UK Government Opens Consultation on Draft UK Sustainability Reporting Standards (UK SRS)
On 25 June 2025, the UK Government officially opened a public consultation on its Exposure Drafts for the UK Sustainability Reporting Standards (UK SRS). These drafts are rooted in the globally recognized IFRS S1 and IFRS S2 standards, adapted with six minor amendments to suit the UK context. The consultation forms a key milestone in the UK’s phased strategy to modernise corporate reporting in line with international sustainability frameworks.
What Are IFRS S1 and S2?
The International Sustainability Standards Board (ISSB) developed IFRS S1 and IFRS S2 to provide a comprehensive global baseline for sustainability-related financial disclosures:
IFRS S1 outlines the general disclosure requirements for sustainability-related risks and opportunities.
IFRS S2 focuses specifically on climate-related financial disclosures, building on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.
These standards aim to equip investors with consistent, comparable, and decision-useful information, and the UK is aligning closely with this approach through the UK SRS.
What the UK SRS Exposure Drafts Cover
The draft UK SRS incorporates both UK SRS S1 and UK SRS S2, reflecting the core principles of the IFRS standards. However, to localize them effectively, the UK Government proposes the following six minor amendments:
SASB Materials Reference – Reporting entities “may refer” to the Sustainability Accounting Standards Board (SASB) sector-specific guidance, removing mandatory language.
Carbon Credit Disclosures – Clarified requirements for transparency in how companies generate, purchase, or use carbon credits.
Terminology Adjustments – Replacing global regulatory references with UK-specific legal and institutional language.
UK Governance Clarification – Detailing the Financial Reporting Council’s (FRC) oversight roles.
Assurance Guidelines – Reflecting UK expectations for third-party verification of disclosures.
Climate Metrics Alignment – Adapting some metrics to reflect UK environmental and economic indicators.
Weighing the Costs and Benefits
The consultation seeks feedback on the financial and operational impact of adopting the UK SRS:
Anticipated Benefits:
Enhances transparency and investor trust.
Aligns UK entities with global reporting frameworks.
Informs long-term business strategies and risk management.
Potential Costs:
Investment in data infrastructure and reporting systems.
Need for external assurance and staff training.
Challenges in sourcing value-chain data, particularly for SMEs.
Participants are encouraged to provide evidence-based insights, particularly in comparing costs with existing SECR (Streamlined Energy and Carbon Reporting) and TCFD-aligned reporting.
Who Is Affected?
While the draft standards are voluntary at this stage, they are intended to apply to:
UK-listed companies under the FCA Listing Rules.
Large private enterprises operating within the scope of the Companies Act.
Entities preparing for future mandatory disclosure requirements.
The government emphasizes a phased and proportionate rollout, ensuring SMEs receive appropriate guidance and support.
A Broader Corporate Reporting Reform
The UK SRS consultation is just one part of a three-pronged reform plan launched through the Mansion House Reforms in 2024. This phase includes parallel consultations on:
Transition Plan Disclosure Requirements.
Oversight of Sustainability Assurance Providers.
Later stages (anticipated Q3 2025 onwards) will explore mandatory reporting under FCA rules and potential extensions to the Companies Act, marking a shift toward a cohesive UK ESG reporting framework.
Market and Stakeholder Impact
Adopting the UK SRS could catalyse:
Increased investor confidence and market comparability.
Expansion of the sustainability consulting and assurance sector.
More informed capital allocation in favor of sustainable operations.
However, the government acknowledges that transitional challenges—especially for data-heavy metrics and climate scenario analysis—will require careful policy consideration and robust stakeholder engagement.
The UK Government's release of the UK SRS exposure drafts is a pivotal step toward embedding high-quality sustainability disclosures into corporate reporting. By leveraging IFRS S1 and S2 while tailoring them to national needs, the UK positions itself as a global leader in sustainable finance. Stakeholders are encouraged to participate fully in shaping these standards, ensuring they are both effective and practicable for the UK context.
UK SRS FAQs
What is the purpose of the UK SRS?
To create a UK-aligned sustainability disclosure framework grounded in international best practices.
Are the standards mandatory now?
No, but this consultation will inform future decisions on whether to mandate them.
What is the deadline for feedback?
Responses must be submitted by 17 September 2025.C
Where can I find the full exposure drafts?
The documents are available on GOV.UK under the open consultation section titled “UK Sustainability Reporting Standards.”