Abstract
By February 2026, the finalisation of the UK Sustainability Reporting Standards (UK SRS) has created a regulatory emergency for the UK’s ‘squeezed middle’—SMEs with 10–49 employees. While the legal framework for Scope 3 emissions reporting includes a ‘comply or explain’ principle and materiality thresholds, this paper argues that supply chain ‘regulatory gravity’ has transformed these reliefs into a de facto mandate for SMEs. Material Flow Cost Accounting (MFCA) is evaluated as the primary operational tool for providing required transparency. This paper reviews literature on MFCA integration, contrasting traditional manual methods with the emerging practice of Agentic AI. It proposes a methodology to investigate how digital maturity influences MFCA adoption, arguing that firms failing to automate mass-balance calculations risk supply chain exclusion as corporate clients demand auditable, real-time sustainability data.