UK Sustainability Disclosure Standards

As it had been signalling for some time, the UK government has now clarified its intentions regarding corporate sustainability reporting standards. 

Its Department for Business and Trade (DBT) will publish UK Sustainability Disclosure Standards (UK SDS) that will be based on the IFRS Sustainability Disclosure Standards (S1 and S2) and “only divert from the global baseline if absolutely necessary for UK specific matters”, by July 2024. 

Once endorsed, these standards may be referenced in any legal or regulatory requirements for UK entities by the UK government and by the Financial Conduct Authority (FCA). To do so, the UK government has created two committees. 

First, the UK Sustainability Disclosure Technical Advisory Committee, for which the Financial Reporting Council will provide the secretariat, which will assess the IFRS SDS on a technical basis and provide independent recommendations on endorsement. It has published a call for evidence on IFRS S1 and IFRS S2 that closes on 11 October 2023. 

Second, the UK Sustainability Disclosure Policy and Implementation Committee, whose members comprise various UK government departments and regulators, will provide advice on an endorsement decision based on the recommendations from the Advisory Committee and an analysis of the interactions between IFRS SDS and existing UK legislation and regulation. 

It’s worth noting that with this announcement the UK is confirming its move away from the European Union’s approach to sustainable development and finance.