The two draft UK SRS are based on the International Sustainability Standards Board’s (ISSB) IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures, following the UK Sustainability Disclosure Technical Advisory Committee’s (TAC) recommendation to endorse them with only a small number of amendments.

The consultation, alongside consultations on assurance of sustainability reporting and climate-related transition plan requirements, are open for responses until 17 September 2025. ICAEW's Corporate Reporting Faculty will be responding on the draft SRS.

Alignment with IFRS S1 and IFRS S2

The draft UK SRS are closely aligned with IFRS S1 and IFRS S2, to ensure consistency with international sustainability reporting practices. Like the ISSB standards, UK SRS S1  provides the general requirements for disclosure of sustainability-related risks and opportunities, while UK SRS S2 focuses specifically on climate-related disclosures. The two standards are designed to be applied together and follow the same four-pillar structure, requiring an entity to provide disclosures about:

1. Governance, ie, the processes, controls and procedures the entity uses to monitor and manage sustainability-related risks and opportunities.
2. Strategy, ie, the approach the entity uses to manage relevant risks and opportunities.
3. Risk management, ie, the processes the entity uses to identify, assess, prioritise and monitor the risks and opportunities.
4. Metrics and targets, ie, the entity's performance in relation to the risks and opportunities, including progress towards any targets the entity has set or is required to meet by law or regulation.

While broadly aligned with IFRS S1 and IFRS S2, the draft UK SRS propose a small number of amendments recommended by the TAC and the UK Sustainability Disclosure Policy and Implementation Committee (which has assessed public policy implications arising from the use of the ISSB standards in the UK). These include:

• Extending IFRS S1’s ‘climate-first’ transition relief, allowing UK entities to report only climate-related risks and opportunities for the first two years, rather than just one.
• Removing the transitional relief included in IFRS S1 that permits entities to report sustainability-related disclosures after publishing their financial statements in the first year, rather than at the same time. This proposed amendment is intended to reinforce connectivity between financial and sustainability reporting.
• Making optional the requirement in IFRS S2 for entities to “refer to and consider the applicability of” the sector-based standards published by the Sustainability Accounting Standards Board (SASB).

Scope

The consultation outcome will inform the Secretary of State for Business and Trade’s final endorsement decision on whether to make UK SRS available for voluntary use. The development of any mandatory reporting requirements against UK SRS for UK entities will be part of an “implementation” phase of work to follow after this endorsement phase, which will be subject to further consultation.

Interoperability

The draft UK SRS are designed to be interoperable with existing sustainability reporting frameworks. As noted, they are based on IFRS S1 and IFRS S2, which themselves fully incorporate the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations. Similarly, the UK’s Climate-related Financial Disclosure Regulations are based on the TCFD recommendations.

This means reporters already applying the TCFD recommendations or the UK’s Climate-related Financial Disclosure Regulations will be relatively well-placed to apply UK SRS in future.

Sustainability assurance providers

Alongside the UK SRS consultation, the government has published a separate consultation on assurance of sustainability reporting. This consultation seeks views on a proposal for the planned Audit, Reporting and Governance Authority to be given responsibility for creating a voluntary registration regime for providers that offer third-party assurance on sustainability-related financial disclosures.

Commenting on the UK SRS consultation, Sally Baker, ICAEW’s Head of Corporate Reporting Strategy, says: “As strong supporters of the ISSB and its work to establish a global baseline in sustainability reporting, we are pleased to see the publication of this consultation – the next milestone towards implementation of ISSB Standards in the UK.

"While we are yet to examine the proposals in detail, we are encouraged to see that the draft UK SRS appear to contain only limited amendments to the requirements of IFRS S1 and IFRS S2. This will help to achieve the consistency and comparability in sustainability reporting across global markets that investors have been calling for. ICAEW will be analysing the proposals in detail and formulating its response over the coming months.”