for sustainability.
There is a narrow set of cases where the answer changes the credit rather than the process: a site with contamination affecting the value of security, a business model exposed to a regulatory phase-out inside the term of the loan, a sector some funds are mandated to avoid entirely. Those are structuring questions to identify before approaching lenders, because the right response is to choose the approach list accordingly rather than to discover the problem in credit committee.
A short pack, built once, that answers every lender in the process.
Start with twelve months of energy and fuel data, pulled from meter readings, utility invoices and fuel cards, split by site. That single dataset answers the largest block of questions and converts into emissions figures with published conversion factors and an afternoon’s work. Add a one-page statement of governance naming the accountable director, what the board reviews and at what frequency, and any targets the company has set, with the honest position stated plainly if it has set none. A company that says it has no target and explains why reads better than one that invents a target for a data room.
Then assemble the documents: environmental and health-and-safety policies, the reportable-incident record for three years, any environmental permits or licences, EPCs for owned or charged property, the modern slavery statement if the company publishes one, and the supplier code if it has one. Finally, write down the sector-specific exposures before a lender finds them, with the mitigation next to each. Naming a flood-zone site alongside the flood plan and the insurance position turns a diligence surprise into an answered question, and answered questions are what a credit paper is made of.
If the data exists to this standard, a sustainability-linked structure becomes worth pricing rather than dismissing, since the marginal cost of the label falls to verification and drafting. Our guide to sustainability-linked and green loans sets out what that discount is worth.
We build the pack once, and answer the market with it.
If a lender has sent you a questionnaire you cannot fill in, or you are preparing to raise and would rather find the gaps now than in credit committee, a first conversation is confidential and costs nothing. We assemble the diligence pack alongside the financial materials, choose the approach list with your sector exposures in mind, and negotiate the undertakings that come back with it. See how a mandate runs in how we work, or the full range of what we advise on in our services.
The terms in this guide
Each is defined in full in the library, with the levels and conventions that apply at £3-15m.
- Data room
The data room is the repository a credit team underwrites from. Standing it up is the moment a raise becomes real, and its condition does more to set the timetable and the diligence bill than anything else a borrower controls.
- Information undertakings
Information undertakings are the reporting obligations in a facility agreement. They are the least negotiated covenants and the ones you live with every month, and late delivery says something about a business that its numbers may not.
- LMA
The Loan Market Association publishes the standard-form documents most UK loan agreements are built from. LMA-style means the shape is conventional; it does not mean the terms inside it are.
- Quality of earnings (QoE)
A quality of earnings report is an accounting firm's independent test of whether your reported profit is real and repeatable. It is the piece of diligence that most often moves a deal, because what it strikes out reduces what you can borrow.