Britain to duplicate ISSB’s sustainability reporting standards

The UK government’s upcoming corporate disclosure framework - the Sustainability Disclosure Standards (SDS) - will be underpinned by the reporting principles of the International Sustainability Standards Board (ISSB).

According to a statement from the UK Department for Business and Trade, the SDS will use the ISSB framework as a baseline, with plans for the new regulation to be rolled out in Britain by July of next year.

The SDS will be a disclosure scheme covering sustainability-related risks and opportunities that companies face. 

The British government stressed any “UK endorsed standards will only divert from the global (ISSB) baseline if absolutely necessary for UK specific matters.”

ISSB

Initially launched following the COP26 climate conference in Glasgow in 2021, the ISSB aims to develop standards for a global baseline of sustainability disclosures. 

The framework enables companies to provide comprehensive sustainability information to global capital markets.

Last month, it was confirmed that the ISSB is to merge with the Task Force on Climate-Related Financial Disclosures (TCFD), considered a critical step forward in unifying the current climate disclosure maze, even though the decision was met with scepticism by some industry insiders.

'Step in the right direction'

Responding to the UK government's move to largely duplicate the ISSB standards, Alexis Normand, chief executive of carbon accounting firm Greenly, said that “UK adoption of these standards is a significant step in the right direction when it comes to consolidating the fragmented landscape of disclosure frameworks globally."

He added: “Whilst decisions over whether or how to enforce the rules will become clear in time, widespread adoption of these standards would improve the quality of information that market participants have access to and would provide investors with valuable information that will help them decide where to allocate capital." 

"Just like financial reporting, the hope is that reporting on sustainability issues will be taken into consideration when making resource-allocation decisions.”

To assist with implementing the ISSB’s first two standards, IFRS S1 and IFRS S2, within the upcoming SDS, the UK government has established two committees, the Sustainability Disclosure Technical Advisory Committee, and the Sustainability Disclosure Policy and Implementation Committee (PIC).

PIC’s membership consists of UK government departments and regulators, including the Bank of England, the Department for Energy Security and Net Zero, the Department for Environment, Food and Rural Affairs, and the Financial Conduct Authority.

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