What is the background to the UK SRS scheme?
The creation of the International Sustainability Standards Board (ISSB) under the IFRS Foundation marked a pivotal shift in global sustainability reporting and the ongoing development of an integrated reporting framework.
In June 2023, the ISSB published IFRS S1 (general sustainability disclosures) and IFRS S2 (climate-related disclosures), which are collectively referred to as IFRS sustainability disclosure standards, forming a global baseline for consistent and comparable sustainability information. IFRS S1 sets out general requirements for the disclosure of sustainability-related financial information, emphasizing transparency in disclosing sustainability-related risks and opportunities that impact an entity’s financial health and decision-making for users of financial reports. The standards will apply to annual reporting periods beginning on or after 1 January 2024, with earlier application permitted for companies that wish to adopt the standards before the official effective date.
Now, as of June 2025, the UK government has published exposure drafts of UK SRS S1 and S2, based on the ISSB’s standards. These drafts form part of a broader set of consultations on sustainability-related disclosures, including transition plan requirements and assurance frameworks.
The UK SRS drafts reflect recommendations from the UK Sustainability Disclosure Technical Advisory Committee (TAC) and include several key amendments that aim to make the standards more practical and proportionate for UK companies and investors. Finalised standards are expected to be released later in 2025.
What’s new in the UK SRS exposure drafts?
While closely aligned with IFRS S1 and S2, the UK versions propose notable amendments:
A “climate-first” relief period that gives companies up to two years to focus on climate disclosures before expanding to other sustainability areas (compared to one year in the original ISSB standards). These changes introduce new sustainability reporting requirements for UK companies, reflecting evolving reporting requirements in the sustainability space.
Removal of a relief that allowed companies to delay publication of sustainability-related disclosures relative to financial statements, reinforcing the importance of integrating ESG and financial data. This highlights the growing emphasis on non-financial reporting and the need to integrate non-financial and financial disclosures, particularly in the context of sustainability related financial disclosures.
- A broader set of UK consultations to assess the costs and benefits of mandatory adoption, and to gather feedback on what a “common sense” sustainability framework should look like. These consultations reflect the latest developments in sustainability related financial disclosures and reporting requirements, ensuring the UK approach remains aligned with international standards and best practices.
The government has positioned this process as part of a wider ambition to support green growth, investor confidence, and responsible business conduct.
Which organizations will be impacted?
- UK-listed companies
The initial scope is expected to include companies listed on UK regulated markets, particularly those already subject to existing climate or financial disclosure obligations.
- Large companies
The government is considering whether to extend the standards to large private enterprises with significant economic impact, especially those already subject to SECR or TCFD-aligned requirements.
- Financial institutions
Banks, asset managers, insurers, and pension funds may fall under the scope—particularly in relation to climate-related transition plan disclosures and financed emissions.
- Multinational companies with UK operations
Businesses operating across borders but with substantial UK presence may need to align their disclosures with UK SDS, especially if reporting to UK stakeholders or regulators.
- Sectors with material sustainability risks
Companies in high-impact sectors—such as energy, construction, manufacturing, and transport—are more likely to be in scope due to the relevance of their environmental footprint.
- Public interest entities (PIEs)
Businesses designated as PIEs, such as those providing essential public services or with a large number of stakeholders, may be brought into scope.
- Future scope expansion likely
The government has signalled that it may expand coverage over time, particularly as alignment with international frameworks increases and as stakeholder expectations evolve.
What are the expected SRS requirements?
The UK SRS will require companies to disclose:
- Climate-related risks and opportunities, including both physical, transitional, and environmental risks
- Greenhouse gas emissions across Scopes 1, 2, and 3, as well as other environmental impacts
- Governance and strategy alignment on sustainability, including governance performance within ESG standards
- Key sustainability metrics and progress against stated targets, with a focus on tracking both sustainability performance and governance performance
- Use of resources and resource management, demonstrating how companies manage and report on their resource use as part of responsible environmental practices
- Key areas required by the standards, including sustainability related financial information
In addition, the standards encourage organisations to identify their material sustainability risks, including those related to the environment, and consider sector-specific metrics to ensure disclosures are useful to investors. The environment and its protection are central to sustainability reporting, highlighting the importance of transparent disclosure of environmental impacts and resource management.
