ESG questions from your bank or insurer, and how to answer them

Banks and insurers ask small businesses ESG questions because regulators expect them to understand the climate and governance risks in their lending and underwriting. For an SME, the questions are usually simple: how much energy you use, whether you know your carbon footprint, what your premises are like, and whether you have basic policies in place. A short, honest answer with figures where you have them is all most lenders want.

If one of these has just landed in your inbox, you are in good company. Here is what is behind the questions and how to answer each one.

Why are banks and insurers asking about ESG?

The Bank of England’s Prudential Regulation Authority expects UK banks and insurers to identify and manage the financial risks from climate change. Its latest expectations, Supervisory Statement SS5/25, took effect in December 2025 and place more weight on data. Those risks come in two forms:

• Physical risk. Flooding, storms and heatwaves that could damage your premises or interrupt trading.
• Transition risk. Changes in regulation, technology or customer demand that could hit a business heavily reliant on fossil fuels. Think of a diesel fleet in a city introducing a clean air zone, or a commercial building that falls below minimum EPC standards for letting.

Your energy use and carbon footprint help a bank judge how exposed your business is to both.

What ESG questions do banks ask small businesses?

The wording varies, but most SME questionnaires and relationship manager conversations cover the same ground:

Question	What they are really asking
How much electricity and gas do you use a year?	Your energy exposure and running costs
Do you know your carbon footprint?	Whether you have a baseline, and its rough size
Are you on a renewable electricity tariff?	Your market-based Scope 2 position
What is the EPC rating of your premises?	Transition risk on the property, and green loan eligibility
How many vehicles do you run, and what fuel?	Exposure to fuel costs and clean air zones
Do you have net zero or carbon reduction targets?	Whether you have a plan
Do you have an environmental policy and a code of conduct?	Basic governance
Who is responsible for ESG in the business?	Whether someone owns it

None of these are trick questions. Most are things you already know or can find on a bill.

How to answer each type of question

Energy and emissions

Give annual kWh for electricity and gas, and a carbon footprint in tonnes of CO2e if you have one. Say which year it covers and the method, for example “calculated using the GHG Protocol and UK government conversion factors”. If some figures are estimates, say so. Lenders are comfortable with estimates. What they cannot use is a vague “we are quite green”.

A worked example: a 12-person firm using 18,000 kWh of electricity and 25,000 kWh of gas a year has location-based Scope 2 emissions of about 2.4 tCO2e (at roughly 0.13 kg per kWh in the 2026 factors) and Scope 1 gas emissions of about 4.6 tCO2e (at roughly 0.18 kg per kWh). Those approximate figures, plus vehicles and travel, are the core of what a bank wants.

Premises and vehicles

Look up your EPC on the government register and quote the rating and expiry date. For vehicles, list the number, fuel type and rough annual mileage. If you plan to switch to EVs or upgrade a building, mention it. That is exactly the kind of project a green business loan is designed for.

Targets and plans

If you have a target, state it plainly with a year and a baseline. If you do not, it is fine to say you are measuring this year and will set a target once you have a baseline. Avoid promising net zero by a date you have not thought through.

Policies and governance

Attach your environmental policy and code of conduct if you have them. If not, our environmental policy template and code of conduct template will get you started. Name the person responsible for ESG, even if it is the managing director.

What insurers tend to ask

Insurer questions overlap with the bank’s, but lean more towards physical risk and operations. Expect questions about flood risk and location, fire safety, business continuity plans, health and safety (written policy, incident recording, training), data protection and cyber security, and for some sectors, how hazardous materials or waste are handled.

The governance and social side of your ESG work does most of the lifting here. A written health and safety policy, a record of incidents and a short risk register say far more to an underwriter than a carbon figure.

Keep your answers consistent

The same questions will come from your bank, your insurer, large customers sending supplier ESG questionnaires and grant funders. Give them all the same figures from the same report. Inconsistent numbers across forms are what raise eyebrows, not modest ones.

How ESG Now helps

Start the ESG Now questionnaire and you will finish with a shareable ESG report that answers almost every question above: energy use, Scope 1, 2 and 3 emissions (location-based and market-based), vehicles, policies, workforce, health and safety and governance. It uses the GHG Protocol and the UK government conversion factors, shows every calculation, and labels each figure as measured or estimated.

You also get a private action plan with prioritised actions, including any policies worth adding. Answers save as you go, so you can stop to dig out a bill and come back. Your first report is free. See what the report covers for green finance.