6 Key Differences between the newly released UK sustainability standards and the ISSB

The newly released consultation is based on the ISSB's IFRS S1 and S2, but has a number of important amendments. See how those affect your reporting obligations going forward.

On 25 June 2025, the UK Government launched a public consultation on its proposed Sustainability Reporting Standards (UK SRS S1 and S2). These standards are based on the International Sustainability Standards Board’s (ISSB) IFRS S1 and IFRS S2 and form the foundation of a future UK disclosure regime. While they align closely with the global baseline, the UK has proposed seven targeted amendments to reflect domestic regulatory and market considerations.

This consultation represents a critical phase in the UK’s approach to updating its corporate reporting system, complementing efforts around a UK Green Taxonomy, ESG ratings regulation, and voluntary carbon market integrity.

The Building Blocks: IFRS S1 and S2

To understand the UK proposals, we should briefly revisit the ISSB’s standards.

IFRS S1 sets out the general framework for sustainability-related financial disclosures. It requires entities to disclose material information about any sustainability-related risks and opportunities that could reasonably be expected to affect enterprise value over the short, medium, or long term. Where no topic-specific standards yet exist, S1 still applies.

IFRS S2 focuses specifically on climate-related disclosures. It builds on the TCFD’s four pillars: governance, strategy, risk management, and metrics and targets, and requires reporting on physical and transition risks, GHG emissions (including Scope 3), scenario analysis, and financed emissions.

The ISSB’s goal is to establish a global baseline. The UK strongly supports that aim. However, as we’ve seen in other jurisdictions, it has made several amendments to the standards.

The Six Amendments in the UK SRS

The UK Government, supported by expert technical and policy committees, proposed the following changes to the ISSB standards in this consultation.

1. No fixed effective date
   The UK SRS removes the default ISSB effective date of 1 January 2024. Instead, implementation timing will be determined through future regulation. This allows the UK to align adoption with its broader corporate reporting reform agenda.

2. Extension of ‘climate-first’ transitional relief
   IFRS S1 allows firms to report only on climate for their first year. The UK extends this to two years, recognising the need for a phased approach to reporting beyond climate.

3. Removal of delayed reporting relief
   The UK SRS eliminates the ISSB’s one-year grace period that allowed sustainability disclosures to be published later than financial statements. UK entities will be expected to report on the same timeline, supporting stronger integration.

4. GICS requirement removed
   UK SRS allows entities to use classification systems other than GICS for reporting financed emissions. This avoids costs and delays of reclassification and supports consistency with firms’ existing reporting practices.

5. SASB references made optional
   The ISSB language “shall refer to and consider” SASB standards is replaced with “may refer to and consider.” This change reflects concerns about over-reliance on legacy US-centric guidance.

6. Transition reliefs tied to mandatory use
   The UK clarifies that transition reliefs will apply only when reporting becomes legally required. Voluntary adopters can still use the reliefs, but the UK will not define their scope in that context.

These amendments are not deviations for their own sake. They aim to strike a balance between global comparability and UK-specific coherence, especially in relation to legal structure, investor expectations, and the country’s existing TCFD-aligned requirements.

What Firms Should Do Now

While these standards are not yet mandatory, this is an important moment for UK-based companies, especially those already preparing climate and sustainability aligned reports. Here are three immediate steps:

1. Review the exposure drafts and assess how your current disclosures align with UK SRS S1 and S2.

2. Identify capability gaps such as in areas like Scope 3 estimation, value chain data, and climate risk analysis.

3. Engage with the consultation and share your feedback. Submissions are open until 17 September 2025.

The UK’s commitment to climate and sustainability reporting is clear. Firms that prepare now will be well-positioned to meet expectations when the standards become formal requirements in the months ahead.

If you are looking to better understand these new standards and how to implement them in your organization, please do get in touch with us at info@dacarlin.com. We’d be glad to share our perspectives and offer a complimentary gap analysis.

For our paid newsletter subscribers, we have the full amendments table in Excel as well as a comparison of the UK, Canada, and Japan’s adoption of ISSB. Support us for full access to resources like this.