UK delays endorsement of disclosure standards

The UK government has recently announced a delay in the endorsement of new sustainability disclosure standards, based on the International Sustainability Standards Board (ISSB) guidelines. Originally planned for endorsement in July, the government now aims to finalise the acceptance of these standards by the first quarter of 2025.

Background on the standards

The ISSB launched its first two sustainability standards, IFRS S1 and IFRS S2, last summer. These standards have already been endorsed by several countries, including Brazil, Sri Lanka, and Turkey. Larger economies like Canada and Japan are also nearing endorsement. Meanwhile, the European Union is working to align its own guidance with the ISSB standards.

IFRS S1 serves as the “core baseline” for sustainability reporting, applicable to large businesses across all sectors and geographies. It covers emissions across all scopes and waste management data. On the other hand, IFRS S2 delves deeper into climate mitigation, adaptation, and risk management.

The role of the UK Sustainability Disclosure Technical Advisory Committee

The newly formed UK Sustainability Disclosure Technical Advisory Committee, chaired by Sally Duckworth, will evaluate the potential endorsement of these standards. Duckworth, an experienced accountant and corporate executive, emphasised the importance of these standards in enhancing corporate reporting and promoting a sustainable economy. Furthermore, she noted that the committee’s diverse skills would be crucial in ensuring the standards’ effectiveness and relevance.

Timeline and next steps

Despite the anticipated endorsement in early 2025, this does not mean mandatory implementation of the standards. The government will finalise the acceptance of the standards but will not immediately require regulated entities to comply. The government expects to decide on mandatory implementation by the second quarter of 2025, following further consultation and approval from Parliament. If approved, mandatory reporting requirements would become effective starting in 2027, based on 2026 data.

Implications and observations

For U.S. observers, the UK’s process might seem intricate. The endorsement is just one step towards potential mandatory implementation. The delay allows more time for thorough consideration and consultation, ensuring that the standards, when implemented, are well-suited to the UK’s economic and environmental goals.

While the delay in endorsing the ISSB’s sustainability standards might seem like a setback, it also reflects the UK government’s cautious and thorough approach. By taking the time to ensure these standards are robust and effective, the UK aims to lead in sustainable investment and corporate transparency. The work of the UK Sustainability Disclosure Technical Advisory Committee, under Sally Duckworth’s leadership, will be instrumental in this endeavour. This will set the stage for a more sustainable and transparent financial future.

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