Another step on the road to UK Sustainability Reporting Standards

On 25 June 2025, the UK government published three important consultations which are a significant milestone in the development of a UK sustainability reporting framework. The consultations cover:

1. Exposure drafts of UK Sustainability Reporting Standards (UK SRS) S1 and S2 which are based on the two standards, IFRS S1 and S2, published by the International Sustainability Standards Board (ISSB) in June 2023, with some amendments.
2. Sustainability assurance providers and proposals to develop an oversight regime.
3. Future transition planning requirements.

The deadline for consultation responses is 17 September 2025.

Development of UK SRS

The first of the consultations, the publication of the first exposure drafts of UK SRS S1 and S2, represents a further step toward the endorsement and implementation of UK SRS. A summary of the timeline to date and going forward is set out below:

UK SRS will be available for voluntary adoption in the first instance. There will be further consultations by the FCA and UK government to determine any mandatory adoption by listed and other UK entities.

ISSB standards – the foundation for UK SRS

In June 2023, the ISSB published its first two standards, IFRS S1 and S2, which UK SRS are based on: 

• IFRS S1 ‘General Requirements for Disclosure of Sustainability-related Financial Information’. Provides general framework and requirements for disclosing sustainability-related risks and opportunities.
• IFRS S2 ‘Climate-related Disclosures’. Contains requirements for disclosures on climate-related risks (physical and transition risks) and opportunities.

It is important to note that the ISSB standards are built on the same four pillars as the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Entities are required to disclose information around their governance, risk management, strategy, and metrics and targets.

This is helpful because it means that UK entities currently reporting TCFD or TCFD-aligned disclosures are already on the path to presentation for UK SRS. This includes the following types of entities:

• Premium and standard listed companies – in accordance with the FCA’s listing rules, required to include climate-related financial disclosures in annual report which are consistent with TCFD recommendations.
• Large private companies and limited liability partnerships – in accordance with the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 and Limited Liability Partnerships (Climate-related Financial Disclosure) Regulations 2022, required to report climate-related financial disclosures in annual report which are aligned to (but not the same as) TCFD recommendations.
• Asset managers, life insurers and FCA-regulated pension providers – in accordance with the FCA’s ESG Sourcebook, required to publish an annual TCFD entity report.

Whilst the similarities with TCFD will be beneficial in helping these entities transition to UK SRS, it is important they familiarise themselves with the detail and specific requirements of UK SRS so there are no surprises if/when reporting against UK SRS becomes mandatory.

Proposed amendments

Whilst UK SRS is based on the ISSB standards, the UK government is proposing some minor amendments following a technical assessment of IFRS S1 and S2 – preserving international comparability, whilst at the same time allowing UK SRS to be implemented within a UK context.

The amendments includes:

1. Removal of IFRS S1 transition relief permitting delayed reporting in the first year. This means that entities adopting UK SRS S1 will have to disclose sustainability-related information at the same time as their financial statements. This ensures connectivity between financial and non-financial reporting.
2. Extension of IFRS S1 transition relief permitting a “climate-first” approach. This will allow entities to focus on climate-related reporting in the first two years of reporting , thereby giving time for entities to prepare disclosures on wider (non-climate) sustainability-related topics.
3. Removal of IFRS S2 requirement to use the Global Industry Classification Standard (GICS). The use of GICS is required by IFRS S2 for reporting on Scope 3 financed emissions which are emissions relating to a financial institution’s investment and lending activities. The removal of this requirement provides these entities with more flexibility to use alternative classification standards and potentially reduced costs.
4. Removal of effective date clauses. IFRS S1 and S2 include statements prescribing their effective dates. These effective dates have been removed given UK SRS will be available for any entity to adopt on a voluntary basis as any time. In relation to mandatory adoption, effective dates will be set by the FCA or UK government.
5. References to Sustainability Accounting Standards Board (SASB) materials. IFRS S1 and S2 include requirements that state that entities “shall refer to and consider the applicability of” SASB standards. In UK SRS S1 and S2, “shall” has been replaced with “may” in recognition that SASB materials may not be relevant to all entities and thereby provides greater flexibility.
6. Treatment of transition reliefs. Transition reliefs have been amended to be explicitly linked to mandatory (rather than voluntary) reporting.

Next steps

Publication of the draft UK Sustainability Reporting Standards is a significant step towards the endorsement and implementation of UK SRS, providing greater clarity over what future sustainability reporting will look like in the UK.

Our ESG & Sustainability team is closely monitoring the developments. If you would like to discuss any aspect of the consultation or exposure drafts of UK SRS and how it impacts you, please get in touch with Jess Wills or Charlie Benton