Menu

IR Society responds on UK SRS proposals

The Society supports the introduction of UK SRS to improve comparability, clarity, credibility and global alignment/ interoperability in sustainability disclosures, underpin transparency and maintain the UK’s appeal as an investment destination. We support the 6 proposed amendments, including extending the ‘climate only’ relief for two years to benefit those who are less mature in their reporting practices, but we suggest DBT engages with investors to ascertain whether they have concerns. To promote transparency, it would be beneficial for ‘safe harbour’ provisions akin to s463 to apply in respect of forward-looking reporting requirements introduced under UK SRS, and also in respect of information that relies on third-party data or estimations. We also call for more clarity around dual compliance with overseas reporting requirements, equivalence agreements with oversees jurisdictions, and clearer mapping tools to join UK SRS with CSRD/ESRS and SEC rules. Requiring economically significant private entities to report against UK SRS would support transparency across value chains, reduce the risk of regulatory arbitrage and avoid disincentivising those companies from seeking a London listing. It would also present a valuable opportunity to simplify the various thresholds embodied within the Companies Act 2006, and eliminate the need for multiple filings in different formats.

A blue and black logo AI-generated content may be incorrect.

The Investor Relations Society

Office 605 Birchin Court, 20 Birchin Lane

London EC3V 9DU

 

Hannah Skewes

Sustainability Reporting

Company Law and Governance

Department for Business and Trade

Old Admiralty Building, London, SW1A 2DY

 

By email: uk.srs@businessandtrade.gov.uk

 

19th September 2025

Dear Hannah,

Re: UK SRS

Thank you for giving us the opportunity to respond to your Consultation Paper on the Exposure drafts: UK Sustainability Reporting Standards, and also for attending our roundtable last Friday to allow some of our Members to discuss their views and concerns directly with your team. This response is made on behalf of The Investor Relations Society (‘the IR Society’).

The IR Society represents Members working for publicly listed companies and investor relations focused service providers, to assist them in the development of effective two-way communication with the markets. It has approaching 800 Members, drawn mainly from the UK, including the majority of the UK FTSE 100, many of the FTSE 250 constituents and some from AIM-listed companies, as well as those listed overseas.

The IR Society’s mission is to promote best practice in investor relations; to support the professional development of its Members; to represent their views to regulatory bodies, the investment community and Government; and to act as a forum for issuers and the investment community. 

Our response has therefore been primarily constructed through the lens of a corporate issuer, and as such reflects the views of those very much at the ‘coal face’ of investor engagement and corporate reporting – both financial and non-financial.

We set out below our comments on those aspects of most relevance to our Members, which are the proposed amendments to IFRS S1 and S2, potential costs, benefits [and unintended consequences?] of introducing sustainability reporting, the merits of extending reporting to economically significant private entities, the legal liability implications of sustainability-related reporting, and guidance topics to support UK implementation.

Proposed amendments/diversions from IFRS S1 and S2

1. Do you agree or disagree with the UK government’s [first] 4 amendments based on the TAC’s recommendations? Provide your rationale.

5. Do you agree or disagree that ‘shall’ should be amended to ‘may’ in “shall refer to and consider the applicability of… [SASB materials]”? Provide your rationale, including any views you have on the timing of the review of the amendment.

6. Do you agree or disagree with the proposal to link the reporting periods in which a transition relief can be used to the date of any reporting requirements coming into force? Provide your rationale.

These six proposed amendments are:

  1. Removing transition relief to prevent compromising the principle of ‘connectivity’ with the financial statements;
  2. Extending ‘climate-first’ relief to a two-year period;
  3. Removing mandatory GICS code use to reduce the reporting burden and increase connectivity;
  4. Removing fixed ‘effective dates’ to allow regulatory flexibility;
  5. Making the reference to/consideration of applicability of SASB materials optional for issuers, to avoid the risk of assurance providers requiring proof/evidence of how issuers have considered the SASB materials; and
  6. Clarifying that transition reliefs apply only once mandatory, to avoid penalising early voluntary reporters.

On balance, the Society supports these amendments. The two year 'climate-first' relief may help prompt earlier engagement with the framework, particularly without overwhelming those who are less mature in their reporting practices; for instance, around scope 3 disclosures which are required in year two of S2 reporting and disclosure of a transition plan where a company has developed one. With reference to S1, more general sustainability disclosures are already required as part of a company’s s172 statement, the Non-financial and Sustainability Information Statement (NFSIS) and in reporting on principal and emerging risks where risks are material to the business.

We are aware of the risk that this proposed two year ‘climate first’ relief could introduce inconsistency across the market and risk undermining comparability, which could weaken investor confidence in the long-term credibility of the framework.  This might be if it limits visibility of material ESG risks around social and governance factors – just as expectations for more holistic reporting are gaining momentum.  We believe the benefits of the phased introduction outweigh this potential risk, but would suggest that the DBT engage with investors to ascertain whether they have concerns about the proposed two year climate first relief.

