On 30 January, the UK government announced it is moving forward with plans to create a voluntary oversight regime for sustainability assurance, following a period of consultation. 

Firms will be able to opt into the regime to become sustainability assurance practitioners by registering with the Financial Reporting Council (FRC). The eligibility criteria will be developed with input from industry.

The regulator will share guidance and best practice to help build quality across the market. The regime will cover sustainability assurance engagements for large entities that are within scope of current Task Force on Climate-Related Financial Disclosures or future UK Sustainability Reporting Standards (UK SRS) requirements, which are aligned with International Sustainability Standards Board (ISSB) standards. It will also cover the EU Corporate Sustainability Reporting Directive requirements, and other requirements from other, ISSB-aligned non-UK jurisdictions.

“The regime is not intended to capture smaller or bespoke sustainability assurance service providers who do not provide assurance opinions at that level. However, these providers would not be excluded from registration, as long as they meet the conditions of registration,” the government’s announcement states.

While the government will legislate to establish the sustainability oversight regime as a legislative function of the FRC, the regulator has been tasked with creating an interim non-legislative regime by the middle of 2026.

ICAEW responded to the original consultation on the voluntary oversight regime voicing its support for a short-term voluntary registration regime, while urging the government to create a pathway from voluntary to mandatory registration. It advocated for the inclusion of European sustainability reporting standards on the list of standards covered within the assurance regime.

It agreed in principle with proposals to create a new ‘sustainability assurance provider’ legal category, while emphasising how the skillset of auditors would apply to sustainability assurance. It pointed out that a lack of UK regulatory framework is creating barriers for UK businesses. 

“ICAEW welcomes the UK government moving forward with plans to create a voluntary oversight regime for sustainability assurance as a pragmatic first step in building a trusted and competitive sustainability assurance market in the UK,” said ICAEW CEO Alan Vallance.

UK FCA sustainability reporting standards consultation opens

Alongside the announcement on the sustainability assurance oversight regime, the FCA has opened its consultation on aligning sustainability disclosures with international standards. The consultation outlines plans to bring disclosures in line with the forthcoming UK government’s endorsement of UK SRS, which are aligned with the ISSB standards, and proposals on how these may apply in practice, proposing a comply or explain approach for the more complicated aspects of reporting.

“We look forward to responding to the UK FCA’s consultation that went live last week on proposals to align listed issuers’ sustainability disclosures with international sustainability disclosure standards,” said Vallance.