UK Sustainability Reporting Standards (SRS) in 2024 - Last Updated: 31 July, 2024
The United Kingdom (UK), along with the EU, has some of the world's most advanced corporate and investor sustainability laws and reporting standards in the world. Sustainability is an important economic and cultural topic in UK, and the UK government is adapting additional policy steps to support its Net Zero 2050 targets. On August 2, 2023, the UK Government UK's announced the creation of an official set of UK Sustainability Reporting Standards (SRS). We’ve prepared this guide to summarize the upcoming UK SRS, what they are, and what they mean for organisations in 2024 and beyond.
The UK Sustainability Reporting Standards (SRS)
The UK Sustainability Reporting Standards (SRS) set out corporate disclosures on sustainability-related risks and opportunities that companies face. The SRS will form the basis of any future requirements in UK legislation or regulation for companies to report on risks and opportunities relating to sustainability matters, including risks and opportunities arising from climate change
The new UK Sustainability Reporting Standards (SRS) were initially planned to be published in the UK on or before July 2024. However, as of July 31, the UK SRS remain pending as the Labour Party establishes its new government, following a significant victory in the 4 July UK general elections. The latest guidance as of May 2024 suggests "The [UK] Government aims to make the UK-endorsed ISSB standards available in Q1 2025... The Government expects a decision regarding future requirements to be taken in Q2 2025." Published by the UK Department for Business and Trade (DBT), UK SRS will be based on the IFRS® Sustainability Disclosure Standards issued by the International Sustainability Standards Board (ISSB).
Following the creation and publication of the UK SRS, the standards will be adopted into legal and regulatory reporting requirements for UK entities. According to the UK government:
"Decisions to require [SRS] disclosure [by companies] will be taken independently by the UK government"
By using the ISSB standards as a baseline, the objective is to help UK companies disclose internationally consistent sustainability information for investors, regulators, and other capital markets participants.
UK Sustainability Reporting Standards (SRS) Disclosure Requirements
At present, there are no formal legislative or mandatory reporting requirements for large or listed UK businesses to report under the UK SRS, only the existing Streamlined Energy and Carbon Reporting (SECR) mandate for eligible entities. However, given the expected international adoption of the ISSB, as well as the existence of other UK sustainability reporting requirements under SECR and the FCA, it can be expected that FCA and SECR-eligible companies should consider adopting the ISSB standards in anticipation of the UK SRS.
In fact, our prediction is the upcoming UK Sustainability Reporting Standards will introduce measures and modifications to institutionalize and unify SECR, TCFD, and ESOS reporting into an overall, annual set of sustainability disclosures that will include:
- ISSB S1 and S2 (which now incorporates TCFD) reporting, including Scope 3 emissions
- Additional non-climate sustainability and ESG reporting disclosure
- A detailed transition plan outlining the submitter’s path to net zero emissions
While SRS has yet to be finalized and officially implemented, we expect it will emerge as the definitive UK sustainability reporting standard upon its release in 2024. SRS may also introduce a UK Green Taxonomy, similar to EU sustainability legislation.
UK Sustainability Reporting Standards (SRS) Implementation Timeline
As of May 2024, the UK Government has indicated that the UK SRS will be drafted and published no later than March 2025. From there the UK Department for Business and Trade, the Financial Conduct Authority, and the Department for Energy Security and Net-Zero (formerly DEFRA and the BEIS) will likely give organizations at least a six month preparation period to begin completing required disclosures and reporting on either the 2025 or 2026 financial year. That said, the ISSB S1 (General) and S2 (Climate) reporting standards are now readily available, as well as TCFD guidance, so indications are there's unlikely to be anything substantially 'new' in the UK SRS compared to those existing standards.
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Your Next Steps With UK Sustainability Reporting Standards Preparation
Both in the UK and elsewhere in Europe and around the world, there are a lot of new and evolving sustainability disclosure legislation going into effect in 2024 and future years. In fairness, it can feel very complex and daunting. However, from a positive perspective:
- The UK SRS standards are phased in over several years, likely not taking effect until financial years starting on or after January 1, 2025
- UK regulators recognize they're at the forefront of global economic sustainable transition, and are looking to help UK companies successfully adopt and implement the ISSB and UK SRS standards
- There's plenty of time to implement the necessary measures, standards, process changes, data collection, and reporting capabilities to keep pace - particularly for organisations who are proactive and already investing in these areas (or starting soon)
- There are lots of existing market resources to help organisations and investors track, manage, and report around these changes more efficiently and effectively, including Brightest's software and services
For organisations in the early stages of their UK sustainability reporting journey, we have a few general recommendations, additional reading, and suggested next steps:
Materiality assessment - The principle of Materiality is embedded in both the ISSB standards and most UK climate disclosure and sustainability laws, particularly within TCFD and the concept of double materiality. Materiality essentially asks and attempts to answer a fundamental question: what are the most important (re: material) ESG, climate, and sustainability risks and considerations for a business or investment? And what is the relationship between material sustainability and material financial impacts, risks, and opportunities. If your organisation hasn't already done so, a materiality assessment can help determine what your top sustainability goals, targets, risks, and priorities should be in relation to regulatory and investor sustainability reporting. In turn, this can help clarify where to focus, what to prioritize, and what aspects of pending or forthcoming UK and/or EU sustainability legislation matter most to your organisation.
Understand the ISSB S1 and S2 standards in depth - A full, in-depth breakdown of the ISSB standards is outside the scope of this piece, but it is critical that, if your organisation expects to fall under mandatory UK sustainability disclosure eligibility in the coming years, you work with your leadership, directors, legal counsel, auditors, and other stakeholders to learn your organisation's specific obligations under each law, as well as how to effectively report under the applicable standards.
Sustainability data systems and process - While this might go without saying, in order to disclose your organisation's sustainability performance, you need to know what it is - with a high degree of accuracy. Your materiality process can help guide you toward the main sustainability themes you may need to focus on and collect data around. Is employee travel a big source of your organisation's carbon footprint? Facilities? Manufacturing sites? Where does that data exist today, and how will you access or collect it? Many organisations start their sustainability disclosure preparations with relatively simple spreadsheets, surveys, and documents, but things can get complex fast - particularly for larger companies. If you're an organisation with a medium-to-large or complex environmental footprint, you likely need dedicated sustainability reporting and data management software, like the kind we design here at Brightest to help organisations stay compliant with SECR, TCFD, and other UK sustainability disclosure standards. Ongoing report archiving, version control, audit readiness, and governance are also important to think about, since you'll be reporting every year.
Further reading - Our free guides to sustainability measurement and sustainability reporting provide additional, detailed guidance and insights on how to measure and report your sustainability performance for voluntary or future mandatory UK sustainability disclosures.
