Picture a board meeting in London on a grey Tuesday morning. Someone around the table asks a simple question: “Can we trust our sustainability numbers in the same way we trust our financials?” You already have CSRD on the horizon for your EU entities, TCFD-style disclosures in the annual report, SECR and internal ESG dashboards, plus a growing list of investor questions from UK asset managers.  

Now the UK is bringing in its own set of sustainability reporting standards that will sit alongside your financial reporting under UK company law. That is what the UK Sustainability Reporting Standards, or SRS, are designed to do. They take the global baseline created by the International Sustainability Standards Board (ISSB) and translate it into a rulebook that UK regulators, auditors and markets can rely on.

SRS will not replace everything you already disclose, but it will shape how you organise ESG data, how you connect it to financial performance, and how ready your organisation is when UK auditors and the FCA start looking more closely at non-financial information.  

What are the UK Sustainability Reporting Standards?

The UK Sustainability Reporting Standards are draft rules that set out how companies will be expected to report sustainability-related financial information in the UK. They are built on the ISSB’s IFRS S1 and IFRS S2 standards and then adapted for the UK context through the Department for Business and Trade’s endorsement process.

The government’s exposure drafts cover two core standards:

The idea is simple. Companies should disclose sustainability risks and opportunities that could reasonably affect their cash flow, access to finance or cost of capital over the short, medium or long term.

Globally, the ISSB baseline is already gaining traction. As of June 2025, 36 jurisdictions have adopted or are taking steps to use the ISSB sustainability disclosure standards in their regulatory frameworks. SRS is the UK’s way of joining that move while keeping control over local details.

Why SRS Matters Now

Even before SRS becomes fully mandatory, it is already influencing how UK-focused businesses think about ESG reporting. Three pressures stand out.  

A. Regulatory Convergence

The UK wants to align with a global baseline while keeping a local lens. SRS takes IFRS S1 and IFRS S2 and layers a small number of UK-specific amendments on top. That means UK companies can design one reporting spine that supports SRS, ISSB alignment and other regimes, instead of running separate workstreams for every new regulation.

B. Investor Expectations

Investors are increasingly using sustainability data as part of mainstream decision-making rather than treating it as a side story. A recent global survey found that 80% of US institutional investors use sustainability information when they make investment decisions. At the same time, they remain sceptical about quality and want more robust, assurance-ready data. SRS is designed to respond to that by focusing on decision-useful, financially relevant information.

C. Global Momentum

Companies are already starting to align with ISSB-style disclosures even before local rules catch up. Between October 2023 and March 2024, more than 1,000 companies referenced the ISSB standards in their reports. For UK businesses, SRS offers a way to tap into that momentum and stay comparable with peers in other markets.

Inside UK SRS S1 and S2

A simple way to explain SRS is to think of S1 and S2 as two layers of the same structure. S1 is the base. S2 is the climate layer that sits on top.

UK SRS S1: General Sustainability Disclosures

UK SRS S1 sets the overarching rules for sustainability-related financial disclosures. It asks companies to identify sustainability risks and opportunities that could reasonably affect enterprise value and to explain how those issues are governed, managed and measured. The content is organised around four familiar pillars: governance, strategy, risk management, and metrics and targets, which many UK companies already know from TCFD.

There are a few important shifts in emphasis. S1 expects companies to describe how they determine which sustainability topics are financially material, not just which topics are “important to stakeholders”. It also expects clearer connections between sustainability information and the financial statements. In other words, climate or social risks discussed in the narrative should be visible, where relevant, in cash flow, impairment or provisioning decisions rather than floating on their own.

UK SRS S2: Climate Disclosures

UK SRS S2 applies the same pillars specifically to climate. It requires companies to show how climate-related risks and opportunities affect their business model, strategy and financial planning. This includes both physical risks, such as extreme weather, and transition risks, such as regulation, technology or market shifts linked to decarbonisation.

S2 pushes for more precise climate metrics and targets. Companies will need to disclose greenhouse gas emissions across Scope 1 and Scope 2 and explain which Scope 3 categories are material and how they are measured. They will also be expected to set out their climate targets, track performance against those targets, and explain how transition plans are being implemented in practice rather than just announced.

Together, S1 provides the general rules of the game, and S2 deepens the climate story that investors, regulators and lenders are already watching closely.

How SRS Will Work in Practice

SRS is not just a new chapter in the annual report. It will change the way sustainability information moves through the organisation.

1. Scoping and materiality

Companies will need to decide which sustainability topics are financially material and therefore in scope for SRS. That means looking at how issues like climate, resource constraints, labour practices or data security could affect revenue, costs, capital allocation or access to finance. Many organisations already run materiality assessments, but SRS will push them to tighten the link to financial outcomes rather than treating ESG and finance as separate conversations.

