ICAEW’s take on the draft UK Sustainability Reporting Standards

In June 2025, the UK Government published three consultations aimed at shaping the future of sustainability reporting and assurance. These covered the draft UK Sustainability Reporting Standards (UK SRS), climate-related transition plan requirements, and the development of an oversight regime for sustainability assurance. The consultation period has now closed, with ICAEW submitting responses to all three consultations.

The outcome of the draft UK SRS consultation is expected to be the publication of final standards, UK SRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and UK SRS S2 Climate-related Disclosures, for voluntary use. Further consultations are anticipated to follow in due course, focusing on the scope and timing of any future mandatory application.

Support for UK Sustainability Reporting Standards

ICAEW strongly supports the endorsement of UK SRS S1 and UK SRS S2, viewing this as critical in reinforcing the UK’s role as a leading international financial centre. The UK SRS are based on the IFRS Sustainability Disclosure Standards developed by the International Sustainability Standards Board (ISSB), which ICAEW has long supported as the foundation for a global baseline in sustainability reporting. Endorsing the UK versions of these international standards will help increase the flow of capital to those businesses disclosing sustainability-related risks and opportunities and ensure that the UK markets remain attractive to investors within a global landscape.

Approach to amendments

While based on the ISSB's Standards, the draft UK SRS include six proposed amendments intended to make the standards suitable for application in a UK context. To promote the provision of consistent and comparable information to investors, ICAEW believes the government should maintain a high threshold for divergence from the ISSB Standards. Any amendments should be clearly justified, limited in scope, and subject to regular review. ICAEW proposes three principles to guide any divergence:

Overall, ICAEW supports the government's proposed amendments, with some points of clarification and suggestions for improvement as explained below. Nevertheless, we believe these UK-specific variations should be kept under review, based on the principles above, with a view to realignment where appropriate. 

Global Industry Classification Standard (GICS)

As a proportionate approach, we support the removal of the mandatory requirement to use the Global Industry Classification Standard (GICS) in UK SRS S2. Its removal gives entities the flexibility to present disclosures in a manner that is appropriate to their business model and operations whereas mandating GICS could introduce unnecessary complexity and cost, especially for smaller entities. That said, we recommend including a mechanism to unwind any temporary divergence if the ISSB’s intended amendments on this topic address UK concerns.

Sustainability Accounting Standards Board (SASB)

We support changing references to the Sustainability Accounting Standards Board (SASB) Standards from ‘shall consider’ to ‘may consider’. While the SASB standards offer useful industry-specific guidance, they have not undergone the IFRS Foundation’s full due process; an important consideration in our view when determining whether they should be treated as a mandatory element of UK SRS. However, ICAEW encourages the government to monitor developments in this area and consider realignment in the future, once due process is complete.

Financed emissions

Calculating and disclosing financed emissions presents significant practical challenges, given the estimation required and data limitations. With this in mind, we encourage a focus on transparency through narrative disclosures that explain methodology, assumptions, and estimation uncertainty. We are also concerned about the requirement to restate prior year disclosures when new information becomes available. In our view, retrospective restatement based on new information diverges from financial reporting norms and risks confusing users. With this in mind, we recommend a temporary relief from this requirement.

Reliefs for voluntary reporters

We believe minor revisions are needed to clarify that voluntary adopters are equally eligible for transitional reliefs to those that may be mandated to do so in the future. The current drafting refers to reliefs being available in periods when an entity is ‘required’ to apply the standards, which we think could unintentionally exclude voluntary reporters. We do not support early adopters being penalised in this manner. To encourage early adoption and ensure consistency in how the standards are applied, we suggest revisions are made to the relevant paragraphs.

Approach to implementation

We support a phased approach to implementation, starting with the largest entities and extending to others over time. Many large UK businesses are already reporting against similar requirements and are well-positioned to build on this experience. Implementation of UK SRS will be a journey and, as such, we encourage regulators and assurance providers to adopt a proportionate approach during the early stages of implementation.

We also emphasise the need for clarity on how different entities will be required to report under the standards. Many UK entities are already reporting or expecting to report under other frameworks, such as the EU’s Corporate Sustainability Reporting Directive (CSRD), and without a clear UK roadmap, these frameworks are being prioritised. We urge the government to communicate timelines early and clearly to help businesses prepare, invest in systems and plan for assurance.

Transition plans and assurance views

In parallel with its response to the UK SRS consultation, ICAEW also submitted representations on the following:

• Transition Planning Requirements:

  We recommend a phased introduction of transition plan requirements, starting with a ‘comply or explain’ model, with a view to mandating compliance in the future.

  While we believe UK SRS S2 is sufficient for transition plan disclosures in annual reports, ICAEW supports entities having the flexibility to publish a separate standalone transition plan outside of the annual report and believe the Transition Plan Taskforce Disclosure Framework is useful for this.

  We oppose using the FTSE 100 as a threshold for mandatory disclosure and instead suggest an emissions-based criteria plus alignment with future UK SRS reporting thresholds is used.

• Oversight regime for the assurance of sustainability-related financial disclosures:

  ICAEW sees assurance of an entity’s sustainability information as a critical component of the sustainability reporting infrastructure, providing investors with credible and decision-useful information. As such, our response expresses strong support for the creation of a registration regime for assurance providers with voluntary registration as a pragmatic first step in the short-term.

  ICAEW urges the government to set a clear path to mandatory registration as a longer-term goal.

Looking ahead

It is anticipated that the government will publish UK SRS S1 and UK SRS S2 for voluntary use in early 2026. Further consultations on scope and timing are then expected to follow in due course. ICAEW continues to engage with stakeholders and is monitoring developments closely. Practical guidance on UK SRS to support members with implementation is under development and will be promoted through our usual channels when it becomes available.

Members can get a head start through our webinar recordings on the ISSB standards, which form the basis of UK SRS. These include:

• Introducing the first IFRS Sustainability Disclosure Standards: IFRS S1
• Introducing the first IFRS Sustainability Disclosure Standards: IFRS S2