For IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (IFRS S1) and IFRS S2 Climate-related Disclosures (IFRS S2) to be available to UK companies, they must first be endorsed for use in the UK.

The UK Government has repeatedly confirmed its intention to assess the suitability of the IFRS Sustainability Disclosure Standards for endorsement. Most recently, the Department for Business and Trade (DBT) issued an update in May 2024 that explained the Government aims to make the UK-endorsed ISSB standards available in Q1 2025 – these will be known as UK Sustainability Reporting Standards (UK SRS). The Secretary of State for Business and Trade will be responsible for this endorsement decision.

UK SRS will be based on the IFRS Sustainability Disclosure Standards and will only divert from them if necessary for UK specific matters.

The Secretary of State’s endorsement decision will be informed by the UK Sustainability Disclosure Technical Advisory Committee (TAC), which will assess whether endorsing the standards would be conducive to the long-term public good in the UK.

In addition to the TAC’s recommendations, DBT will also advise the Secretary of State on whether use of the standards is likely to be:

• conducive to the UK’s economic growth and international competitiveness, and
• coherent with, and suitable for inclusion in UK domestic legislation and regulation.

The UK Endorsement Board (UKEB), which endorses IFRS Accounting Standards for use by UK companies, is represented on the TAC. While UKEB will not have responsibility for endorsement of the sustainability standards, it will be considering connectivity issues between IFRS Sustainability Disclosure Standards and IFRS Accounting Standards.

After consideration of the recommendations and advice provided by the TAC and DBT, the Secretary of State will decide on draft UK SRS which will be published for public consultation in Q1 2025.

Following the consultation, the Secretary of State will take a final endorsement decision.

If the Secretary of State endorses the standards, UK SRS may be referred to in any legal or regulatory requirements for UK entities.

Decisions on scope and implementation of any mandatory reporting requirements against the UK-endorsed standards will be taken following further consultation. Decisions mandating disclosure will be taken independently by the UK government - for UK registered companies and limited liability partnerships - and the Financial Conduct Authority (FCA) for UK listed companies.

When making implementation decisions, the UK government and the FCA will work closely together to ensure consistency with UK government priorities and coherence across the UK’s reporting landscape.

To assist with implementation decisions, a second advisory committee – the UK Sustainability Disclosure Policy and Implementation Committee (PIC) – has been established by the UK government. PIC will coordinate the implementation of UK SRS by the UK government and the FCA. PIC will also be an information-sharing forum for UK government, UK financial regulators and standard setters to share information regarding their engagement and influencing work with the ISSB.

As ISSB standards are designed to be GAAP agnostic, the scope of companies potentially required to adopt the standards will not be dependent on whether the entity uses IFRS Accounting Standards or UK GAAP.

Decisions on implementation will include any effective date for UK SRS. The effective date of 1 January 2024 stated in the ISSB standards therefore is not relevant in the context of UK reporting. It is expected that the UK SRS will be effective no earlier than 1 January 2026.

The location of disclosures within company reporting will also be subject to consultation. However, the Strategic Report is a key component of UK reporting and already contains information which is similar in nature to that required by the standards. While no decisions have yet been taken on how to implement IFRS S1 and IFRS S2 in the UK, a separate ‘sustainability’ report would not be consistent with the current UK framework.

Further detail about the endorsement and implementation framework for the UK SRS can be found in DBT’s Framework and Terms of Reference for the development of UK Sustainability Reporting Standards.

IFRS S1 and IFRS S2 as issued by the ISSB contain a suite of transitional reliefs, including a one-year relief on disclosure of comparative information and Scope 3 greenhouse gas emissions. TAC’s call for evidence asked for views on whether the reliefs set out in the standards are sufficient to allow companies to develop the systems and capabilities necessary to report.

Reporters will see a degree of commonality between IFRS S2 and the UK’s Climate-related Financial Disclosure Regulations as both are based on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

While IFRS S2 goes beyond the requirements of the TCFD recommendations, the comparison of IFRS S2 to the TCFD recommendations published by the IFRS Foundation demonstrates how IFRS S2 integrates the TCFD recommendations. Reporters who already apply the TCFD recommendations or the UK’s Climate-related Financial Disclosure Regulations will therefore be well-placed to apply UK SRS in future, particularly any requirements based on IFRS S2.

No decisions have been made on the future of the UK’s existing Climate-related Financial Disclosure Regulations, although implementation decisions on IFRS S1 and IFRS S2 will seek to avoid duplication of reporting obligations. PIC’s work will include an analysis of the interactions between IFRS Sustainability Disclosure Standards and existing UK legislation and regulation.

No decisions have been taken on whether assurance will be required on sustainability disclosures. Mandatory assurance will only be introduced following consultation.

Draft regulations, that in part require companies to produce a triennial Audit and Assurance Policy Statement explaining how the company proposes to assure non-financial reporting, were laid before parliament in July 2023. The draft regulations require disclosure of what assurance has been sought, but do not require companies to obtain additional assurance on sustainability reporting.

To support assurance providers in their work on sustainability assurance engagements, the International Auditing and Assurance Standards Board has developed a draft International Standard on Sustainability Assurance 5000, General Requirements for Sustainability Assurance Engagement. The standard is expected to be finalised in 2024.

The information contained on this webpage is based on publicly available information but is also informed by conversations between ICAEW, government and the Financial Reporting Council.