UK Advisory Committee Calls for Adoption of IFRS Sustainability Reporting Standards

The government-mandated UK Sustainability Disclosure Technical Advisory Committee (TAC) announced today the publication of its recommendations to endorse the IFRS Foundation’s International Sustainability Standards Board’s (ISSB) climate- and sustainability-related reporting standards for use by companies in the UK.

The recommendations, published by the Financial Reporting Council (FRC), follow the release last year by the former government of the UK Green Finance Strategy, which included a pledge to assess the new IFRS sustainability and climate-related reporting standards once they are published.

The IFRS released general sustainability (IFRS S1) and climate (IFRS S2) reporting standards in June 2023. Following the release of the standards, IOSCO, the leading international policy forum and standards setter for securities regulators called on regulators to incorporate the standards into their sustainability reporting regulatory frameworks, and more than 30 jurisdictions representing 57% of global GDP have already signalled movement towards adopting the standards.

The TAC was subsequently commissioned by the government in May 2024 to provide advice on the potential endorsement of the standards.

While the TAC endorsed the adoption of IFRS S1 and S2, it also recommended some amendments to the standards. Most notably, while the ISSB introduced a “climate-first” relief, giving companies an extra year to provide disclosure on some sustainability-related risks, in order to enable them to first focus on climate-related reporting, the TAC endorsement includes a recommendation to extend this relief to two years.

Sally Duckworth, Chair of the UK Sustainability Disclosure TAC, said:

“The TAC has conducted an extensive and thorough review over several months, carefully evaluating the IFRS Sustainability Disclosure Standards. Our report, as presented to the Secretary of State, recommends that the UK endorse these standards to reinforce its leadership in sustainability reporting.”