The Financial Conduct Authority (FCA) has signalled the IFRS SDSs are to be adopted in the UK for reporting periods on or after January 1, 2025 – others may launch sooner. The type of entities in scope of new requirements are not yet decided, but current rules could change.
Indeed, the trend in recent years has been to cast the net wider, increasing the number of firms in scope of existing laws and regulation, including the Taskforce for Climate-Related Financial Disclosures (TCFD) and Climate Related Financial Disclosures regulations (CRFD) in the UK, and the Corporate Sustainability Reporting Directive in the EU. Proposed changes by the Securities and Exchange Commission (SEC), although currently highly uncertain, would also require US registrants to include climate-related disclosures in their annual statements and periodic reports.
With increasingly rigorous requirements and expectations, organisations should start work now, investing incrementally as we move toward implementation to avoid a significant gap at the end.
If you have existing reporting processes in place – TCFD, for example – we recommend building on those capabilities, using the time until formal adoption, to prepare the ground for additional disclosures, and to establish the necessary capabilities to deliver.
The new S1 standard has a significant focus on the ‘how’ of the reporting process. Hence, establishing robust data and reporting controls and procedures should not be overlooked. Engaging internal audit and undertaking a dry run exercise can provide valuable support and is highly recommended. Doing so will identify areas for further improvement and help to close the gap without a last-minute sprint to the finish line.
For more information or to discuss these topics in more detail, please contact Alex Hindson or you usual Crowe contact.
Please find our insight on the IFRS S2 climate-related disclosure requirements here.