Updates to the UK Sustainability Disclosure Requirements (SDR)
The Government has published an implementation update to the Sustainability Disclosure Requirements (SDR) and the FCA has also confirmed its (delayed) timetable.
The Government has published an implementation update to the Sustainability Disclosure Requirements (SDR) as part of their Green Finance Strategy set out in 2023. In summary, following assessment of IFRS S1 and S2 by the UK Technical Advisory Committee which should conclude by the end of this year, the government will aim to make UK Sustainability Reporting Standards (UK SRS) available in Q1 2025. Subject to positive endorsement and consultation process in Q1 2025, the FCA will then be able to use the UK SRS to introduce sustainability reporting requirements for UK-listed companies in 2025. A decision by the Government on disclosure requirements for other companies is expected in Q2 2025, although the paper makes it clear that any changes introduced by the government will be effective no earlier than January 2026. Further details on the process to develop the UK SRS were set out in a separate Policy Paper.
On Transition Plan Disclosures, the Government had planned to consult in Q2 2024 on how the UK’s largest companies can disclose their transition plans with reference to the UK TPT disclosure framework. However, this will now have to wait until a new Government has been formed. The Government also expects to launch a consultation on the design of the UK Green Taxonomy ‘in due course’ which would involve a testing period and voluntary disclosures for at least two years before any mandatory reporting is introduced.
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The FCA subsequently published Primary Market Bulletin (PMB) 49, updating the timelines previously set out in PMB 45. The FCA has delayed its consultation on amending its disclosure rules to reference the UK-SRS until after the UK endorsement process is completed in early 2025 (originally planned for the H1 2024). At the same time, the FCA will also consult on listed company transition plan disclosure, with reference to the TPT disclosure framework. Meanwhile, the FCA continues to encourage companies to become familiar with the ISSB standards (S1 and S2) and to take steps to voluntarily report against them, rather than waiting for the conclusion of the UK endorsement process. The regulator may explore additional guidance to support issuers by indicating how reporting based on the ISSB standards can remain consistent with its existing rules based on the TCFD.
[Initially published 17th May, updated on 3rd June]
Published 3 June, 2024