UK Sustainability Reporting Standards

The International Sustainability Standards Board (ISSB) was announced during the 2021 UN Climate Change Conference (COP26) to create a global standard for sustainability reporting.

The ISSB operates under the International Financial Reporting Standards (IFRS) Foundation. Its main goal is to provide guidelines that help investors compare companies, make better investment decisions, and improve the running of capital markets.

What are the new international sustainability reporting standards?

In June 2023, the first two new standards were published by the ISSB, and these came into place on 1 January 2024. These are:

• IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information
• IFRS S2: Climate-related Disclosures

UK governments have supported the ISSB from the start. In its 2023 green finance strategy, the last government outlined plans to review whether IFRS S1 and IFRS S2 standards are suitable for use in the UK.

What happens next?

If approved, the UK will create its first two Sustainability Reporting Standards (SRS) based on the international standards IFRS S1 and IFRS S2. The government plans to make a decision on these standards by the first quarter of 2025 as part of a broader sustainability reporting system led by HM Treasury.

This means that the Financial Conduct Authority (FCA) will be able to introduce rules requiring UK-listed companies to report sustainability-related information to investors after holding a consultation.

The government will also decide whether to extend these reporting requirements to other UK companies that the FCA doesn’t regulate. This decision will consider factors like company costs and benefits for investors who might use this information.

Involved committees

The UK government has established two committees to help assess IFRS S1 and IFRS S2, as well as any adoption of resulting UK SRS. These committees are:

• An independent Technical Advisory Committee (TAC)
• Policy and Implementation Committee (PIC).

UK Sustainability Disclosure Technical Advisory Committee (TAC)

The Technical Advisory Committee (TAC) assess IFRS Sustainability Disclosure Standards on a technical basis and provides recommendations to the Business and Trade Secretary in government. 

TAC consists of a chair and members from a diverse range of professional backgrounds. It is also supported by the Financial Reporting Council (FRC), who provide a secretariat.

UK Sustainability Disclosure Policy and Implementation Committee (PIC)

The Policy and Implementation Committee (PIC) is made up of UK government and regulator representatives. Its main job is to help coordinate how UK Sustainability Reporting Standards (SRS) are put into action.

PIC’s membership consists of UK government departments and regulators, including:

• Bank of England
• Department for Energy Security and Net Zero (DESNZ)
• Department for Environment, Food and Rural Affairs (Defra)
• Department for Work and Pensions (DWP)
• Financial Conduct Authority (FCA)
• Financial Reporting Council (FRC)
• HM Treasury
• the Foreign, Commonwealth and Development Office (FCDO)
• UK Endorsement Board (UKEB)

Members will also use it to share information about their efforts to influence the development of standards. This will help Department for Business and Trade (DBT) officials advise the Business and Trade Secretary and provide relevant information that DBT can share with TAC.

PIC meetings are private, but summaries will be made available on the UK Government Website.