What is the implementation timeline?
As of June 2025:
- Exposure drafts are now published
- Consultations are open until September 17, 2025
- Final standards are expected in late 2025
- Implementation will likely begin for financial years starting in 2026 or early 2027, depending on the outcome of the consultation process, and will apply to specific annual reporting periods as defined in the standards.
The Financial Reporting Council will oversee the adoption and endorsement of these standards, ensuring alignment with regulatory requirements.
The UK government has also launched related consultations on mandating credible climate transition plans and developing a voluntary registration regime for sustainability assurance providers, with input from a dedicated task force guiding the development of these standards.
What is the difference between the UK SDS and SECR?
As UK businesses prepare for the arrival of the UK Sustainability Disclosure Standards (UK SDS), many are asking how these new requirements will compare to existing frameworks like Streamlined Energy and Carbon Reporting (SECR). While both aim to improve transparency around corporate climate impact, they differ significantly in scope, structure, and ambition. Below is a side-by-side comparison to help businesses understand where the overlap lies, and how they are expected to disclose information.
| Feature |
SECR |
UK SDS |
| Status |
In force since 2019 |
Exposure drafts released in 2024; final standards expected late 2025 |
| Basis |
UK-specific regulation |
Based on IFRS/ISSB standards (IFRS S1 and S2) |
| Focus |
Energy use and carbon emissions (Scope 1 & 2) |
Broader ESG and climate risks, governance, strategy, metrics (including Scope 3) |
| Applies to |
Large UK-incorporated companies and LLPs |
Initially UK-listed companies; may expand to large private companies and financial firms |
| Disclosures required |
Energy consumption, Scope 1 & 2 GHG emissions, intensity metrics, actions taken |
Climate risks and opportunities, Scope 1, 2 & 3 emissions, governance, targets, strategy |
| Link to financial reporting |
Separate from financial reports |
Integrated into financial reporting (connectivity is a core principle) |
| Forward-looking information |
Not required |
Required (e.g. transition plans, risk mitigation, strategic targets) |
| Assurance requirement |
Not mandatory |
Under consultation—future mandatory assurance possible |
| Transition timeline |
Fully implemented |
Consultation ends September 2025; reporting could begin as early as FY 2026 |
| Use of ESG frameworks/tools |
Optional |
Strongly encouraged to use ESG tools aligned with ISSB for data collection and reporting |
Preparing for the UK SRS will require high-quality data, internal coordination, and assurance-ready reporting. ESG tools can support this by:
- Centralising and automating data collection across emissions, governance, and social metrics
- Ensuring alignment with frameworks like ISSB, TCFD, and SECR
- Providing transparency and traceability for audit and assurance
- Integrating ESG and financial reporting into a single, unified view
Effective sustainability reporting can provide a competitive advantage by differentiating a company in the marketplace and enhancing its brand reputation. Improved sustainability disclosures can also enhance financial performance by supporting better risk management and long-term profitability, while facilitating access to capital markets through increased transparency and comparability for investors.
With increased scrutiny on the accuracy, consistency, and timeliness of sustainability disclosures, ESG platforms can help businesses meet both regulatory requirements and investor expectations.
A new chapter in corporate sustainability reporting
The UK’s move to adopt ISSB-aligned sustainability standards, marks a major step in its transition to a more accountable, transparent, and climate-aligned economy. For businesses, this is both a regulatory shift and a strategic opportunity.
Companies that begin preparing now, by engaging with the consultation process, strengthening internal data systems, and adopting ESG tools, will be better equipped to navigate the new reporting landscape and build trust with investors and stakeholders.
By embedding the UK SRS into their broader ESG strategies, organisations can lead with confidence and contribute meaningfully to the UK’s goals to address climate change.
