UK’s long awaited Sustainability Reporting Standards (SRS) drafts released

Exposure drafts and a consultation on the UK’s highly anticipated Sustainability Reporting Standards (SRS) were finally released last week, allowing companies a first look at new sustainability standards which are likely to become mandatory for companies within the next two years. 

As was previously known, UK SRS are set to be the UK’s implementation of IFRS Sustainability Standards S1 and S2, which are sometimes known as the ‘ISSB Standards’. Indeed, the UK’s standards will helpfully be titled ‘UK SRS S1’ and ‘UK SRS S2’, and with the exception of some proposed amendments, covered below, are wholly consistent with IFRS S1 and S2. 

With these drafts originally touted to be released back in Q1 of this year, a conspicuous silence surrounded the government’s lack of communication on a delay to the standards. This had prompted many to believe there was a threat of the standards being indefinitely delayed, or even axed completely, following comparable regulatory rollbacks in the EU and the US. 

On this point, the government is still moving cautiously around the timelines and scope for mandatory implementation of SRS, writing noncommittally that evidence gathered through the consultation would “inform future government decisions when it considers whether to require entities to report information using the standards”. It had been broadly assumed that SRS would be made mandatory for at least UK companies which were already in scope of TCFD, but we await exact clarity on this. 

What’s in UK SRS?

If you’ve read IFRS S1 and S2 which first released in 2023, then you’ve already seen these standards – barring the UK-specific amendments. SRS S1 and S2 ask companies to disclose on the impacts and management of climate-related risks and opportunities (S2), and wider “sustainability-related” risks and opportunities (S1). IFRS followed the TCFD’s approach very closely, meaning that these standards are focused quite strictly on the financial impacts to the business from these stated risks and opportunities, and use the same disclosure pillars – governance, strategy, risk management, and metrics and targets – as TCFD.

Indeed, S2 is ultimately very close to TCFD given its climate focus, and although TCFD Statements will require some additions and updates, we expect companies to repurpose this existing work quite closely for S2. 

SRS S1 and S2 do add greater expectations for a climate transition plan, which most companies have begun work on or published, and a greater emphasis and specificity around quantifying and disclosing the financial impacts of its identified risks and opportunities. These additions mark a sensible maturing of the TCFD approach, with greater detail being requested.   

What are the amendments? 

Subject to the consultation, the UK government has accepted six amendments to S1 and S2. 

Three are to do with the reliefs and timings of reporting. One is an extension of the ‘climate-first’ relief, which would allow companies to begin with S2, but then have up to two years to implement S1 – a fairly significant relief to reporting pressures given that S2 largely mirrors TCFD reporting. Another is a requirement to publish SRS simultaneously with financial statements (i.e. in line with the ARA) in the first year of S1/S2 reporting – removing a relief which had allowed a company’s very first S1/S2 publication to be released at a different time to ARA, if the company needed. And a third amends transition reliefs – parts of the standards that allow less stringent reporting for the first years of reporting – to apply only from when mandatory reporting begins, meaning voluntary reporters would not trigger the reliefs’ ‘countdown’. 

A further three are more minor. One removes the mandatory usage of an industry classification standard in S2, a second makes consulting the SASB standards (a set of well-used sustainability reporting metrics) optional, and a third is a formality removing an ‘effective date’ line, which frees the UK government to decide on implementation timings. 

The most significant in the above six is the extension of the ‘climate first’ relief, which means we might not see many companies reporting SRS S1 until several years after SRS becomes mandatory. 

What about the consultation?

Along with releasing the drafts, the government has launched a consultation, looking to gather views on cost and benefits of the standards to inform its decision about mandatory implementation. This consultation was launched at the same time as two other sustainability-related consultations, one on its transition plan requirements for FTSE100 companies and financial institutions, and the other on assurance for sustainability reporting which follows the FRC’s study on assurance services earlier this year. 

The consultation will be open until the 17th September. 

What should my next steps be?

The government has stated that it aims to publish final standards in “autumn 2025”. Previously, companies had been told that an FY26 reporting date, i.e. reports published in 2027, was a likely mandate for UK SRS. Given the climate-first relief and the government’s tentativeness to commit to a date prior to the consultation, we’d be hesitant to endorse the FY26 reporting date wholeheartedly – but FY26 is still a probable outcome. 

For now, companies should review the standards and think about areas where they will need to lay the groundwork for assessing impacts and reporting. 

We can help with this – be in touch with [email protected] if you’d like to discuss UK SRS further, or get an on-call review of what it might mean for sustainability at your company.