Developing a UK sustainability reporting and assurance framework

This article has been updated on 26 September 2025 following the end of the consultation period.

On 25 June, the UK government published three related consultations covering UK sustainability reporting, assurance and transition plans. These interconnected consultations closed for comment on 17 September 2025 and shared an overarching objective of “delivering credible and decision useful sustainability related financial information to the financial markets”.

The consultations sought views on:

• exposure drafts of two UK Sustainability Reporting Standards (UK SRS);
• developing an oversight regime for assurance of sustainability-related financial disclosures; and 
• climate-related transition plans.

ICAEW submitted detailed responses to each consultation: UK SRS, assurance regime and transition plan requirements. These responses support the government’s direction of travel, while recommending phased and proportionate implementation, along with some specific suggestions and clarification points.

UK Sustainability Reporting Standards

Following the UK Sustainability Disclosure Technical Advisory Committee’s (TAC) recommendation to endorse them with only a small number of amendments, 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. 

Alignment with IFRS S1 and IFRS S2

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: the processes, controls and procedures the entity uses to monitor and manage sustainability-related risks and opportunities.
2. Strategy: the approach the entity uses to manage relevant risks and opportunities.
3. Risk management: the processes the entity uses to identify, assess, prioritise and monitor the risks and opportunities.
4. Metrics and targets: 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.

International comparability is a priority for the UK government and it has aimed to limit divergence from the ISSB Standards as far as possible. Nevertheless, a small number of amendments are proposed to reflect their use in a UK context. The amendments have been 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) and 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.
• Stronger integration: 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.
• Optional consideration of SASB Standards: 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).

Consultation outcome

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. Any move toward mandatory reporting against UK SRS would be part of a second ‘implementation’ phase, to follow after this endorsement phase, and would be subject to further consultation.

Interoperability with existing requirements

Reporters in scope of existing sustainability reporting requirements in the form of the UK’s Climate-related Financial Disclosure Regulations, as well as any that voluntarily apply the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations will be relatively well placed to apply UK SRS in the future. 

As noted above, the draft UK SRS are based on IFRS S1 and IFRS S2, which themselves build upon the TCFD recommendations. Similarly, the UK’s Climate-related Financial Disclosure Regulations are based on the TCFD recommendations.

Transition planning

In its manifesto, the UK government committed to mandating UK-regulated financial institutions (including banks, asset managers, pension funds and insurers) and FTSE 100 companies to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement. 

The climate-related transition plan requirements consultation sought views on how the government should take forward this commitment while meeting four key objectives:

• supporting an orderly transition;
• enabling providers of capital to receive decision-useful information;
• maintaining the UK’s position as a global financial centre and supporting growth in the financial services sector; and
• capturing the opportunities of the transition.

The consultation noted that transition plans are core to maintaining the UK’s position as the green finance capital of the world. 

Transition planning not only helps with decarbonisation efforts, but leads to stronger business resilience by enabling businesses to think holistically about the risks and opportunities relating to climate change and the transition to net zero. The preparation and disclosure of transition plans also has wider benefits to investors, capital markets, public bodies and policymakers. 

As well as the role of transition planning, the consultation considered potential options to implement future transition plan requirements. It explored requirements relating to the development of a transition plan (including the role of the Transition Plan Taskforce framework), the disclosure of that plan and the mandation of transition plan implementation. While the government’s manifesto commitment was that UK-registered financial institutions and FTSE100 companies would fall in scope of transition plan requirements, the government is considering whether to redefine the scope so that it is considered holistically alongside those that might be required to apply UK SRS in the future. 

The final section of the consultation considered other policies and frameworks that relate to transition planning. Several frameworks and policies are being progressed by the UK government to deliver their Clean Energy and Growth Missions, and to make the UK the global leader in sustainable finance. The international landscape forms part of these considerations, not only to ensure international interoperability but also to ensure that future requirements do not negatively impact the attractiveness of the UK as a listing destination.

Assurance of sustainability-related financial disclosures

The third consultation in the package, on the assurance of sustainability reporting, sought views on a proposal for the planned Audit, Reporting and Governance Authority (ARGA) to be given responsibility for creating a voluntary registration regime for providers that offer third-party assurance on sustainability-related financial disclosures.

Assurance is a critical element of delivering credible and decision-useful sustainability-related financial information to markets. Key components of the government’s proposals include:

• New category of ‘sustainability assurance provider’: a new legal category, separate from the statutory auditor, of those qualified to provide third-party assurance over an entity’s sustainability-related financial disclosures.
• Open to all professions: 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.
• Voluntary basis: the registration regime would, at this stage, operate as a voluntary registration regime that participants, subject to meeting the relevant criteria, can ‘opt in’ to.
• Multi-framework recognition: recognition of multiple reporting standards, eg, TCFD, the UK SRS and European Sustainability Reporting Standards.
• Standards-based: 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.
• Future-proof: ARGA will develop a standard-setting and proportionate enforcement framework regime.
• Interaction with other regulatory requirements: interaction with the delivery of Corporate Sustainability Reporting Directive engagements and 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.

Further resources

• ICAEW Sustainability Assurance hub
• ICAEW Non-financial Reporting hub