Impacts, Risks, and Opportunities (IRO) for CSRD Reporting
1 min
Level
In this article, we’ll break down what IROs are, how to identify and assess them, and what CSRD requires in terms of disclosure.
ESG / CSR
Industries
MEASURE
ACT
COMFORM
UK Sustainability Reporting Standards (UK SRS): What Businesses Need to Know
Level
For years, climate disclosures have been defined by the TCFD framework. While that move was a leap forward, it left UK firms navigating a fragmented patchwork of global standards. The result? A landscape of fragmented and overlapping reporting characterised by inconsistency, duplication, and frustrated investors.
The UK Sustainability Reporting Standards (UK SRS) are designed to provide a more unified path forward. Built on the ISSB’s global baseline (IFRS S1 and S2), the UK SRS marks a shift from simple climate-focused disclosure to a structured, financially-integrated system. This isn't just another ESG box-ticking exercise; it’s about explicitly linking sustainability to enterprise value, corporate strategy, and long-term financial resilience.
In this article, we'll cover:
What the UK Sustainability Reporting Standards (UK SRS) are
How they build on and move beyond the TCFD
Who will be impacted
Key reporting and timelines
What listed companies should know about the FCA’s proposals
How UK SRS fits into the global reporting landscape
What businesses should be doing now to prepare
What are the UK Sustainability Reporting Standards?
The UK SRS are the UK’s domestic version of the ISSB’s global sustainability disclosure standards:
- IFRS S1 – General sustainability-related financial disclosures
- IFRS S2 – Climate-related disclosures
At their core, these standards are about ensuring companies can share meaningful, decision-useful information regarding the sustainability-related risks and opportunities that shape their financial performance.
Rather than adding another layer of voluntary reporting, the UK SRS aims to:
Financial alignment
Bridge the gap between sustainability data and mainstream financial reporting.
Global consistency
Foster consistency across global markets.
Investor clarity
Offer investors a clearer view of a company’s long-term resilience.
It is helpful to note that this isn’t about starting over. Instead, the UK is adopting and tailoring the ISSB standards - maintaining alignment with global markets while ensuring the framework is a practical fit for the UK’s specific regulatory landscape.
Why the UK is evolving beyond TCFD
The UK has long been a leader in climate transparency, having been among the first to embrace the Task Force on Climate-related Financial Disclosures (TCFD).
As the global reporting landscape has matured, so have our shared standards. In 2023, the TCFD transitioned its responsibilities to the IFRS Foundation following the publication of the ISSB’s IFRS S1 and S2 standards. This move wasn't a departure from the past, but rather a way to unify climate reporting on a global scale.
This shift represents a shift from:
Principles-based
A voluntary, principles-based framework.
Standardisation
Toward a globally recognised, consistent reporting standard.
While TCFD provided the initial roadmap for climate risks, the new UK Sustainability Reporting Standards (UK SRS) take those insights further, helping companies demonstrate how sustainability factors directly support their value and financial health.
Under the UK SRS, the conversation expands to include:
Refined governance structures
Strategic resilience
Clearer risk management processes
Consistent metrics and targets
In short:
From TCFD to UK SRS
How climate disclosure moves from a framework to a more standardised reporting model.
TCFD
UK SRS
| Focus area |
From TCFD
|
To UK SRS
|
|---|---|---|
|
🏛️
Purpose
|
A foundational framework
Sets principles and core pillars to guide climate-related disclosures. |
A unified reporting standard
Moves toward consistent, decision-useful reporting aligned with financial outcomes. |
|
🌡️
Scope
|
A focused look at climate
Centred on climate-related risks and opportunities. |
Climate first, with a broader lens to follow
Starts with climate reporting, with wider sustainability coverage expected over time. |
|
🧩
Structure
|
Flexible and principles-based
Leaves more room for interpretation in how disclosures are presented. |
More structured and consistent
Clearer expectations on content, comparability, and presentation. |
|
📝
Disclosure style
|
Primarily narrative-driven
Often emphasises qualitative descriptions of governance, strategy, and risk. |
More data-supported
Stronger use of metrics and quantified information to support claims. |
|
💷
Financial linkage
|
Intermittent financial links
Financial impacts may be referenced, but integration can be uneven. |
Seamless financial integration
Designed to connect sustainability disclosures more directly to financial reporting. |
Importantly, the UK SRS honors the legacy of TCFD rather than discarding it. The familiar four pillars remain at the centre of the system:
Governance
Strategy
Risk management
Metrics & targets
These pillars now simply sit within a more refined and standardised architecture, designed to meet the growing expectations of global investors with greater precision.
