The UK government has announced its adoption of climate-disclosure standards from the International Sustainability Standards Board (ISSB), in a decisive move to bolster corporate reporting on sustainability-related risks and opportunities.
The standards will form the basis of the UK Sustainability Disclosure Standards (UK SDS), marking a shift from the previous reliance on guidelines from the Task Force on Climate-related Financial Disclosures (TCFD).
The ISSB’s Sustainability Disclosure Standards, which were finalised earlier this summer, will now serve as the foundation for the UK’s reporting requirements. The move aims to provide a globally consistent approach to disclosing environmental risks faced by companies, enabling investors to make better-informed decisions, efficiently allocate capital, and maintain the smooth functioning of the UK’s capital markets.
Under the rules, firms will face more pressure to publicly disclose their impact on the climate, including on their Scope 3 emissions – which covers the products or services they sell.
The government intends to have its version of the ISSB-based global standards ready for implementation by July 2024. Emphasising alignment with the international baseline, the UK-endorsed standards will deviate only if specifically necessary for UK-specific matters.
To ease the implementation of the UK SDS, the Department for Business and Trade has established Technical Advisory and Policy and Implementation Committees. This strategic adoption of ISSB climate-disclosure standards is expected to uphold London’s attractiveness as a global financial centre.
The announcement follows news of the European Union’s efforts to standardise corporate climate risk reporting and address greenwashing concerns. On Monday, the European Commission unveiled its new European Sustainability Reporting Standards (ESRS), underpinning the bloc’s Corporate Sustainability Reporting Directive (CSRD), which is set to impact over 50,000 companies.
The global push towards standardised climate-disclosures underscores the growing emphasis on corporate accountability and transparency in addressing climate-related risks and opportunities. As countries and businesses take proactive steps in this direction, the hope is to create a more sustainable and resilient future for all.
