Businesses have been “put on notice”, say experts, following the news that new sustainability reporting requirements are set to be introduced next year as part of plans to make information more accessible to investors and the public.
They will be known as UK Sustainability Reporting Standards and are set to be closely based on the voluntary standards created by the International Sustainability Standards Board (ISSB) in 2023.
Last year, ISSB published standards for a comprehensive global baseline of sustainability disclosures focused on the needs of investors and the financial markets. The aim is to create greater clarity around best practice and standardisation of reporting in areas such as exposure to climate risk.
It is currently voluntary for UK businesses to commit to the ISSB standards, but where they do so they must disclose material information about the sustainability‑related risks and opportunities they face.
The UK Government is currently going through a process of endorsing the ISSB standards and, subject to a positive outcome, plans to make the UK-endorsed standards available in the first quarter of 2025 – six months later than the original plan for July 2024.
It will initially introduce requirements for UK-listed companies to report sustainability-related information, overseen by the Financial Conduct Authority, although the government will also consider the case for extending the requirements to non-listed companies, with a decision expected in the second quarter of 2025.
The government also plans to consult on how businesses can most effectively publish climate transition plans, in which companies set out how they intend to achieve alignment with net-zero.
Compass Group UK & Ireland claimed a foodservice industry first in February with the publication of its own climate transition plan.
Hayden Morgan, expert in sustainable finance at law firm Pinsent Masons, said businesses had been “put on notice” by the new timeline. “Prudent firms will have to consider the full compliance implications of these incoming requirements and assess what it means to their business operations. Full compliance can be complex and take time to implement,” Morgan added.
The government stopped short, however, of implementing nature-related disclosure obligations into the UK regulatory framework, despite welcoming work done by the Taskforce on Nature-related Financial Disclosures (TNFD) in developing recommendations in respect of reporting exposure to nature-related issues.
