Decoding UK’s Sustainability Disclosure Standards

Introduction to UK SDS

At the heart of the financial realm, the UK is establishing robust standards for how companies disclose sustainability endeavours. This will encompass both the opportunities and risks, with a particular emphasis on climate change implications.

The Puppeteers

All eyes are on the Department for Business and Trade (DBT) as they curate the guidelines inspired by the IFRS® Sustainability Disclosure Standards. Crafted by the International Sustainability Standards Board (ISSB), these guidelines are under rigorous review, with an endorsement target set for July 2024.

Post Endorsement

Once ratified, UK SDS could be woven into the very fabric of the legal and regulatory landscape. While the UK government will play its part, the Financial Conduct Authority (FCA) is poised to closely monitor the UK’s listed companies.

Global Alignment

To ensure a universal understanding, UK SDS is mirroring the IFRS standards, providing a global benchmark. This is paramount for international investors, offering them an apples-to-apples comparison and aiding in informed decision-making.

The Birth of ISSB

Rewind to COP26 in Glasgow, 2021. This event marked the genesis of ISSB, with a mission to establish a universal baseline for sustainability reporting. As a branch of the IFRS Foundation, by mid-2023, ISSB had already rolled out:

• IFRS S1: A broad perspective on sustainability-related financial disclosures.
• IFRS S2: A deep dive into climate-centric revelations.

The UK’s Green Strategy

As an avid ISSB supporter, the UK government has embraced green financial strategies. With the primary aim to review and possibly endorse the first two IFRS standards, a decision is expected to be cemented by July 2024.

Two Pillars of Implementation

• TAC (Technical Advisory Committee): A committee vested with the technical assessment of the IFRS standards. Their insights will be pivotal to the Business and Trade Secretary’s endorsement decision.
• PIC (Policy and Implementation Committee): Managed by DBT, PIC is entrusted with the operational execution of UK SDS in tandem with the UK government and FCA. This committee is a consortium of notable institutions, including the Bank of England, FCA, and HM Treasury.