A new dawn for sustainability regulation in the UK: Strategic implications for business
The requirements of the forthcoming UK Sustainability Reporting Standards (UK SRS) will likely be closely aligned with IFRS S1 and S2.
The UK SRS represents a significant milestone in sustainability reporting requirements. But what does it really mean for UK businesses?
For many, compliance with UK SRS won’t be optional — instead, it’s the next regulatory hurdle to jump over. Though the list of targeted companies is yet to be finalised, it is likely to initially focus on:
Listed companies (especially those in the main public markets, FTSE 100 & 250 etc).
Other Public Interest Entities (e.g. banks, insurers…).
Companies already required to disclose under TCFD rules.
What are IFRS S1 and S2?
IFRS S1 and S2 were developed by the International Sustainability Standards Board (ISSB), which was set up by the IFRS Foundation in 2021. The goal was clear: create a global baseline for sustainability reporting that connects directly to financial performance. The standards build on well-known frameworks like TCFD and SASB, connecting them to create a unified system useful to investors.
IFRS S1 covers all sustainability issues and asks the question; What sustainability issues matter to your business? Under IFRS S1, a piece of sustainability-related information is considered material if omitting, misstating, or obscuring it could reasonably be expected to influence decisions that investors, lenders, and other creditors make on the basis of an entity’s general purpose financial reports.
On the other hand, IFRS S2 specifically focuses on climate, and asks; How is climate change, in particular, likely to impact your business?
What can businesses do to prepare?
Though it is expected that UK SRS will come into force on 1st January 2026, its requirements are still in development, and a public consultation is widely expected in Q2 2025. Given the uncertainty, what can businesses do to prepare?
Start by building a clear picture of your material issues. While a formal double materiality approach may not be required, the IFRS definition of financial materiality is relatively broad. It expects businesses to understand how their actions affect the world — if those effects could come back to affect the business. A full double materiality assessment, aligned with CSRD expectations, is still likely to be your best move. Even if you don’t publish everything, it will help you manage sustainability risks, impacts, and opportunities with confidence.
Check your current disclosures against IFRS S1 and S2. The final UK SRS disclosure metrics aren’t confirmed, but they are expected to follow the IFRS structure.
Secure internal alignment now. That means early board engagement. You’ll need time, money, and people. Build consensus before the next budget cycle locks you out.
Build your data plan. You’ll need to know where the data lives, who owns it, and how often it can be collected. Start small, but start now — especially for emissions, supply chain exposure, and forward-looking metrics.
Speak to your auditors. UK SRS is likely to come with limited assurance requirements. One lesson from CSRD? Auditors hate surprises. Get them involved early. Agree on the scope. Avoid the scramble.
History tells us that if you treat UK SRS as a reporting chore, you’ll always be reacting. See it through a strategic lens — and you’ll lead, getting ahead of competitors and eliminating a costly last-minute rush to comply.
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