Reporting, Planning, Assurance: The UK’s Sustainability Overhaul In Three Acts

On 25 June 2025, the UK Government launched three coordinated consultations that could fundamentally shape the future of sustainability reporting, planning, and assurance in the UK. 

If adopted, it would mark a pivotal moment in the country’s journey to embed sustainability at the core of financial decision-making. They form part of the UK Government’s broader ambition—outlined in the 2024 Mansion House speech—to position the UK as a global leader in Sustainable Finance.

The first consultation introduces the long awaited UK Sustainability Reporting Standards (UK SRS)—the UK’s tailored version of the International Sustainability Standards Board (ISSB) IFRS Sustainability Disclosure Standards. The draft UK SRSs set out how UK companies should report on sustainability and climate-related risks and opportunities. 

While the drafts closely align with the ISSB IFRS S1 and S2, six targeted amendments have been proposed, based on recommendations from both the UK Sustainability Technical Advisory Committee (TAC) and the UK Sustainability Policy and Implementation Committee (PIC).

The targeted proposed amendments to the draft UK SRS are as follows:

Removal of the IFRS S1 transition relief for delayed reporting in the first year — this supports stronger “connectivity” with financial statements and aligns with UK practice.

Extension of the “climate-first” transition relief — entities may report climate-related disclosures only during the first two years, with full sustainability reporting phased in by year three.

Removal of the requirement to use the GICS classification in ISSB IFRS S2 — companies are no longer required to follow the Global Industry Classification Standard.

Removal of the ISSB “effective date” clauses in IFRS S1 and S2 — once adopted the UK SRS can be adopted voluntarily ahead of any mandatory start date.

SASB Standards become permissive rather than mandatory — companies may refer to SASB Standards but are not required to use them.

Climate-first transition for voluntary adoption — entities that adopt UK SRS voluntarily can rely on climate-first transition relief if they so wish, as well as when mandatory reporting begins, ensuring they are not penalised for early adoption.

As with all three consultations, responses are open until 17 September 2025. If adopted, the UK SRSs are expected to be available for voluntary adoption from autumn 2025, quickly followed by a separate consultation to determine the scope and timing of mandatory application.

The second consultation focuses on climate-related transition plans and proposes requiring credible, science-based plans from two key groups: UK-regulated financial institutions (including banks, asset managers, insurers, and pension schemes) and FTSE 100 companies. It considers mandating these entities to publish transition plans aligned with the 1.5°C goal of the Paris Agreement, with clear short- and long-term targets, interim milestones, and robust governance arrangements. 

The consultation also recognises the potential indirect impacts on small and medium-sized enterprises (SMEs) through supply chain expectations and seeks views on how best to manage those effects.

To allow flexibility while encouraging transparency, the government is also considering a “comply or explain” approach—where companies would be required to disclose whether they have a climate transition plan aligned with UK SRS, and if not, explain why. 

Looking ahead, the UK Government is also seeking views on whether to expand these requirements to other large or economically significant UK companies.

The third consultation addresses trust in sustainability reporting, recognising that as demand for sustainability-related reporting grows, so too does the need for reliable, independent assurance. It proposes the creation of voluntary registration for assurance providers, to be overseen by the new Audit, Reporting and Governance Authority (ARGA). 

The proposal would apply to both traditional audit firms and agnostic assurance providers—those not currently registered under audit regulatory frameworks—helping to ensure all providers meet baseline expectations of competence, credibility, and accountability. This proposal aims to give users of sustainability reports greater confidence in the information disclosed, particularly as assurance practices currently vary widely in this emerging market.

Registered assurance providers would be expected to apply appropriate standards, such as International Standard on Sustainability Assurance (ISSA) 5000, whose UK draft version is currently open for consultation until 31 July 2025, led by the Financial Reporting Council (FRC). 

Taken together, all these consultations signal a deliberate and joined-up approach to sustainability reporting in the UK. They are not simply technical exercises—they represent the start of a new era in which sustainability information starts to become just as essential, consistent, and decision-useful as financial information.

The starting gun has been fired on the future of sustainability reporting, planning, and assurance in the UK. To succeed, the Government must balance growing investor demand for robust, comparable data with companies’ calls to minimise reporting burdens and costs—while recognising that data accessibility and quality, methodologies used, and reporting maturity still vary dramatically.

This is the beginning of an evolving journey, and how the UK navigates this moment will shape the credibility and effectiveness of its sustainable reporting for years to come.