What are the UK Sustainability Reporting Standards?
The UK government has published its finalised UK Sustainability Reporting Standards (UK SRS). They comprise:
- UK SRS S1 (general sustainability-related financial disclosures); and
- UK SRS S2 (climate-specific disclosures).
The UK SRS are closely modelled on the International Sustainability Standards Board standards published in 2023, which have been widely adopted internationally, and build on the existing Taskforce on Climate-related Financial Disclosures (TCFD) reporting framework.
Like those standards, the UK SRS requires disclosures across four core themes: governance, strategy, risk management, and metrics and targets.
Why have the UK SRS been introduced?
Businesses face increasing pressure from finance providers, customers and other business partners to provide more comprehensive and decision-useful ESG information.
The current UK sustainability reporting landscape is fragmented and often duplicative, leading to sometimes excessive and inconsistent reporting across businesses.
The UK SRS addresses this by consolidating existing requirements into a single, cohesive set of disclosures enabling end-users to better compare sustainability-related risks and opportunities across businesses and to facilitate better-informed financial decisions.
What has changed?
Large and listed companies are already subject to sustainability-related disclosure requirements under the Companies Act 2006 (CA 2006) and/or the UK Listing Rules and are likely familiar with the TCFD framework.
The UK SRS, however, raises the bar for sustainability disclosures significantly, going beyond current requirements in both scope and detail.
Which entities will be in scope?
Compliance with the UK SRS is currently voluntary, but mandatory application is explicitly under consideration and is largely regarded as the direction of travel. Specifically:
- Listed companies: the FCA is currently consulting on mandatory UK SRS reporting under the UK Listing Rules (effectively replacing the current requirement to reporting against the TCFD framework) and is proposing phased implementation from 1 January 2027.
- Large private companies: the UK government is expected to consult during 2026 on introducing mandatory UK SRS reporting for the UK's largest private entities.
Whilst mandatory reporting is only expected to impact listed companies and the UK's largest private companies, smaller businesses can expect increasing requests for UK SRS-aligned sustainability data from parent companies, investees or other larger in-scope business partners.
What should organisations be doing now?
Entities already subject to sustainability disclosure requirements should map their current disclosures and governance structures against the UK SRS, identifying gaps both in requirements and in the processes and systems used to capture data internally and across their value chains.
Subsidiaries, portfolio companies and other entities operating within the value chains of larger businesses would be well advised to familiarise themselves with the UK SRS and identify which business partners are likely to fall within scope. Once those relationships are mapped, businesses should assess what information is likely to be required, audit their existing data collection capabilities and address any gaps. Early preparation will put smaller businesses in a stronger, and more competitive, position to respond efficiently when requests arrive.
Other key points
Directors' liability
Sustainability disclosures will require directors to include forward-looking statements and estimated data in their annual reports. Where such disclosures are made in the Strategic Report, the statutory "safe harbour" provisions under section 463 CA 2006 will apply as they do now.
Streamlined Energy and Carbon Reporting (SECR)
The Government will consider how energy and emissions data reported under UK SRS interacts with existing SECR requirements with a view to reducing unnecessary duplication.
Transition plans
UK SRS does not contain an express requirement to have a net-zero transition plan. UK SRS S2 only requires disclosure of a transition plan where one exists. It does, however, require disclosure of similar information, ie how a company "has responded to, and plans to respond to, climate-related risks and opportunities in its strategy and decision-making."
Scope 3 reporting
Scope 3 is the most complex and costly element of climate reporting. UK SRS S2 formally requires Scope 3 reporting, but entities reporting voluntarily may opt out, provided they disclose that they are doing so. This makes voluntary adoption considerably more manageable in practice. Whether Scope 3 reporting becomes mandatory will depend on how the FCA and the government implement the UK SRS into law and regulation.
How we can help you
We can help you prepare for UK SRS, as well as assist you with any likely FCA Listing Rules implications and ongoing disclosure obligations.
