TIME TO ACT: WHAT THE UK SRS MEAN FOR YOUR CLIMATE DISCLOSURES
The much-anticipated UK Sustainability Reporting Standards (UK SRS) have finally landed.
On 25th June, the UK government released exposure drafts which are based on the two Standards published by the International Sustainability Standards Board (ISSB).
UK SRS S1 (based on IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information)
UK SRS S2 (based on IFRS S2 Climate-related Disclosures)
The government has aimed to limit divergence from the international baseline provided by ISSB Standards as far as possible - proposing only six minor amendments to the standards for application in a UK context. These amendments are:
Companies must provide sustainability reporting in alignment with their financial reporting timeline. IFRS S1 contains a transition relief which permits reporting entities to publish disclosures made in accordance with ISSB Standards at a later time than their financial statements, for the first year of applying the ISSB Standards. The Technical Advisory Committee (TAC) concluded that this would compromise the principle of ‘connectivity’ with the financial statements and has proposed removing this transition relief.
Extension of climate-first approach to reporting. Reporting entities will be allowed to only report climate-related risks and opportunities in the first two years (instead of one year), extending to full disclosure of wider sustainability-related matters in subsequent years. Also note that Scope 3 reporting is not required until year 2.
Removal of requirement to use the Global Industry Classification Standard (GICS) for financed emissions, allowing reporting entities to use any suitable industry classification instead.
Removal of ‘effective date’ clauses to reflect that the UK SRS will initially be available on a voluntary basis, and that the timeline for mandatory application of the standards depends on subsequent rules or regulations put in place by government or the Financial Conduct Authority (FCA).
Clarifies that references to the SASB Standards to provide industry-specific disclosures are for guidance only and are not mandatory.
Amends wording on transition reliefs to link timing to when mandatory requirements come into effect to avoid penalising any early voluntary reporters.
What happens next?
A consultation period is open until 17th September, with 20 consultation questions via an online form. The final standards are expected to be published for voluntary use in autumn 2025. Following the consultation, the government and the FCA will decide whether to introduce mandatory reporting using UK SRS.
“With UK SRS exposure drafts now published, companies should waste no time in assessing how their current climate disclosures measure up. The UK government has signalled that future consultations will provide a roadmap for the timeline of regulatory changes, and we are expecting mandatory reporting will be on the cards quite soon, especially for large companies. Organisations should use this window to build internal capability, identify disclosure gaps, and align governance and reporting systems with UK SRS S2 - especially as expectations go beyond TCFD.”– Jessica Channings, Disclosures and Reporting Consultant, Veris Strategies
What does this mean for you?
Act now: begin preparations for reporting under UK SRS S2 Climate-related Disclosures. It's important to note that there are additional requirements within UK SRS S2 beyond what is currently required for TCFD reporting.
We're here to help
Veris can support you to develop an internal roadmap to prepare for UK SRS implementation, as well as a gap analysis of your current climate-related disclosures. If you want to discuss what the UK SRS will mean for you - get in touch to chat to one of our expert consultants today – hello@veris-strategies.co.uk