The UK government has announced the creation of new sustainability reporting rules that will highly correlate with the standards developed by the International Sustainability Standards Board (ISSB).
The UK Sustainability Disclosure Standards (SDS) will ‘form the basis of any future requirements’ related to corporate disclosure of sustainability issues, including climate change, according to a government statement.
The expected move follows the publication of the ISSB’s first two standards, covering general sustainability information and climate-related disclosures, in late June. A number of countries have indicated or confirmed they will mirror the standards in their own reporting rules.
The UK SDS, which are being developed by the Department for Business and Trade (DBT), will ‘be based’ on the ISSB standards and only ‘divert from the global baseline if absolutely necessary for UK-specific matters,’ the statement says.
‘By using the IFRS Sustainability Disclosure Standards as a baseline, the aim is for the information companies disclose under UK SDS to be globally comparable and decision-useful for investors,’ it adds.
Building on TCFD
The government’s aim is to create the UK SDS by July 2024. After this, the Financial Conduct Authority, the UK’s financial regulator, will be able to set rules for listed companies based on the new standards.
The adoption of new sustainability standards will build on the existing requirement for large UK companies to report in line with the TCFD recommendations. The ISSB has said that companies applying its standards will fulfill the TCFD recommendations.
The UK has created two committees to assist with the endorsement of global standards and the creation of the SDS: the UK Sustainability Disclosure Technical Advisory Committee and the UK Sustainability Disclosure Policy and Implementation Committee.
The former is currently running a consultation on the implementation of ISSB standards in the UK, with a call for evidence open until 11 October.