UK SRS: How Can You Prepare?

The UK Sustainability Reporting Standards (UK SRS Financials) is a pivotal upcoming regulation designed to enhance transparency and accountability in corporate sustainability reporting across the UK. With the recent progress in international sustainability standards, the UK is set to align its reporting requirements with the global baseline established by the International Sustainability Standards Board (ISSB). This article explores the UK SRS, its key components, overlaps with other standards, and practical steps companies can take to prepare.

What are the UK SRS?

The ISSB established a global baseline for sustainability reporting, which the UK aims to adopt and enhance through its own standards.

Objectives: The UK SRS seeks to provide clear, comparable, and decision-useful information to investors and stakeholders. The IFRS S1 and S2 standards, developed by the ISSB, are central to this effort. IFRS S1 addresses general requirements for sustainability-related financial information, while IFRS S2 focuses on climate-related disclosures. The UK government plans to assess and most likely endorse these standards by Q1 2025.

Key Components of UK SRS

IFRS S1 and S2 Foundation: The IFRS S1 and S2 standards, published on 26 June 2023, serve as the foundation for the UK SRS. IFRS S1 addresses general requirements for sustainability-related financial information, while IFRS S2 focuses on climate-related disclosures. The UK government plans to assess and potentially endorse these standards by Q1 2025.

Government Support: The UK government has shown strong support for the ISSB’s standards, intending to integrate them into the national regulatory framework. The Financial Conduct Authority (FCA) will play a critical role in implementing these standards for UK-listed companies, following an endorsement decision and consultation process.

Impact on Companies: UK-listed companies will be required to report sustainability-related information based on the endorsed standards starting no earlier than 1 January 2026. Non-listed companies may also be subject to disclosure requirements, considering the cost-benefit balance for reporting entities and the information needs of investors.

Overlap with TPT Disclosure Framework: The UK SRS is expected to align with the Transition Plan Taskforce (TPT) Disclosure Framework, promoting transparency on net-zero targets and ensuring comprehensive transition plan disclosures. However, this alignment is not yet confirmed and will be decided based on future consultations.

Overlaps with Other Reporting Standards

Comparative Analysis with ESRS: UK businesses with operations in the EU will need to navigate the complexities of adhering to both the UK SRS and the EU’s Corporate Sustainability Reporting Directive (CSRD), which is based on the European Sustainability Reporting Standards (ESRS) developed by the European Financial Reporting Advisory Group (EFRAG).

Mutual Benefits: Aligning with both the UK SRS and CSRD provides companies with comprehensive reporting that meets various regulatory demands, improves transparency, and supports global sustainability goals. Companies that manage to integrate both standards effectively will likely gain a competitive advantage in terms of sustainability performance and investor relations. For further information, stakeholders can refer to the recently published interoperability guidance between the ESRS and IFRS standards, which outlines how companies can achieve compliance with both sets of standards efficiently.

What’s Next for Companies?

Implementation Timeline: The UK government aims to finalize the endorsement of IFRS S1 and S2 by Q1 2025. Companies should start preparing now to meet the upcoming reporting requirements.

The UK SRS represents a significant advancement in sustainability reporting, promoting transparency and accountability. By preparing now, companies can ensure compliance with future regulatory requirements and seize the opportunities presented by the transition to a more sustainable economy.

At Position Green, we offer comprehensive advisory and platform solutions to help you navigate these new standards and integrate sustainability into your business strategy. Our expert team is ready to assist you with aligning your reporting practices with UK SRS, ensuring you stay ahead of regulatory changes and maximize the benefits of enhanced sustainability performance.

Contact us today to learn more about how our services can support your journey towards compliance and sustainability excellence.