UK publishes final UK SRS S1 and S2 aligned with IFRS Sustainability Disclosure Standards, available for voluntary use.
FCA consulting on Listing Rules changes, with potential mandatory reporting for certain UK entities.
Governance architecture established through Technical Advisory Committee and cross regulator Policy and Implementation Committee.
London has formally embedded the global sustainability reporting baseline into its domestic framework, publishing final versions of UK Sustainability Reporting Standards S1 and S2 and opening the door to mandatory adoption for listed companies.
The standards, aligned with the International Sustainability Standards Board’s IFRS Sustainability Disclosure Standards, are now available for voluntary use. The Financial Conduct Authority is consulting on amendments to the UK Listing Rules, with the consultation open until 20 March 2026. The outcome could determine whether certain UK entities will be required to report under the new regime.
The move positions the UK alongside jurisdictions that are integrating the IFRS sustainability baseline into domestic law, reinforcing its bid to remain a global hub for sustainable finance.
From COP26 To Domestic Law
The International Sustainability Standards Board was announced at COP26 in Glasgow in 2021. It was created under the IFRS Foundation to establish a global baseline for sustainability disclosures that would serve investors and capital markets.
The ISSB’s overriding aim is to provide standards that deliver comparable and decision useful information for investors. The disclosures required by their standards are intended to help investors to compare information between companies, supporting the efficient allocation of capital, and the smooth running of capital markets.
In June 2023, the ISSB published its first two standards. IFRS S1 sets out General Requirements for Disclosure of Sustainability related Financial Information. IFRS S2 focuses on Climate related Disclosures.
The UK government has backed the ISSB since its inception. In the press notice accompanying the Chancellor’s Mansion House speech in November 2024, it set out its ambition to “deliver a world leading sustainable finance framework”, including consulting “on economically significant companies disclosing information using future UK Sustainability Reporting Standards”.
Consultation And Endorsement
The government consulted on UK adapted versions of IFRS S1 and S2, branded as UK SRS S1 and UK SRS S2, from 25 June 2025 to 17 September 2025. This ran in parallel with a separate consultation on the development of an oversight regime for assurance of sustainability related financial disclosures.
Following the consultation process, the government has now published the finalised standards. They reflect technical recommendations from the independent UK Sustainability Disclosure Technical Advisory Committee, which delivered its final report in December 2024.
The Technical Advisory Committee assessed IFRS S1 and S2 on a technical basis and recommended endorsement for UK use, with minor amendments. Its work was supported by the Financial Reporting Council, which also hosted a call for evidence and published related materials.
RELATED ARTICLE: UK Accounting Watchdog Recommends ISSB Standards for Sustainability Reporting
Alongside the technical process, a Policy and Implementation Committee was established. Comprising representatives from HM Treasury, the Financial Conduct Authority, the Bank of England, the Department for Energy Security and Net Zero, the Department for Environment, Food and Rural Affairs, the Department for Work and Pensions, the Financial Reporting Council, the Foreign, Commonwealth and Development Office and the UK Endorsement Board, the committee coordinates implementation and assesses cross regulatory implications.
In January 2026, the Department for Business and Trade wrote to the FCA regarding next steps and implementation matters, including stakeholder views on transitional relief provisions.
What Executives And Investors Should Watch
For boards and audit committees, the publication of UK SRS S1 and S2 shifts the conversation from policy intent to operational readiness. Even while voluntary, the standards create a clear benchmark for investor expectations. Early adopters may gain credibility in capital markets that are increasingly pricing climate and sustainability risk.
If the FCA proceeds with Listing Rules changes, reporting under UK SRS could become mandatory for segments of the market. That would bring sustainability disclosures closer to the rigour of financial reporting, particularly if an assurance regime is formalised.
For investors, alignment with IFRS standards enhances comparability across jurisdictions. A UK issuer reporting under UK SRS S1 and S2 would be operating within the same conceptual architecture as companies in other markets adopting the ISSB baseline.
The broader signal is geopolitical as much as technical. By embedding the IFRS sustainability framework into domestic policy, the UK is tying its capital markets to a global reporting language. In an environment where regulatory fragmentation remains a risk, convergence around a single baseline strengthens the infrastructure underpinning sustainable finance.
The next phase will hinge on regulatory decisions. Whether voluntary momentum is enough, or whether compulsion is required to ensure consistency, will determine how quickly the UK’s sustainability reporting architecture moves from framework to market standard.
Follow ESG News on LinkedIn
