UK unveils new sustainability disclosure standards

August 11th, 2023

A new set of UK standards based on the IFRS Sustainability Disclosure Standards are to be rolled out that will enable companies to flag any sustainability-related risks and opportunities that they face.

The UK Sustainability Disclosure Standards (SDS) have been published by the Department for Business and Trade and will be implemented by July 2024.

The SDS will form the basis of any future requirements in UK legislation or regulation for companies to report on risks and opportunities relating to sustainability, including climate change.

The standards are based on the IFRS Sustainability Disclosure Standards issued by the International Sustainability Standards Board (ISSB) earlier this year.

The aim of the new standards is to make information that companies disclose “globally comparable and decision-useful for investors” facilitating the efficient allocation of capital and smooth running of the UK’s capital markets.

To assist with the implementation of the UK SDS, the government has established two committees: the UK Sustainability Disclosure Technical Advisory Committee, an independent committee assessing the IFRS standards on a technical basis; and, the UK Sustainability Disclosure Policy and Implementation Committee, overseen by the Department for Business and Trade.

If Business and Trade Secretary Kemi Badenoch endorses the standards, the UK Sustainability Disclosure Policy and Implementation Committee will coordinate the implementation with the UK government and Financial Conduct Authority.

Andrew Ninian, director – stewardship, risk and tax at UK asset manager trade body, the Investment Association, welcomed the ISSB’s sustainability disclosure standards when they were unveiled in June.

He said: “Our members invest in companies around the world, so the creation of a global baseline of sustainability reporting standards is an important step to achieve consistent reporting by all companies.

“Investors are increasingly incorporating a wide range of material sustainability issues into their assessments of long-term value from investee companies and need this information to make the best investment and stewardship decisions."

He added: “We support the UK government’s timeline and process for implementing the ISSB standards and we will continue to work with stakeholders to ensure swift adoption in the UK.”