What the UK’s New Sustainability Reporting Rules Mean for Businesses

Companies in the UK will soon need to report more clearly on how they’re dealing with environmental and climate-related issues. This is part of a global shift toward more transparency about sustainability—and the UK is working on new rules called the UK Sustainability Reporting Standards (UK SRS) to guide this process. These rules will help investors and the public understand how businesses are managing climate risks and planning for a greener future.

Why Are These New Rules Being Introduced?

In 2021, an international group called the International Sustainability Standards Board (ISSB) was created to set global standards for sustainability reporting. The goal is to make it easier for investors to compare companies and make smart decisions based on how they manage environmental risks.

In 2023, the ISSB released two important standards:

• IFRS S1 – covers general sustainability information.

• IFRS S2 – focuses on climate-related issues.

The UK government has supported these global standards and is now adapting them into its own national rules (UK SRS). These are expected to be finalized in early 2025, with reporting requirements starting soon after.

Which Companies Will Be Affected?

At first, the new rules will likely apply to companies listed on the UK stock exchange, but the government may expand them to cover other large businesses too. That includes companies in industries like finance, energy, manufacturing, and retail—especially those that already have to report emissions under existing rules like the SECR (Streamlined Energy and Carbon Reporting) framework.

What Will Companies Need to Report?

Businesses will need to share detailed information on:

• Climate risks and opportunities: For example, how extreme weather or new government climate policies might affect their operations.

• Emissions: Companies must report their carbon emissions—including direct pollution (Scope 1), energy-related emissions (Scope 2), and emissions from their supply chains (Scope 3).

• Governance and strategy: How they’re including sustainability in their decision-making and business plans.

• Goals and progress: Targets for reducing emissions and how they’re tracking against those goals.

This information will give investors a clearer picture of how seriously companies are taking sustainability.

When Do the New Rules Start?

The UK SRS is expected to be officially published by March 2025, with reporting likely to begin for financial years starting on or after July 1, 2025. Companies will probably have 6–12 months to prepare, giving them time to adjust systems and processes.

How Can ESG Reporting Tools Help?

Many companies are turning to ESG reporting tools to make this process easier. These digital tools can:

• Collect and organize emissions and sustainability data.

• Ensure reports meet current rules and standards.

• Help companies stay audit-ready and transparent.

• Combine financial and sustainability data in one place for easier reporting.

With the new UK standards on the horizon, now is a good time for businesses to start exploring these tools and getting systems in place.

Final Thoughts

The UK SRS is part of a growing global trend toward better sustainability reporting. Companies that get ready now will not only avoid compliance issues but also build trust with investors and customers who care about climate and social responsibility. Staying updated and seeking expert advice will be key to success in this new reporting environment.