What will companies actually have to report?
Under the UK SRS, disclosures will focus on the four key areas that help tell a company’s sustainability story.
🧭 Governance
Outlining how sustainability considerations are guided by leadership
Board oversight and responsibility
The evolving roles of management
Internal check-and-balance systems
📊 Strategy
Understanding how sustainability themes shape business direction
Influence on core business model
Impact on financial performance
Long-term resilience and decision-making
⚖️ Risk Management
Describing how sustainability factors are identified
Thoughtfully assessed
Prioritised within business operations
Integrated into wider business risk frameworks
📈 Metrics & Targets
Providing measurable performance insights
Scope 1 and Scope 2 emissions
Scope 3 emissions (with transitional relief)
Targets and progress toward them
A phased approach to sustainability disclosure
The UK government has proposed a phased approach to implementation, which aims to ensure that businesses have the time and space to adapt effectively.
To help manage this journey, several supportive measures are expected:
A focus on climate first
Early implementation is expected to prioritise climate-related disclosures, with broader sustainability topics introduced over time, subject to final policy decisions.
Support for Scope 3 reporting
Recognising that understanding value chain emissions is a journey, a transition period is expected:
- Transitional relief for Scope 3 reporting is expected, subject to how ISSB reliefs are adopted into the final UK SRS framework.
- This gives companies an additional year to refine their data collection processes - a meaningful step for those new to mandatory value chain reporting.
Flexibility with industry standards
For extra clarity, companies have the option to reference SASB industry metrics to help guide their reporting, though this remains a matter of choice.
Who will be affected?
The final scope of the UK Sustainability Reporting Standards is currently being finalised following a period of consultation.
The UK government aims to focus on "economically significant" organisations - specifically, those whose scale and market presence mean their sustainability insights are of significant value to investors and the wider economy.
In practice, this is likely to include:
UK-listed companies
Public interest entities
Large private companies
Limited Liability Partnerships (LLPs)
This framework directly builds on the UK’s established climate disclosure foundations, which already include:
Quoted companies with more than 500 colleagues
Large companies required to produce strategic reports
Large LLPs
As a result, many organisations already reporting under:
- TCFD-aligned Companies Act requirements
- Streamlined Energy and Carbon Reporting (SECR)
may ultimately fall within the scope of the UK SRS.
The UK government will ultimately determine how the UK SRS applies across the wider corporate population.
For listed issuers specifically, implementation will be led by the Financial Conduct Authority, which has already begun consulting on how the standards could be embedded into the UK Listing Rules.
FCA proposals - What listed companies should expect
In January 2026, the Financial Conduct Authority (FCA) published consultation paper CP26/5, detailing the proposed evolution of sustainability disclosures for listed companies. These proposals are intended to align the UK’s domestic reporting requirements with the forthcoming UK Sustainability Reporting Standards (UK SRS).
The framework is intended to replace the FCA’s existing TCFD-aligned listing rules, creating a streamlined system built on international best practices.
Who would be in scope?
The FCA proposes applying the new requirements across multiple listing categories, including:
Commercial companies (UKLR 6)
Secondary listings (UKLR 14)
Depositary receipts (UKLR 15)
Non-equity shares and non-voting equity shares (UKLR 16)
Transition category issuers (UKLR 22)
This scope ensures that sustainability disclosures remain comparable for investors, encompassing both domestic firms and overseas issuers accessing UK capital.
What would companies need to disclose?
The proposal introduces a shift toward more rigorous, data-driven reporting - focusing initially on climate-related disclosures as the first step toward broader UK SRS alignment:
✅
Mandatory climate reporting (UK SRS S2)
Hover to read
For most in-scope issuers, reporting on climate-related risks and opportunities (excluding Scope 3 in the early phase) would move to a mandatory basis.
💷
Financial materiality
Hover to read
Disclosures would progressively align with the UK SRS structure - covering governance, strategy, risk management, and metrics - wherever sustainability factors are financially material to the business.
🧾
Transition plans & assurance
Hover to read
While not yet mandatory, companies would be required to state whether they have published a transition plan and whether they have sought third-party assurance, providing transparency for investors on the maturity of their reporting.
A flexible transition approach
To help companies adopt these more complex standards, the FCA has proposed a "comply or explain" model for specific areas:
Wider sustainability (UK SRS S1)
Recognising that non-climate reporting may be less established for many organisations, these disclosures would initially be on a comply-or-explain basis.
Scope 3 emissions
Reporting on value chain emissions would follow the same flexible approach during the initial transition.
