On 16 May The Department for Business and Trade (DBT) announced changes in relation to the ISSB standards. In 2023, the Government laid out plans to establish a framework to assess the suitability of the ISSB standards for endorsement in the UK.
The UK Government has now stated updates to naming, timelines, transition plan disclosures, and the UK green taxonomy.
The Government said it would create the first two UK Sustainability Reporting Standards (SRS), which would be based on the ISSB’s IFRS S1 and IFRS S2. Previously, the UK SRS was referred to as the Sustainability Disclosure Standards (UK SDS), which reflects a move closer to the European Sustainability Reporting Standards (ESRS).
In an update to the Sustainability Disclosure Requirements (SDR), the Government announced that it aims to make the UK-endorsed ISSB standards – the UK SRS – available in Q1 2025. Following a Government endorsement and a consultation process, the FCA will be able to use the UK SRS to introduce requirements for UK-listed firms to report sustainability-related information. The Government noted that any changes that may be introduced would be effective no earlier than accounting periods beginning on or after 1 January 2026.
Given the considerable overlap between the ISSB’s IFRS S2 and Transition Plan Taskforce’s (TPT) disclosure framework – the Government is planning to “shortly” consult on strengthening its expectations for transition plan disclosures with reference to the TPT Disclosure Framework.
The Government expects to consult in “due course” on the proposed taxonomy. After the taxonomy has been finalised, there will be a testing period for voluntary disclosures and use for at least two reporting years before exploring mandatory disclosures.
The Government also noted the work of the Taskforce on Nature-related Financial Disclosures (TNFD) - it's currently not set to be included within UK SRS, but could set the tone for future requirements.
These early signals on sustainability-related reporting emphasises the UK Government’s direction of travel on ESG and sustainability-related requirements. The focus on the financial services sector means that firms should be aware of these changes in their planning and, in particular, their strategy on transition.
To learn more about ESG and sustainability requirements, contact Irina Velkova.
