The UK government published on 25 June three related consultations on UK sustainability reporting and assurance, and transition plans, with an overarching objective of “delivering credible and decision useful sustainability related financial information to the financial markets”.

The consultations discuss:

• exposure drafts of UK Sustainability Reporting Standards (UK SRS), based on the International Sustainability Standards Board’s (ISSB) IFRS S1 and S2;
• developing an oversight regime for assurance of sustainability-related financial disclosures; and 
• climate-related transition plans.

ICAEW will be considering the consultations holistically, through close engagement with ICAEW members. The Audit and Assurance Faculty’s main focus will be on the oversight regime.

Alex Russell, Head of Audit and Assurance Strategy at ICAEW, says: “ICAEW welcomes this consultation as a vital next step in establishing a high-quality sustainability assurance environment in the UK, where there is currently an unregulated market of voluntary assurance on a wide range of sustainability information from individual metrics to entire sustainability reports.”

At the moment in the UK, statutory auditors are regulated, but there is a lack of equivalent arrangements for the oversight of providers of assurance for sustainability-related financial disclosures. 

A key feature of the government proposals is a new category of ‘sustainability assurance provider’ qualified to provide third-party assurance over an entity’s sustainability-related financial disclosures, along with a voluntary registration regime for sustainability assurance that providers can ‘opt in’ to. The regime would be set up by the proposed Audit, Reporting and Governance Authority (ARGA). 

Other key components of the government’s proposals include :

• a ‘profession-agnostic’ approach that encompasses both audit and non-audit professionals and firms, who will be able to register as providers if they are qualified according to relevant criteria set by ARGA ;
• recognition of multiple reporting standards, eg, Task Force on Climate-related Financial Disclosures, the UK SRS, and European Sustainability Reporting Standards;
• requiring providers to follow UK equivalent standards to the International Auditing and Assurance Standards Board’s International Standard on Sustainability Assurance (ISSA) 5000 General Requirements for Sustainability Assurance Engagements;
• a future standard setting approach by ARGA;
• a proportionate enforcement regime;
• interaction with the delivery of Corporate Sustainability Reporting Directive engagements; and
• interaction of these sustainability assurance engagements with the non-audit services fee cap.

In the longer term, ARGA would consult on the details of the registration scheme, and consider whether it should become mandatory in time.

The Department for Business and Trade (DBT) notes that “the government is committed to supporting the growth of the UK’s sustainability assurance market and to putting in place regulatory structures to ensure that assurers have the necessary skills and qualifications to undertake high-quality sustainability assurance engagements. These regulatory structures will provide greater oversight of sustainability assurance providers and drive trust in the market.”

ICAEW engaged with the Financial Reporting Council (FRC) on its Sustainability Assurance Market Study and will continue to engage with DBT and the FRC (and then ARGA) on this topic, recognising the importance of establishing a regulatory regime that promotes high quality sustainability reporting and assurance. 

We have in recent months sought views of members, including large, mid-tier and smaller firms, on what a voluntary registration scheme might look like in the UK, including barriers that need to be overcom and relevant criteria for providers to demonstrate. We will be seeking to inform DBT of what we have heard from members in the coming weeks.

Dr Nigel Sleigh-Johnson, Director of Audit and Corporate Reporting at ICAEW, says: “A regulatory regime that promotes high-quality sustainability assurance engagements in the UK is a vital part of the infrastructure required to bolster trust and confidence in reported non-financial information, an objective that closely aligns with the government’s growth agenda.”

Alongside the mooted registration and accreditation scheme, learning and CPD will be critical, especially in ensuring that the wide ecosystem of providers reach the required standards of assurance skill sets, ethics and quality management. 

Alongside ICAEW’s Sustainability Accelerator, the Audit and Assurance Faculty is supporting members to develop and enhance skills around sustainability assurance, including through its Climate Assurance hub, designed to help boards and audit committees better understand how to obtain high-quality assurance on climate-related information, and a Sustainability Assurance hub, which hosts a wealth of relevant content, including on the FRC’s current consultation on adoption of ISSA (UK) 5000.

The DBT consultations close on 17 September 2025. ICAEW will be responding to all three consultations. We’d be very pleased to hear from you. Comments can be emailed to tdaf@icaew.com.