UK Adoption Of ISSB IFRS S1 & S2: April 2025 Editorial Brief

As April 2025 unfolds, many are watching closely for the UK government’s long-awaited decision on adopting the ISSB IFRS S1 and S2 standards—the cornerstone of the country’s future Sustainability Disclosure Requirements (SDR). Set against a backdrop of geopolitical turbulence, economic strain, and shifting global climate leadership, the question is: will the UK position itself at the forefront of sustainable leadership, backslide on its net zero commitments, or take a committed yet pragmatic path towards long-term sustainability?

A World In Turmoil
The past months have seen significant global upheaval. Geopolitical tensions sadly remain unresolved and strategic imperatives have had to shift at breakneck speed in response to political and economic chaos. Increased defence spending and the need to support critical infrastructure have taken centre stage, forcing governments to make short-term decisions—all in the name of the “national interests.” Against this backdrop, green ambitions have been pitted against the urgency of national security and economic resilience, and difficult trade-offs have followed.

EU: Easing Off The Accelerator Or Hitting The Brakes?
In February 2025, the EU’s Omnibus Simplification Package took a second look at the scope, timelines, and requirements of the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy. Among several proposals was a suggested two-year delay to CSRD implementation for companies not yet required to report. The so-called “stop-the-clock” directive was framed as a response to business concerns around cost, complexity, and competitiveness—with new trade wars looming—and it signalled that even climate leaders are willing to recalibrate in this new world order.

The US: Shifting Defence Responsibility And Applying Economic Pressure
Meanwhile, the United States has stepped away from coordinated international climate action, with a renewed withdrawal from the Paris Agreement and legislative efforts to curtail sustainability regulations—such as Senator Bill Hagerty’s Preventing Regulatory Overreach Act—which directly responds to the evolving European sustainability regulations mentioned above.

Simultaneously, the United States has called on European nations to take greater responsibility for their own defence—prompting the UK government to immediately increase defence spending in response to growing pressure to prioritise national and regional security.

Adding further global turbulence are new US tariffs, which have disrupted international trade. As in other countries, the UK automotive industry has been caught in the crossfire, with fresh US tariffs imposed on British-made passenger vehicles and light trucks imported into the US. In a separate move—set against the backdrop of further new US tariffs this time on UK steel and aluminium—the UK government has taken emergency control of British Steel’s Scunthorpe plant from its Chinese-owned parent company, citing national security and key industrial resilience. These interventions are stark reminders of how rising global tensions are redirecting political focus towards strategic security and economic stability.

As ministers focus on shielding key industries and navigating global shocks, climate-related reforms could well be deprioritised —not necessarily due to a lack of ambition, but because more immediate priorities which have suddenly taken precedence.

The UK Government’s Balancing Act
There are some hopeful signals from the UK government that it intends to stay the course on net zero, clean energy, and broader sustainability goals—while adapting implementation to reflect today’s new security and economic realities. The UK government has been keen to stress that stepping back from net zero is not the answer and emphasising that the UK’s high energy prices are driven largely by its reliance on gas, not by climate policies.

So where does this leave the UK’s adoption of ISSB IFRS S1 & S2? These global standards, designed to provide consistent and transparent sustainability disclosures, have broad international backing. The UK government has expressed support, and the Technical Advisory Committee (TAC) have recommended adoption – with phased implementation and extended reliefs.

It’s not yet clear how current geopolitical, security, trade, and economic pressures will influence the UK government’s decision on adopting ISSB IFRS S1 and S2 as the foundation of our new Sustainability Disclosure Requirements. But it is worth remembering transformation is never linear, and recalibrations are part of the journey. No industrial revolution in history followed a perfect path. The clean energy and sustainability revolution we’re living through is no exception.

With the consultation phase now complete, we shouldn’t have to wait much longer to see what comes next.