This allows companies to provide disclosures as their data capabilities mature, or to provide a clear rationale where specific information is not yet available.
Implementation timeline
The timeline remains subject to the final endorsement of the UK SRS and the outcome of the consultation period:
Autumn 2026: Expected finalisation of FCA rules and publication of the Policy Statement.
1 January 2027: New requirements could apply to accounting periods beginning on or after 1 January 2027, depending on final endorsement and FCA rulemaking.
Timeline - When will this happen?
The transition to UK Sustainability Reporting Standards will take place in stages, reflecting the split responsibilities between the UK government and the Financial Conduct Authority (FCA).
UK SRS development and adoption:
UK SRS milestones
Key publication and adoption dates (expected).
| Date | Milestone |
|---|---|
| 2026 |
Final UK SRS expected to be published by the UK government. |
| 2026 |
Companies may choose to begin aligning voluntarily ahead of any future mandatory requirements. |
At this stage, companies may choose to begin aligning with the standards ahead of any mandatory requirements.
FCA implementation for listed companies
FCA implementation milestones
Expected listing rule updates and reporting timeline.
| Date | Milestone |
|---|---|
| Autumn 2026 |
FCA expected to finalise listing rule updates following consultation. |
| Jan 2027 |
New reporting requirements expected to apply to accounting periods starting on or after this date. |
| 2028 |
First reports aligned with UK SRS likely to be published by listed issuers. |
What still needs to be clarified?
Separate government consultations are expected to determine:
Which non-listed entities will be required to comply
How UK SRS will integrate into existing Companies Act reporting obligations
Legal considerations
Sustainability disclosures under the UK SRS are expected to include forward-looking information, such as:
- Climate targets
- Strategic transition pathways
- Long-term resilience planning
Unlike historical financial reporting, this type of information often relies on assumptions, estimates, and scenario analysis.
As a result, it raises potential liability concerns for directors, particularly where future outcomes may differ from expectations.
Existing legal position
Under section 463 of the Companies Act 2006, directors already benefit from protections when providing forward-looking information in strategic and directors’ reports.
Liability arises only where statements are:
Knowingly untrue or misleading
Made recklessly
Or involve the dishonest concealment of a material fact
This liability is owed to the company itself, rather than directly to investors.
Possible approach under the UK SRS
As UK SRS disclosures are expected to incorporate similar forward-looking elements, the government is considering whether equivalent safeguards should apply within the new reporting framework.
Extending these protections could support meaningful disclosure while allowing companies to report in good faith, even where outcomes evolve over time.
How the UK SRS fits into the global landscape
The UK is part of a global shift toward embedding sustainability into mainstream financial disclosure. By aligning with the International Sustainability Standards Board (ISSB), the UK SRS ensures that British companies remain comparable and competitive in global capital markets.
While the momentum is global, the approaches differ in key ways:
EU (CSRD / ESRS)
Operates under double materiality, requiring companies to report both on how sustainability issues affect their finances and how their operations impact society and the environment.
United States
Seeing a rise in state-level mandates (such as California’s climate laws) focused primarily on emissions and climate-related financial risk.
UK (UK SRS)
Built on a financial materiality lens.
The core distinction: Unlike the broader EU approach, the UK SRS focuses specifically on how sustainability-related risks and opportunities affect company value. This ensures reporting is directly aligned with investor decision-making and a company’s long-term financial health.
What should your businesses do now?
Even though mandatory adoption is still on the horizon, starting early helps make the transition much smoother. Here are a few practical ways to begin:
📍
Benchmark where you are now
Hover to read
If you already report under TCFD, take a look at how that data translates into the more structured UK SRS framework. It’s often a case of refining what you have rather than starting from scratch.
🧩
Spot the data gaps
Hover to read
Now is the time to look at your value chain emissions. Even with the transition periods available, understanding where your data stands today will save a lot of pressure later on.
🏛️
Check in on governance
Hover to read
Ensure that sustainability isn’t sitting in a silo. It’s worth reviewing how these topics are integrated into leadership discussions and your existing risk management processes.
🧠
Build confidence in your systems
Hover to read
Because the goal is to provide data that is useful for decision-making, it’s a good idea to ensure your internal tracking is as reliable and consistent as your financial reporting.
🔎
Think about assurance
Hover to read
As reporting becomes more formalised, having a third party verify your data is becoming the new standard. Getting assurance-ready now is a great way to build trust with your investors.
For companies already working with ISSB- or IFRS-aligned processes, the transition may involve refinement rather than redesign.
Others may need to develop new capabilities to meet the evolving expectations around structured sustainability reporting.
Close
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