Sustainability reporting is entering a new era in the UK, with upcoming national standards set to transform how businesses disclose their ESG performance. The UK Sustainability Reporting Standards (SRS) are being designed to improve consistency, transparency, and comparability in corporate sustainability reporting, aligning with global frameworks like those of the ISSB. While still in development, the SRS are poised to become a central part of how UK businesses communicate their sustainability efforts. Keep reading as we demystify these standards, highlighting everything you need to know.
What is SRS?
The SRS are a set of guidelines designed to standardise sustainability reporting for businesses operating in the UK. These emerging standards aim to enhance corporate transparency and accountability, ensuring that companies disclose their ESG performance in a consistent and comparable manner. While still under development, they are expected to play an important role in shaping corporate accountability in the UK.
What does SRS stand for?
SRS stands for the UK Sustainability Reporting Standard – a set of standards that aim to help UK businesses standardise their sustainability disclosures, enhance corporate transparency, and ensure compliance.
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Overview of the SRS requirements
The Sustainability Reporting Standards UK (SRS) are a forthcoming set of guidelines aimed at standardising how UK businesses disclose their ESG performance. These standards are designed to enhance corporate transparency and accountability, aligning with global sustainability frameworks such as those developed by the International Sustainability Standards Board (ISSB).
Development and objectives:
- Alignment with ISSB: The UK government has been a strong supporter of the ISSB since its launch at COP26 in 2021. The ISSB’s mission is to create a global baseline for sustainability reporting.
- Assessment and endorsement: The UK government plans to assess and potentially endorse the ISSB’s standards, specifically IFRS S1 (General Requirements for Sustainability-Related Disclosures) and IFRS S2 (Climate-Related Disclosures), to create the first two UK Sustainability Reporting Standards.
Implementation timeline:
- Consultation phase: The UK government aims to consult on the exposure drafts of the UK SRS in the first quarter of 2025.
- Adoption schedule: Subject to the consultation outcomes, the UK SRS could be adopted, with implementation no earlier than January 2026.
Implications for UK businesses:
- Enhanced Transparency: The UK SRS aim to provide investors and stakeholders with clear, comparable, and decision-useful information regarding companies’ sustainability practices.
- Regulatory Compliance: Aligning with these standards will help UK businesses meet both domestic and international ESG reporting requirements, supporting the transition to a more sustainable economy.
By adopting the UK SRS, businesses will be better equipped to communicate their sustainability efforts, manage risks, and seize opportunities in the evolving landscape of corporate responsibility.
Impact of the SRS on corporate sustainability
The UK SRS are poised to significantly influence corporate sustainability by enhancing transparency, accountability, and strategic decision-making. These standards will not only reshape how businesses report on ESG issues but will also drive greater integration of sustainability into corporate strategies. Below are some key impacts of the UK SRS on corporate sustainability:
Standardised and comparable ESG disclosures
One of the major benefits of the UK SRS is that they will harmonise sustainability reporting across industries, ensuring that ESG disclosures are consistent, reliable, and comparable. This will make it easier for investors, regulators, and stakeholders to assess corporate sustainability performance and differentiate businesses genuinely committed to sustainability from those engaging in greenwashing.
Strengthened corporate accountability
By aligning with global frameworks like the ISSB’s IFRS S1 and IFRS S2, the UK SRS will introduce clear reporting requirements that encourage businesses to be more transparent about their environmental and social impact. This means companies will need to take sustainability seriously, as failing to meet disclosure requirements could lead to reputational risks, regulatory scrutiny, and loss of investor confidence.
Encouraging long-term value creation
With sustainability becoming a key performance indicator, companies will be incentivised to integrate sustainability goals into their business models. By adopting structured sustainability strategies, businesses can unlock long-term value through:
- Improved operational efficiencies (e.g., reducing energy consumption and waste).
- Lower compliance risks (by staying ahead of regulations).
- Increased access to sustainable finance (e.g., green bonds and ESG-linked loans).
Driving climate action and net zero alignment
The UK SRS will push businesses to prioritise decarbonisation by requiring clear climate-related disclosures under IFRS S2. Companies will need to demonstrate how they are:
- Measuring and reducing Scope 1, 2, and potentially Scope 3 emissions.
- Aligning with net-zero commitments and the UK’s climate targets.
- Implementing climate risk management strategies to ensure business resilience.
Elevating investor confidence and sustainable finance access
Investors are increasingly prioritising ESG-aligned companies, and standardised sustainability reporting will improve access to sustainable investments. Businesses that meet UK SRS requirements will be better positioned to attract ESG-conscious investors and secure lower-cost capital through sustainability-linked financing.
Challenges and compliance costs
While the UK SRS offers many benefits, businesses (especially SMEs) may face challenges such as:
- Increased reporting costs (due to data collection and verification requirements).
- The need for new expertise and ESG talent (to meet regulatory expectations).
- Integration complexities (embedding sustainability into core business strategies).
However, proactive adoption of digital ESG data management tools and early alignment with the UK SRS can help businesses mitigate these challenges.
Conclusion
The introduction of the UK SRS represents a crucial opportunity for businesses to strengthen ESG practices and future-proof their sustainability strategies. With implementation likely from 2026 onwards, organisations should begin preparing now. They should do this by reviewing current reporting processes, investing in ESG capabilities, and engaging with forthcoming consultations. The early alignment will not only support compliance but also unlock long-term value and stakeholder trust in an increasingly transparent business landscape.
