Update: The UK Government Consults on Sustainability Reporting Standards
Background and what has happened?
As of June 2025, The UK Department for Business & Trade (DBT) is now consulting on the introduction and structure of UK Sustainability Reporting Standards (SRS).
There will be two standards that aim to introduce a consistent set of sustainability disclosures for certain UK companies.
Standards are broadly aligned with the two IFRS Sustainability Disclosure Standards and include:
UK SRS S1: General Requirements for Disclosure of Sustainability-related Financial Information
UK SRS S2: Climate-related Disclosures
These standards form part of a wider framework of UK Sustainability Disclosure Requirements (SDR), first announced in the government’s 2021 “Greening Finance: A Roadmap to Sustainable Investing”
What are the timelines?
The consultation opened on 25 June 2025 and will close on 17 September 2025. An oversight regime for the assurance of sustainability-related financial disclosures is also under consultation across the same time period.
Following this consultation process, the UK government will publish finalised versions of UK SRS S1 and UK SRS S2 for voluntary use in autumn 2025.
Subsequently, the DBT and Financial Conduct Authority (FCA) will consider whether to introduce requirements for certain UK entities to report against these standards. There is no clear timeline for this at present.
There is a transition relief, one of six proposed changes from the IFRS Standards, that will allow for reporting in line with just the SRS S2 climate standard for the first two years after UK SRS become mandatory.
Which companies could be affected?
Based on the consultation, the government’s focus is on “economically significant entities where there is likely to be strong public and investor interest”.
With the FCA consultation, it is highly likely that UK SRS will apply to UK listed companies.
There is also a possibility that private UK companies may be required to report, with the consultation seeking feedback on this.
Taskforce on Climate Related Financial Disclosure (TCFD) aligned requirements are already in force for large private companies, for example AIM firms with over 500 employees or UK registered companies with more than 500 employees and a turnover of more than £500m. If the SRS is to apply to non-listed companies, this group may be the initial focus.
What are the likely requirements for UK companies?
What are the likely requirements for UK companies?
The UK SRS will require in scope companies to disclose sustainability related financial information across four main categories:
Governance – the governance processes, controls and procedures the entity uses to monitor and manage sustainability-related risks and opportunities
Strategy - the approach the entity uses to manage sustainability-related risks and opportunities
Risk Management - the processes the entity uses to identify, assess, prioritise and monitor sustainability-related risks and opportunities
Metrics and Targets - the entity’s performance in relation to sustainability-related risks and opportunities, including progress towards any targets the entity has set or is required to meet by law or regulation
The DBT has proposed six amendments to the original IFRS standards to form the UK SRS. However, beyond the transitional relief already mentioned, these do not significantly alter the requirements from these standards.
What should UK small-caps do?
Although UK SRS are still being finalised, limited changes against IFRS Standards mean that UK SRS are likely to be highly aligned
Listed and economically significant companies, broadly those who are already required to report TCFD aligned disclosures, should conduct a gap analysis of their current TCFD disclosures and practices against the requirements of the IFRS standards - these standards are a step up from the TCFD
Additionally, mapping the value chain to better understand where significant sustainability related risks and opportunities are located will support disclosures
Lastly, we encourage firms to engage with the consultation or, at a minimum, continue to monitor the development of UK SRS.
About Addidat
At Addidat we strive to remove the ESG burden in the small-cap market, and to help companies thrive and build long-term resilient businesses.
With our AI-driven platform that ingests and analyses disclosures, combined with a team of ESG experts experienced in investment management and running AIM-listed businesses, we are uniquely positioned to help UK small-cap companies enhance their annual reporting in a proportionate way.
The Addidat Platform provides companies and investors with market leading small cap data, as well as strategic and regulatory insights. This allows AIM-listed businesses to understand, which regulations may apply to them, what ESG topics are material to their company, and understand what peers are doing to spot opportunities to differentiate.