UK Sustainability Disclosure Standards
Information on the UK government’s framework to create UK Sustainability Disclosure Standards (UK SDS) by assessing and endorsing the global corporate reporting baseline of IFRS Sustainability Disclosure Standards.
UK Sustainability Disclosure Standards (SDS) will set out corporate disclosures on the sustainability-related risks and opportunities that companies face. They 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.
Published by the Department for Business and Trade (DBT), UK SDS will be based on the IFRS® Sustainability Disclosure Standards issued by the International Sustainability Standards Board (ISSB). The Secretary of State for Business and Trade will consider the endorsement of the IFRS Sustainability Disclosure Standards, to create UK SDS by July 2024. UK endorsed standards will only divert from the global baseline if absolutely necessary for UK specific matters.
Following endorsement, UK SDS may be referenced in any legal or regulatory requirements for UK entities. Decisions to require disclosure will be taken independently by the UK government, for UK registered companies and limited liability partnerships, and by the Financial Conduct Authority (FCA) for UK listed companies.
By using the IFRS Sustainability Disclosure Standards as a baseline, the aim is for the information companies disclose under UK SDS to be globally comparable and decision-useful for investors. The disclosures required by these standards will help investors to compare information between companies, thereby aiding decision making; supporting the efficient allocation of capital, and smooth running of the UK’s capital markets.
Background to the standards
The creation of the ISSB was announced at COP26, the 2021 UN Climate Change Conference in Glasgow, with the role of creating a global baseline for sustainability reporting. The ISSB is a standard-setting board of the International Financial Reporting Standards (IFRS) Foundation, a not-for-profit organisation that sets global, corporate reporting standards, through the International Accounting Standards Board (IASB).
ISSB published its first 2 new standards on 26 June 2023. They are:
- IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information
- IFRS S2: Climate-related Disclosures
What the UK is doing
The UK government has been a strong supporter of the ISSB since its launch. In its mobilising green investment: 2023 green finance strategy, the UK government laid plans to establish a framework to assess the suitability of IFRS S1 and IFRS S2 for endorsement in the UK, and the creation of the first 2 UK SDS. The UK government aims to make endorsement decisions on the first 2 standards by July 2024.
To assist with the assessment and endorsement of IFRS S1 and IFRS S2, and any implementation of resulting UK SDS, the UK government has established 2 committees.
UK Sustainability Disclosure Technical Advisory Committee (TAC)
TAC will assess IFRS Sustainability Disclosure Standards on a technical basis and provide independent recommendations on endorsement to the Business and Trade Secretary, via DBT. DBT will also provide TAC with relevant contextual information. TAC will be formed of a chair and members from a range of relevant professional backgrounds, due to be appointed shortly.
TAC’s operations will be supported by the Financial Reporting Council (FRC), including the provision of a secretariat. More information on TAC is available on the FRC website. The TAC secretariat has published a call for evidence on IFRS S1 and IFRS S2, which closes on 11 October 2023.
UK Sustainability Disclosure Policy and Implementation Committee (PIC)
PIC is managed and overseen by DBT, who will provide advice on an endorsement decision to the Business and Trade Secretary, based on the recommendations from TAC and PIC’s work. This will include PIC’s analysis of the interactions between IFRS Sustainability Disclosure Standards and existing UK legislation and regulation.
If the Business and Trade Secretary endorses the standards, PIC will coordinate the implementation of UK SDS by the UK government and FCA.
PIC’s membership consists of UK government departments and regulators, including:
- Bank of England
- Department for Energy Security and Net Zero (DESNZ)
- Department for Environment, Food and Rural Affairs (DEFRA)
- Department for Work and Pensions (DWP)
- Financial Conduct Authority (FCA)
- Financial Reporting Council (FRC)
- HM Treasury
- The Foreign, Commonwealth and Development Office (FCDO)
- UK Endorsement Board (UKEB)
It will also be used for different members to share information:
- on their influencing activities related to the development of standards
- to help DBT officials advise the Business and Trade Secretary
- on relevant contextual matters that DBT can share with TAC
PIC meetings are held in private. However, summary minutes from PIC meetings will be made available by date in the ‘publications’ section of this page .