7. Explain your views on: a) whether disclosure of the purchase and use of carbon credits in the current period would be useful information b) what the barriers to companies being able to produce this information are (including the availability of the information required for reporting and the associated costs) c) whether (and how) any further disclosures would be useful

We acknowledge that carbon credits can be useful for addressing residual emissions within decarbonisation strategies, but with SBTi and IICVCM both emphasising that credits should supplement, not replace, decarbonisation.

However, we are aware that there are issues around the availability and reliability of data on the quality and permanence of credits, and the lack of universally accepted methodologies for classification. ICVCM and Carbon Market Watch note that many credits may not deliver the claimed climate benefits.

We note that IFRS S2 requires disclosures around how the entity intends to use carbon credits to achieve any net greenhouse gas emissions target it might have. To assist our Members working in ‘hard to abate’ sectors, we would request as much guidance and granularity on the use of carbon credits as possible (for example, whether carbon credits issued by an overseas government would be automatically acceptable under a transition plan).

There is growing maturity and best practice accreditation within the carbon credit validation market, and pressure from purchasers to ensure ongoing monitoring and reporting by the managers of such projects will help this momentum.  As a result, some greater transparency could be beneficial, but it needs to avoid yet another reporting burden where it is not material to a net zero strategy.

8. What are your views on the potential amendments to IFRS S2 proposed by the ISSB at this time?

We welcomed the ISSB’s approach in proposing targeted amendments to IFRS S2 to clarify the application of GHG emissions disclosure requirements, as it aims to balance the need for high-quality, decision-useful information with the practical challenges that preparers face in data collection and reporting. The Society supported these reliefs as a pragmatic and proportionate evolution of IFRS S2, whilst emphasising the importance of maintaining a strong focus on consistency and transparency, and the need for clear disclosures about the methods, assumptions, and scope of emissions reporting. Our full response can be found here: IR Society responds to proposed reliefs for GHG emissions disclosures under IFRS S2 - Investor Relations Society.

Support for endorsement

10. Overall, do you agree that the UK government should endorse the standards, subject to the amendments described? Explain any other amendments that you judge to be necessary for endorsement and why.

ISSB standards S1 and S2 are investor-driven and welcomed as a credible baseline. We therefore support the introduction of UK SRS as proposed, on the basis this directly responds to investor expectations for comparability, clarity, and credibility in sustainability disclosures. Investor appetite is clear, and there is a pressing demand for globally-aligned reporting standards to underpin transparency and maintain the UK’s appeal as an investment destination. By way of illustration, a survey by UKSIF highlighted that two thirds of financial services firms overseeing substantial green investments identified government delays in adopting global sustainability reporting standards as a key factor risking the relocation of investment out of the UK.

International interoperability is also a very significant consideration, and critical for a reporting entity.   Equivalence agreements between the UK and oversees jurisdictions (for example, the EU in relation to CSRD/ESRS reporting) are essential for reducing duplication and the associated additional burden for preparers. Interaction with governance processes also needs to be properly considered. Given non-financial data currently often lacks the internal governance controls seen in financial reporting, UK SRS could encourage the adoption of sustainability control frameworks aligned with internal audit, data lineage, and board oversight processes to enhance data reliability and assurance readiness, but should seek to avoid being prescriptive.

Where companies rely on third-party, proxy, or estimated data (particularly for Scope 3), UK SRS should help encourage disclosure of data provenance, confidence levels, and estimation techniques to improve user understanding and support transparency over complex data sets. See also Society evidence on Scope 3 emissions reporting - Investor Relations Society for the results of our members survey on Scope 3 emissions.

Implementation: Potential costs and benefits

11. Explain the direct and indirect benefits that you are expecting to result from the use of UK SRS S1 and UK SRS S2. Include an assessment of those benefits which are additional to benefits arising from current reporting practices.

The potential benefits include improved investor confidence, streamlining and reducing information asymmetry, encouragement of transition planning, global alignment, enhanced governance and internal processes (which have the potential to encourage companies to improve data quality, internal controls, and board-level oversight of sustainability issues) and lower cost of capital. In particular, UK SRS also provides the opportunity to simplify existing climate-related reporting (TCFD, SECR, NFSIS etc), which should result in more standardised/comparable data that could lead to better/easier decision-making from investors. This is a critical request from issuers and so it is also important for DBT and the FCA to work together to ensure that adoption of UK SRS facilitates broader consolidation of existing reporting requirements (e.g. Companies Act 2006 and listing rules).  Without this, any growth in reporting requirements is likely to have more negatives than positive benefits.

12. Explain the direct and indirect costs that you are expecting to result from the use of UK SRS S1 and UK SRS S2. Include an assessment of those costs which are additional to costs arising from existing reporting practices.

The potential costs, especially for smaller cap companies and/or those earlier on their sustainability journey, include resource costs for collecting data, upgrading systems, training staff, and engaging with third-party assurance. In particular, the costs associated with reporting Scope 3 emissions (in year 2 of the UK SRSs) will be significant, as this requires investigation throughout what are often very complex value chains and should not be underestimated.

