Understanding UK consultations on Sustainability Reporting standards, Assurance and Transition plans

The UK government launched three sustainability disclosures-related consultations in June 2025, covering the UK Sustainability Reporting Standards (UK SRS), development and disclosure of transition plans, and assurance of sustainability-related disclosures. These consultations will shape the future of UK’s sustainability reporting landscape.

UK SRS: A New Reporting Baseline

Exposure draft of UK Sustainability Reporting Standards: UK SRS S1 and UKSRS S2

UK SRS S1 and S2 are derived from the International Sustainability Standards Board’s (ISSB’s) IFRS S1 and IFRS S2 sustainability disclosure standards on general sustainability and climate-related disclosures respectively. To maintain the global baseline and cross-jurisdictional interoperability, while adapting them for the UK context, six minor amendments are made to IFRS S1 and IFRS S2 to form the UK SRS. These amendments are:

Removal of delayed reporting relief: UK SRS removes the transition relief of IFRS S1 that allows entities to delay the publication of sustainability disclosures in the first year of reporting. Delayed reporting can undermine ‘connectivity’ with financial statements and other narrative reporting. With the existing climate-related financial disclosure requirement in the Companies Act and the Task Force on Climate-related Financial Disclosures (‘TCFD’) disclosure requirement under the Financial Conduct Authority (FCA) Listing Rules, UK entities are well-positioned to report climate-related disclosures within the same timeframe as other elements in the annual report.
Extension of ‘climate-first’ relief: UK SRS extends the transition relief in IFRS S1 to permit entities to report only climate-related disclosures from one additional year to two years. Disclosures in other sustainability areas may be postponed to the third year of mandatory application of the UK SRS. However, the transitional relief in IFRS S2, which delays the requirement to report Scope 3 emissions until after the first year of applying the standard, remains unchanged. This phased approach helps balance the challenges arising from changes in reporting practices.
Removal of requirement to use GICS: UK SRS removes the IFRS S2’s mandatory requirement to use the Global Industry Classification Standard (GICS) for ‘financed emissions’ reporting purposes, allowing the use of an alternative standard based on existing reporting practices to enhance connectivity.
Removal of specific effective dates: UK SRS does not set any effective dates, as these will be determined by the relevant authorities in the UK, such as the FCA or the UK government.
Change of ‘shall’ to ‘may’ for SASB Standards: IFRS S1 and S2 require that the Sustainability Accounting Standards Board Standards (SASB Standards) be considered in the context of an entity’s particular business, sector or operations. UK SRS states that an entity ‘may refer to and consider the applicability of’ SASB Standards to support their voluntary application alongside other sector guidance and to reduce the burden of the entity to prove their consideration of inapplicability of this standard.
Linking transition relief to mandatory requirements: UK SRS clarifies that transition reliefs apply when the reporting requirements become mandatory. This ensures voluntary reporters are not penalised for their voluntary reporting.

Apart from the six minor amendments mentioned above, the UK government is also consulting on whether it is beneficial to diverge from IFRS S2 by introducing additional disclosure requirements for the purchase and use of carbon credits during the reporting period, alongside the planned use of carbon credits —requirements that are already included under IFRS S2.

The UK government announced that it will make the final decision on endorsement after the consultation. It aims to publish the final UK SRS in autumn 2025. The UK SRS will then be available for entities to use on a voluntary basis. The FCA expects to consult in 2025 to update the existing climate-related disclosure requirements for listed entities to make reference to the use of the UK SRS. This forms part of the UK government’s wider review of non-financial reporting framework. The aim of this review is improving coherence, proportionality and cost-effectiveness of reporting by streamlining the current legal framework. Part of this review will focus on the application of UK SRS to economically significant entities.

We have summarised some key similarities and differences between the current UK climate-related disclosures reporting requirements and the proposals of the new UK SRS and the other two consultations. For more information, you can download our guide.

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Transition plan consultation: From Targets to Disclosures and Actions

Transition plan requirements consultation

UK SRS does not currently mandate entities to disclose a separate transition plan or set targets linked to the plan. Consequently, the transition plan consultation proposes two approaches to integrate transition plans into sustainability reporting: a ‘comply or explain’ approach, or a mandatory development and disclosure of transition plans approach.

Comply or explain: Under the ‘comply or explain’ approach, there would be no compulsory requirement to disclose a transition plan outside of annual sustainability reporting. However, entities that have not published a transition plan, nor included transition plan-related information in accordance with UK SRS S2, would be required to explain their reasons for non-disclosure.
Mandatory development and disclosure of transition plans: Entities would be obliged to develop a transition plan and disclose the related information as part of their annual sustainability reporting. Moreover, the requirement could extend to publishing a separate transition plan document at specified intervals, following the recommendations of the Transition Plan Taskforce. sed approach helps balance the challenges arising from changes in reporting practices.

As for the scope of implementation, the UK government is considering whether it would be appropriate to require transition plan reporting for listed entities and economically significant entities, which aligns with the potential scope of mandatory UK SRS implementation. UK-registered financial institutions and FTSE 100 companies are expected to demonstrate greater commitment than simply fulfilling reporting requirements, by developing transition plans aligned with the goal set in the Paris Agreement.

Apart from consultation on the disclosure of transition plans, this consultation also covers other areas of transition plan implementation including accountability for delivery, alignment of transition plans to the wider target of net zero by 2050, adaptation and resilience under 2°C and 4°C global warming scenarios and incorporation of nature-related considerations.

Assurance oversight regime consultation: Building Trust through Oversight

Developing an oversight regime for assurance of sustainability-related financial disclosures consultation

The UK government has also launched a complementary consultation on establishing a registration regime for UK sustainability assurance providers and determining the requirements in relation to Sustainability assurance over the future UK SRS.

The UK government proposes a voluntary registration regime for sustainability assurance providers in the initial phase. The rationale for this is that registered UK providers should be sufficiently qualified to provide assurance over sustainability disclosure frameworks aligned with IFRS S1 and IFRS S2 (for example, TCFD, European Sustainability Reporting Standards (‘ESRS’), and UK SRS).

The consultation also outlines the possible assurance levels, phased-in requirements regarding what type of entities that may be required to obtain assurance, and seeking views on whether the assurance should become mandatory in the future.

The three consultations aim to elevate the quality, relevance, consistency, and credibility of the UK’s corporate sustainability reporting system.

Although the consultations are still underway, it will be important for UK entities to engage with the consultations and understand the potential future implications of these consultations on their non-financial reporting and assurance.