2. Data and controls

SRS raises expectations on data quality and consistency. Emissions, health and safety, diversity, supply chain and governance metrics are often owned by different teams and stored in different systems. Historically, that has been manageable for narrative reporting. Under SRS, those same metrics may need to stand up to audit-style testing. Companies will have to align definitions, fill gaps in coverage and strengthen controls around ESG data in the same way they do for financial numbers.

3. Governance and strategy integration

Boards will be expected to demonstrate that they understand key sustainability risks and opportunities and are considering them in strategy and risk oversight. This will push organisations to improve how ESG topics appear in board papers, how decisions are recorded and followed up, and how responsibilities are shared between committees.

4. Reporting and assurance

SRS disclosures will sit within the corporate reporting package, not in a stand-alone sustainability brochure. Investors are already signalling that they want the same level of rigour for sustainability assurance as they get for financial audits, with around three quarters of investors saying they expect a similar level of detail in assurance reports on sustainability information as in financial audits. Organisations that treat SRS as a last-minute compliance task, without strengthening underlying processes, will feel this pressure first.

From ESG Data to Audit-Ready Sustainability Reporting

UK Sustainability Reporting Standards require organisations to move beyond narrative ESG disclosures and demonstrate how sustainability information is generated, validated, and connected to financial decision-making. This framework shows how ESG data travels from operational teams into assurance-ready SRS disclosures that boards, auditors, and regulators can rely on.

Typical Challenges SRS Will Expose

SRS will not create new problems on its own. It will simply make existing weaknesses harder to hide.

One recurring issue is fragmented ESG data. Sustainability metrics are often spread across local spreadsheets, legacy systems and manual trackers. Different teams use different definitions and reporting cycles. When you try to pull that into an SRS-aligned disclosure, you end up spending more time reconciling numbers than understanding what they mean.

Another challenge is the weak link between sustainability and financials. Many organisations publish rich sustainability content, yet it is not obvious how the issues described affect revenue, costs, capital expenditure or financing. Because SRS focuses on sustainability-related financial information, finance and ESG teams will need to work more closely together and use a shared language.

Governance gaps are also common. Boards receive ESG updates, but the documentation is thin on how risks are prioritised, how trade-offs are made and how actions are tracked. Under SRS, those gaps quickly become visible when companies have to describe processes in more detail and provide evidence that sustainability topics are embedded in risk and strategy discussions.  

Assurance readiness is the last pressure point. SRS increases the likelihood that sustainability disclosures will be subject to external assurance. Companies that have not yet tested the robustness of their ESG data and controls will face a steep learning curve when auditors start applying the same discipline to non-financial metrics as they do to financial ones.

How SRS Lands in Different Businesses

To make SRS less abstract, it helps to see how it might play out in a few different types of organisations. These three scenarios can easily be turned into flip cards or short blurbs on your site.

A UK-listed group with a significant EU footprint is already working towards CSRD. SRS gives it a way to keep UK disclosures aligned with the ISSB baseline while using the same data and controls for EU and UK requirements. Finance and sustainability teams map CSRD and SRS requirements to a single data model, so metrics, assumptions and narrative stay consistent across reports rather than diverging by region.

A UK subsidiary of a global manufacturer currently submits group-level climate and ESG data with limited local context. As SRS emerges, the parent needs more granular information on UK climate risks, governance and transition plans. The subsidiary strengthens its local data collection, clarifies who is accountable for climate and broader ESG topics, and documents how group policies operate in practice in the UK. That work improves SRS readiness and also raises the quality of information going back to the group.

A large private company is not yet in scope for listed company rules, but lenders and private equity investors are already asking more detailed climate and sustainability questions. The company decides to align voluntarily with UK SRS S1 and S2 to future-proof its reporting and make financing discussions smoother. By building SRS-aligned processes now, it avoids a rushed, reactive implementation later if thresholds change or if more entities are brought into scope.

SRS Readiness: Three Things to Focus On

SRS is still moving through consultations, but most organisations already know where the pressure will show up. If you are starting to prepare, three focus areas tend to make the biggest difference. You can use these as a set of flip cards on the site.

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Where KarbonWise Fits in an SRS World

SRS is asking companies to join up sustainability and financial information, with better data, stronger governance and more assurance-ready disclosures. That is difficult to achieve if ESG numbers still sit in scattered spreadsheets and siloed systems.

KarbonWise helps by creating a central ESG and carbon data spine so emissions, social indicators and governance metrics are captured in one structured platform. The same dataset can then be mapped to UK SRS S1 and S2, CSRD, BRSR and other frameworks, which means teams do not have to repeat data collection every time a new requirement appears.

With that foundation in place, SRS reporting becomes a natural output of how you already manage ESG data, rather than a separate compliance exercise.

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