Preparing for UK Sustainability Reporting Standards (SRS) compliance
Despite key differences between the UK SRS and CSRD – particularly the UK’s focus on single materiality – the boarder trend is clear: sustainability is becoming a core financial requirement.Ed Packshaw Head of Risk, reporting and communications
The UK Sustainability Reporting Standard (SRS) is set to fundamentally change how businesses report on sustainability, marking a new era of corporate transparency and financial accountability. More than just another compliance exercise, this upcoming regulation is about helping companies better understand how sustainability performance ties directly to financial performance—think cash flow, access to finance, and the cost of capital. While still in its early days, the SRS will play a critical role in mobilising capital toward sustainable investments and aligning UK businesses with the low-carbon transition needed to reach net-zero by 2050.
A defining moment for UK sustainability reporting
On the 26th of June 2023, the International Sustainability Standards Board (ISSB) released its latest standards: the most recent standards IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures). In response, and as part of its 2023 Green Finance Strategy, the UK government has developed the first two UK Sustainability Reporting Standards (UK SRS), aligning with these global benchmarks.
The first draft of the UK SRS is expected to be endorsed in Q1 2025, signalling a major shift in how UK businesses disclose sustainability-related risks and opportunities—especially those tied to climate change. While adoption will initially be voluntary, mandatory reporting is on the horizon. Though the exact scope remains undefined, publicly listed companies are likely to be among the first required to comply.¹
For global organisations, aligning with UK SRS is also a step towards broader compliance with proactive approach will support compliance with emerging international regulations, as 16 jurisdictions have officially adopted or committed to using ISSB standards. Alongside the UK; Japan, Singapore, Australia, Canada, Brazil, China, Hong Kong, South Korea, Malaysia, Kenya and Nigeria are integrating ISSB standards into disclosure frameworks, representing 57% of global GDP and more than half of global greenhouse gas emissions.²
The business case: Why UK SRS is more than just compliance
Since the UK SRS will be based on IFRS S1 and IFRS S2, UK companies will be required to report on sustainability-related risks and opportunities that could affect their cash flows, access to finance and cost of capital. Additionally, they will need to disclose detailed climate-related information, focusing on physical risks, transitions risks, and climate-related opportunities.
Who’s ahead of the curve?
Companies already reporting under the Global Reporting Initiative (GRI) have a clear advantage, as they are already tracking material sustainability risks and opportunities. GRI standards requires businesses to disclose how they identify, assess and manage risks, which aligns well with the SRS. This means companies following GRI will find it easier to adapt to the upcoming SRS requirements, as they are already embedding sustainability into their risk management process.³
In addition, UK businesses that are already required to report under the European Corporate Sustainability Reporting Directive (CSRD) are also in a strong position. The CSRD mandates that large companies conduct a double materiality assessment, which includes both impact materiality and financial materiality.
- Impact materiality focuses on identifying how a company’s operations affect the environment and society, identifying sustainability-related risks and opportunities.
- Financial materiality, on the other hand, requires companies to assess how the environment and society can lead to financial risks or create opportunities for the business itself.
Since the UK SRS is expected to focus only on financial materiality, businesses accustomed to CSRD reporting will already have the necessary financial risk and opportunity disclosures in place, giving them a head start in complying with the UK’s evolving regulatory landscape.
Why businesses can’t afford to wait
Despite key differences between the UK SRS and CSRD – particularly the UK’s focus on single materiality – the boarder trend is clear: sustainability is becoming a core financial requirement. Investors, lenders and stakeholders will increasingly expect UK businesses to provide high-quality, decision-useful sustainability data, even before reporting becomes mandatory.
A recent Global Investor Survey revealed that 80% of institutional investors already prioritise sustainability disclosures when making investment decisions.⁴ Companies that fall short risk facing higher financing costs, losing competitive positioning, and even encountering divestment from major funds.
What should companies be doing now?
