WIREDGOV

The government has now published the long awaited UK Sustainability Reporting Standards (UK SRS) which will form the foundation of UK sustainability disclosures.

Although the standards are now ready for voluntary adoption by businesses, this may not remain the case for long. The FCA is consulting on making UK SRS mandatory for UK listed firms, and the government is still working through how they might eventually apply to large private companies and non-UK businesses operating in the UK.

Overall we support how government has gone about this. The UK SRS are aligned with the global IFRS S1 and IFRS S2 standards developed by the ISSB, with S1 covering broader sustainability related information and S2 focused on climate reporting. Harmonised international standards remain the best way forward. Fragmented reporting frameworks are costly, confusing and ultimately distract companies from meaningful sustainability progress.

For tech firms, we recommend becoming familiar with the standards now. Scope and threshold creep are inevitable, and investors required to report will quickly start pushing requirements down to partners, suppliers and investees, so techUK members should expect to be asked for more sustainability information in line with these standards. Getting ahead while these standards are still voluntary creates space to learn, build internal processes and make mistakes without risking compliance issues, fines or reputational damage.

While the UK SRS are closely aligned with the global versions, the UK has made several pragmatic and helpful adjustments that do not expand requirements beyond the international baseline. These include aligning reporting timelines, deprioritising outdated SASB materials and softening the approach to scope 3 emissions reporting. Scope 3 is notoriously challenging for tech firms given the complexity of global supply chains, spanning semiconductors, electronics, cloud infrastructure and more. Under the UK SRS, the removal of fixed time limits for transitional Scope 3 relief means companies can omit Scope 3 emissions indefinitely, as long as they disclose the use of this relief. This is a sensible and business friendly change that makes voluntary adoption more realistic for tech firms.

Despite the voluntary nature of the standards today, as mentioned above the FCA is consulting (techUK is responding!) on how to make UK SRS aligned reporting mandatory for all listed companies. Exact dates are subject to consultation, so our advice is to get familiar now, and anyone firms reporting under TCFD (which will be replaced) will be in a strong position as the UK SRS follow the same risks and opportunities structure.

For those following all this there are still unresolved questions. The government has not decided on mandating climate transition plan and won’t do for months. We know ministers were keen to mandate them, but concerns about creating additional regulatory burdens, along with the EU stepping back from mandatory transition plan requirements in their Omnibus make this less likely. We are also still waiting for clarity on how UK SRS could be extended to private companies and non UK businesses operating domestically, and government acknowledges concern with their ‘economically significant’ private firm proposals in their response.

We will be discussing this at a roundtable with the DBT on 19 March so  Email Lucas.Banach@techUK.org if you would like to attend, and members interested in ESG disclosures generally should join our Responsible Business Conduct group. If you'd like to explore membership of techUK, you can do so here.

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