These costs could potentially be partly mitigated through proportional reporting requirements, implementation toolkits, and access to centralised support platforms or sector-specific case studies. Investors are looking for greater comparability across reporters, and so alignment of methodologies and industry-level assumptions that can have very substantial impact on long term Scope 3 modelling would be useful, rather than each company developing their own.

13. What are your views on the merits of economically-significant private companies reporting against UK SRS? Explain your assessment of direct and indirect benefits and costs.

Requiring economically significant private entities to report against UK SRS would help address market dependencies by supporting transparency across value chains, particularly where listed companies rely on private suppliers for value chain analysis and Scope 3 data. Furthermore, requiring economically significant private entities to report would avoid exacerbating the gap between their reporting obligations and those of listed issuers, reducing the risk of regulatory arbitrage and avoid disincentivising those companies from seeking a London listing.

15. What (if any) would be the opportunities to simplify or rationalise existing UK climate-related disclosures requirements, including emissions reporting, if economically-significant private companies are required to disclose against UK SRS? Consider how duplication in reporting can be avoided. Responses to this question will support the government's review of the UK’s non-financial reporting framework.

Requiring economically-significant private companies (as yet undefined, but likely to include those with £500m turnover and 500 employees, as this is the scope the Companies Act 2006 uses to define ‘high turnover’ private companies, bringing them into scope for CfD disclosures and a NFSIS) would present a valuable opportunity to simplify the various thresholds embodied within the Companies Act 2006. Simplifications could also include:

  • requiring one iXBRL/UKSEF tagging package for UK SRS climate disclosures, which regulators can reuse, would eliminate multiple filings in different formats, and
  • publication of UK sector guidance, a Scope 3 estimation toolkit and a standardised mapping from SECR/TCFD to UK SRS should help to minimise rework during transition.

Please also see our comments at Q11 above regarding the opportunity to simplify existing climate-related reporting (TCFD, SECR, NFSIS etc) for all economically-significant entities (which would include private companies), which should result in more standardised/comparable data that could lead to better/easier decision-making from investors.

18. Explain your assessment of the legal implications of using UK SRS and your assessment of the existing provisions in section 463 of the Companies Act.

As noted in the consultation, Section 463 of the Companies Act contains protective provisions for forward-looking information in the Strategic Report and Directors’ Report, with directors only liable where they either “knew the statement to be untrue or misleading or was reckless” or knew that the omission was a “dishonest concealment of a material fact”. Reporting on climate and sustainability-related matters will also include forward-looking information, including information on the future prospects of the reporting entity, how its strategy will develop over time, and its climate and environmental targets.

In our view, it would be beneficial for similar ‘safe harbour’ provisions to s463 to apply in respect of forward-looking reporting requirements introduced under UK SRS, and also in respect of information that relies on third-party data or estimations.  This protection would promote transparency and allow for reporting to be made with the best available information and in good faith. 

As mentioned at Q10 and Q12 above, where companies rely on third-party, proxy, or estimated data (particularly for Scope 3), UK SRS should encourage disclosure of data provenance, confidence levels, and estimation techniques to improve user understanding and support transparency over complex data sets. See also Society evidence on Scope 3 emissions reporting - Investor Relations Society for the results of our member survey on Scope 3 emissions.

Additional guidance or educational materials

20. What are your views on the quality and availability of existing guidance for the topics listed in paragraph 5.4? Explain what additional guidance – particularly on a global basis – would be helpful and why.

We acknowledge that there is existing guidance on the overlap/interoperability for ISSB/ESRS already available, but more clarity could be given around dual compliance with overseas reporting requirements, with equivalence agreements with oversees jurisdictions being essential for reducing duplication (see Q10 above). Part of this could involve the development of clearer mapping tools that join UK SRS with CSRD/ESRS and SEC rules.  

We also consider that additional guidance would be helpful in the following areas:

  • UK-specific guidance on performing materiality assessments, for example, illustrative thresholds or sector benchmarks, which could reduce subjectivity and increase consistency across filers, while clarifying how enterprise value-based materiality aligns with broader UK corporate reporting expectations,
  • integrating sustainability data/reporting with financial reporting,
  • the choice of using an operational control boundary or a financial control boundary when reporting, the rationale being that business model targets, metrics, ambitions and strategy tend to be set at a consolidated group level (rather than at JV or associate level),
  • managing data gaps/limitations and estimation challenges (eg especially for scope 3) within the UK legal and regulatory environment, and
  • as mentioned at Q15 above, publication of UK sector guidance, a Scope 3 estimation toolkit, and a standardised mapping from SECR/TCFD to UK SRS should help to minimise rework during transition.

 

We hope you find these comments useful. Please do not hesitate to make contact if you have any questions.

Yours sincerely,

 

Liz Cole

Head of Policy and Communications, The Investor Relations Society

(Email: enquiries@irsociety.org.uk, Tel: + 44 (0) 20 3978 1980)

 

Ross Hawley

Co-Chair of the Policy Committee, The Investor Relations Society

(Email: enquiries@irsociety.org.uk, Tel: + 44 (0) 20 3978 1980)

Published 19 September, 2025