Ready for UK Sustainability Reporting Standards?

Your reporting roadmap

Author: Kate MacKenzie, Senior Manager, Consulting

The UK is entering a new era of sustainability reporting, aligning with global standards while setting clear expectations for credible disclosures that inform decision making. In a move to foster transparency and comparability, the UK Government has released the consultation papers for the UK Sustainability Reporting Standards (SRS), leveraging the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards.

This approach ensures coherence with global reporting frameworks, with only limited modifications to IFRS S1 and S2. The UK SRS will enable organisations to build on existing climate disclosures, such as the Taskforce on Climate-related Financial Disclosures (TCFD), and broaden their reporting to cover all material sustainability-related topics.

A familiar structure: the four pillars of disclosure

The UK SRS adopts a familiar framework, echoing the four fundamental areas seen in reporting under the Taskforce on Climate-related Financial Disclosures:

governance
strategy
risk management
metrics and targets.

S1: sustainability-related risks and opportunities

Under S1, organisations must disclose sustainability risks and opportunities that could materially impact operations and supply chains.

S2: climate-related disclosures

S2 centres on climate-related risks and opportunities, focusing on where organisations have material impacts from physical and transition climate risks. Organisations must also disclose relevant metrics and targets, including greenhouse gas emissions.

Read more about our take on the IFRS Sustainability Disclosure Standards:

IFRS S1 IFRS S2

Implementation timeline and transitional reliefs

The UK government and Financial Conduct Authority will confirm reporting thresholds and implementation dates separately. However, indicative transitional provisions have already been outlined.

For the first two years of mandatory reporting, entities may limit disclosures to climate-related information only. This means applying S1 to climate-related matters and reporting fully under S2, delaying sustainability-wide report to allow organisations to gradually expand coverage to broader sustainability topics.
Scope 3 emissions may be omitted in the first year of mandatory reporting.

These reliefs are intended to support a phased and manageable transition. Nonetheless, organisations should begin preparing now to ensure readiness when full reporting requirements come into effect.

Key considerations for preparing to report

Independent Assurance

The UK government has announced a consultation on the assurance regime for sustainability disclosures. It supports the use of the International Auditing and Assurance Standards Board’s International Standard on Sustainability Assurance 5000 general requirements for Sustainability Assurance engagements. This signals a clear expectation that sustainability reporting will be subject to independent assurance in the future.

Transition plans

While the UK SRS requires entities to disclose their transition plans, they do not prescribe detailed criteria for their content. A separate consultation is currently underway regarding the adoption of the Transition Plan Taskforce framework as the UK standard for transition plan disclosures, which could significantly influence how organisations approach Transition Planning in practice.

Sector-specific disclosures

At present, the International Sustainability Standards Board (ISSB), the body responsible for developing the IFRS Sustainability Disclosure Standards, has not yet published sector-specific standards. In light of this, the UK government has made sector-specific disclosures voluntary under the UK SRS framework.

However, the UK SRS makes clear that organisations must still disclose all information that is material to primary users, such as investors, even if it falls outside the scope of the core standards. As and when the ISSB publishes sector-specific standards, the UK may consider incorporating these into future iterations of the UK SRS.

What first steps should I take to prepare?

Refresh your materiality assessment

Many organisations have already conducted materiality assessments, these should now be revisited to ensure they are robust, up to date, and suitable for assurance. The assessment should clearly identify material sustainability-related risks and opportunities across the value chain, financial materiality, but may also include impact (creating a Double materiality assessment) to inform transition planning.

Measure your emissions

Insert ContentMeasuring emissions is not new, it was an existing reporting requirement under TCFD-aligned requirements. However, the UK SRS is more prescriptive on reporting Scope 3 emissions , and many smaller organisations already have to produce a Streamlined Environment & Climate Report. Organisations should begin by conducting a materiality assessment to prioritise Scope 3 categories and justify any exclusions. This process should be documented and aligned with the Greenhouse Gas Protocol.

Conduct a gap analysis and assurance readiness assessment

A structured gap analysis will help identify areas where further work is required to meet UK SRS expectations. This includes evaluating data quality, documentation, governance, and controls, supporting preparation for future independent assurance. Organisations can also draw on insights from quality reviews of existing TCFD-aligned disclosures, such as those discussed in our recent article FRC scorecard on climate reporting, to identify common reporting weaknesses and highlight areas of particular interest to stakeholders and regulators.

Harness internal audit as an ally to help you prepare

The internal audit function can support sustainability reporting teams in establishing robust processes and controls. Many firms face a challenge in this area; there remains a significant gap between financial and non-financial reporting in terms of the levels of testing and assurance in place to protect the organisation against the risks of misstatement.

Start preparing your data

The UK SRS will require organisations to disclose a significant volume of both qualitative and quantitative data points. Firms should expect questions around the accuracy, source, and nature of quantitative information, including whether it is based on actual data or proxy assumptions. As such, firms will need to establish strong data management practices, including information tagging to support data quality and auditability.

Strengthen your sustainability strategy today

The UK SRS represents more than a compliance exercise; it is an opportunity to strengthen the quality, consistency, and credibility of sustainability disclosures and inform and enhance sustainability strategies. By aligning with international standards, the UK is helping organisations prepare for a global reporting environment.

Organisations should act now to build the foundations for high-quality reporting. It is worth investing in strong underlying processes now, given the eventual expectation of an independent assurance review.

Through our practical and experienced team, Crowe continues to support our clients in setting their own agenda to address rapidly changing sustainability and climate-related reporting requirements.

For more information, please get in touch below.

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