What’s next for the UK Sustainability Reporting Standards?

The UK government is poised to launch a 12-week consultation on the UK Sustainability Reporting Standards (UK SRS), aligning with the International Sustainability Standards Board (ISSB), part of the International Financial Reporting Standards (IFRS) Foundation.  According to the latest update from the Department for Business and Trade (DBT), the consultation is scheduled to begin in March 2025 and will mark a significant step towards enhancing transparency and accountability in corporate sustainability practices in the UK.

The DBT’s technical advisory committee, an independent body established to assist with the assessment and endorsement of the ISSB standards for use in the UK, issued its final recommendations to the Secretary of State for Business and Trade in December 2024. These recommendations support the endorsement of the ISSB standards, known as ‘IFRS S1’ and ‘IFRS S2’, for use in the UK, with minimal modifications. IFRS S1 requires entities to disclose their sustainability-related risks and opportunities and IFRS S2 mandates the disclosure of climate-related risks and opportunities.

What is being consulted on?

The forthcoming consultation will focus on the endorsement of the ISSB standards and creation of the new UK SRS, rather than changes in legislation or regulation. The UK Financial Conduct Authority (FCA) will be responsible for enforcing the UK SRS. Once the UK government's endorsement process is complete, the FCA will consult on amending corporate reporting rules to require UK-listed companies to report sustainability-related information to their investors in line with the UK SRS.

Assurance providers

Reports suggest that the UK government is also contemplating a consultation on sustainability assurance providers, to be conducted concurrently with the consultation on the UK SRS. This follows a February 2025 report by the Financial Reporting Council (FRC) which highlighted concerns over the quality and consistency of sustainability reporting assurance amid growing demand. The FRC’s report identified three key priorities for the UK sustainability assurance market:

• Establish a clear UK policy framework for sustainability assurance that provides medium-term certainty for providers and reporters, supports investment, and aligns with international frameworks where appropriate.
• Create a unified regulatory regime that consolidates standard setting, oversight, enforcement, and market monitoring to maximise certainty for companies, providers, and investors.
• Improve the calibre of available information on the quality of sustainability assurance to support how the assurance market functions.

Comment

As the UK government signals its intent to cut red tape and focus on economic growth, the upcoming consultation on the UK SRS will be a critical test of its commitment to sustainability reporting. With sweeping changes expected in Europe following the EU Omnibus Simplification Package proposed last month, the UK’s approach to sustainability reporting will be closely watched. The success of this consultation and the subsequent implementation of the UK SRS will determine whether the UK can maintain its leadership in sustainability practices and meet the growing demand for transparent and accountable corporate reporting. The stakes are high, and the outcomes will shape the future of sustainability reporting in the UK.

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