16 Dec 2024
UK adoption of the international sustainability standards – FAQs
This frequently asked questions (FAQ) blog outlines the UK’s plan to adopt the International Sustainability Standards Board (ISSB) standards by the first quarter of 2025.
The key themes are:
- The government’s strong support for these standards
- Implementation by the financial conduct authority (FCA) for listed companies and other bodies for non-listed companies
- Benefits of consistent comparable sustainability reporting for investors
- Improved risk management for businesses
1. What are the ISSB standards?
The standards, developed by the International Sustainability Standards Board (ISSB), are a comprehensive set of guidelines for disclosing sustainability-related information. They aim to provide investors and other stakeholders with consistent and comparable data to assess a company’s sustainability performance and its impact on financial value. There are currently two standards. IFRS S1, general requirement for disclosure of sustainability-related financial information and IFRS S2, climate related disclosures.
2. What is the UK government’s stance on ISSB standards?
The UK government has expressed strong support for the adoption of ISSB standards and aims to endorse them by the first quarter of 2025. This endorsement will lead to the creation of UK sustainability reporting standards, aligning with the global push for standardised sustainability reporting.
3. How will ISSB standards be implemented in the UK?
Once endorsed, the Financial Conduct Authority (FCA) will introduce requirements for listed companies to report sustainability-related information based on the UK sustainability reporting standards. The government will also determine disclosure requirements for companies outside the FCA’s regulatory scope, taking into account cost/benefit implications and utility for investors.
4. What is the timeline for implementing ISSB Standards in the UK?
The government plans to endorse ISSB standards by the first quarter of 2025, after which the FCA and the government will establish reporting requirements for different categories of companies.
5. What are the benefits of integrating ISSB standards into investment research and corporate reporting?
Integrating ISSB standards allows for:
- Consistent and comparable data: Enables investors to make informed decisions based on standardised sustainability information
- Improved risk management: Provides a framework for companies to identify and manage sustainability-related risks and opportunities
- Enhanced transparency and accountability: Fosters trust and confidence among stakeholders by promoting transparent and comparable reporting practices
6. How can organisations engage with and contribute to the adoption of ISSB standards?
- Join the IFRS sustainability alliance: Access valuable resources, tools and networking opportunities to support their sustainability disclosure journey
- Integrate ISSB standards into their processes: Embed IFRS S1, IFRS S2, and SASB standards into investment research, corporate reporting software and other relevant products and services
- FSA credential: Encourage employees to sign up for the FSA (fundamentals of sustainability accounting) credential certificate. This will equip them with the knowledge and skills to navigate the sustainability disclosure landscape and analyse the link between sustainability and financial performance
7. Where can I find further information on the UK’s adoption of ISSB standards?
For more detailed information refer to the UK Government’s publication Sustainability disclosure requirements: implementation update 2024 linked here or available on the government website – Gov.UK.