Many forward-thinking businesses are already taking proactive steps to meet the upcoming reporting requirements including:
- Conducting materiality assessments – Identifying the most significant sustainability topics relevant to their business, focusing on risks and opportunities that could impact long-term value.
- Voluntarily aligning to disclosures and standards – Beginning to report in line with IFRS S1 and S2, as well as disclosures such as the GRI and the CSRD, to stay ahead of the upcoming mandatory requirements.
- Assessing sustainability practices – Evaluating existing data collection, management systems and reporting accuracy to ensure they meet the expectations of the UK SRS and identifying gaps that need to be addressed.
Conclusion
With the UK Sustainability Reporting Standards (UK SRS) set for endorsement in Q1 2025, businesses – particularly publicly listed firms likely to be the first subject to compliance – must act now to ensure they are prepared before the regulations take effect. While some may view this as just another compliance hurdle, the reality is clear: this is a fundamental shift in how financial and sustainability performance are evaluated and companies that fail to adapt will be left behind.
For investors, alignment with sustainability standards such as the UK SRS, IFRS S1 and S2, and GRI are now fundamental expectations. Transparency, consistency, and decision-useful sustainability data will be central to investment decisions, impacting capital flows, credit worthiness and long-term financial performance. Businesses that align early will build trust, secure financing at more favourable terms, and demonstrate resilience in an economy that increasingly values sustainability-driven financial performance.
Conversely, businesses that delay preparation for the UK SRS risk undermining investor confidence, potentially leading to divestment. Beyond financial consequences, companies may suffer reputational damage, as stakeholders—including investors, customers, and regulators—are increasingly demanding that businesses proactively address their environmental and social impacts.
In the lead-up to the immediate announcement in Q1 of 2025, large UK companies will likely face increasing questions from stakeholders, particularly capital market participants on what the company is doing to prepare for UK SRS. As always, proactivity drives investor confidence but more importantly, these companies face real risks across sustainability-related topics. Focusing on implementing ISSB reporting as a risk management tool rather than a compliance exercise will ease the pain of reporting and support both strategic resilience against sustainability-related risks and the identification of valuable opportunities that will prepare the business for the transition to a low-carbon economy.
To start preparing now and to understand how to prepare please contact Ed Packshaw for more information.
Author: Ed Packshaw, Head of Risk, reporting and communications, Simply Sustainable
- https://www.gov.uk/government/publications/framework-for-developing-uk-sustainability-reporting-standards/framework-and-terms-of-reference-for-the-development-of-uk-sustainability-reporting-standards
- Over 30 Jurisdictions Embrace ISSB Standards for Sustainability Reporting – The Financial Analyst
- https://reports.geberit.com/annual-report/2021/sustainability/sustainability-performance-report/5-governance/effectiveness-of-the-risk-management-process.html
- https://www.esgtoday.com/80-of-global-investors-now-have-sustainable-investment-policies-in-place-deloitte-tufts-survey/
Ed Packshaw
Head of Risk, reporting and communications
Ed joins the Simply Sustainable team with over 12 years experience in ESG and corporate sustainability, combining both in-house sustainability leadership roles with client leadership and project management expertise, across a range of sectors, including real estate, construction, education and pharmaceuticals.
As our Head of Risk, Reporting and Communications, Ed is responsible for leading clients through their disclosure journey, driving continuous improvement and transparency to deliver impactful and comparable reporting practices that align with a wide-range of stakeholder expectations and help clients present their achievements and goals towards becoming a truly sustainable and profitable business.
Ed has a wealth of experience in international standard and frameworks, including TCFD, SASB, ISSB, CDP, SDGs, GRI, UNGC and a detailed understanding of UK, EU and US regulations and compliance requirements.
Alongside his professional experience, Ed holds a diploma in Sustainable Finance from the University of Cambridge, professional qualifications in Environmental Management and Carbon Management from IEMA and an honours degree in Zoology & Biological Sciences from the University of Edinburgh.