The UK is carving its path in sustainability reporting — and that matters more than most realise.

This week, I’ve been working through the draft UK Sustainability Reporting Standards (S1 & S2). These are not copy-paste jobs from ISSB’s IFRS S1 and S2. The differences — while subtle in places — are deliberate, strategic, and consequential for UK reporters.

Whether you’re an accountant in practice supporting clients through the upcoming wave of ESG regulation, or you’re sat inside the business as a reporting lead, Financial Controller or CFO, these are the kinds of redlines that can easily be missed — and quietly cost your clients, or your reporting credibility, later.

Here’s a breakdown of the key UK departures from the global ISSB baseline — and what they mean in plain English.

1. “Shall” becomes “May”: The UK Loosens the Mandate on Industry Guidance

Across both UK SRS S1 and S2, one change appears again and again:

IFRS says an entity “shall refer to” sector-specific or industry-based disclosure topics.
UK SRS says “may refer to” them.

This softens the requirement to adopt frameworks like SASB or ISSB’s industry-based guidance — especially in identifying material topics and disclosure metrics.

Why it matters:

This is not just semantics. For accountants advising clients or preparing disclosures internally, it means greater discretion, fewer black-and-white mandates, and more need for judgement and justification in selecting disclosures. Expect a lot more conversations about what’s “reasonable”, “applicable”, or “material in context”

2. Effective Dates and Transition Relief: The UK Holds Back the Start Gun

IFRS S1 and S2 were due to take effect from 1 January 2024, with earlier adoption encouraged.

UK SRS S1 and S2 strike that out. Instead:

“The effective date… will be set out in the relevant legislation or regulation.”

Translation: We don’t yet know the final go-live date. But the UK is keeping the option open to phase or delay implementation — or to apply S2 (climate) first, then S1 (general) later.

What to do now:

Don’t assume timelines. Instead, get clients and internal teams audit-ready — but prepare for staged adoption, especially if government wants to ease regulatory pressure on mid-market filers.

3. Financed Emissions: Classification Flexibility for Financial Services

For anyone reporting on financed emissions — particularly in asset management, banking, or insurance — this change matters.

IFRS S2 requires use of the GICS 6-digit industry classification to break down emissions by asset class.
UK SRS S2 replaces this with:

“an internationally recognised industry classification system… for example, the one the entity uses for other regulatory or financial reporting purposes.”

Why it matters:

Many UK firms use FCA or PRA-aligned classifications. This redline removes the GICS-only rule and gives finance institutions a path to align ESG reporting with existing regulatory systems. Simpler, cheaper, and more coherent.

4. Scope 3 Emissions: Temporary Relief for the UK Finance Sector

In S2’s Appendix C (transition), the UK introduces a specific relief clause:

Entities aren’t required to disclose Scope 3 financed emissions in the first year, if they participate in asset management, banking, or insurance.

This diverges from the IFRS baseline — which assumes full Scope 3 disclosure, right out of the gate.

Why it matters:

This is huge. Scope 3 is the hardest, most resource-intensive part of climate reporting — especially for financed emissions.
For CFOs and reporting leads, it means phasing, not failing. Use this relief to buy time and build systems that are fit for purpose.

5. General Presentation: Tailored for a UK Audience

Even subtle changes — like renaming the “Effective Date” appendix to “Initial Application and Transition” — signal a local lens.

The UK SRS is structured to plug directly into UK company law and guidance.
IFRS is a global framework; UK SRS is domestic regulation in waiting.

The big takeaway:

If you’re writing disclosures, you’ll need to do more than CTRL+F “IFRS S1” and replace it with “UK SRS S1.” The framing, structure, and expectations are not identical.

So, What Should Accountants Do Now?

If you’re in practice:

• Start mapping client disclosures against UK SRS, not just IFRS.

• Prepare client briefings on the judgement areas (SASB, Scope 3 relief, financed emissions).

• Push for early scoping: Don’t let clients wait until the legislation drops.

If you’re in business:

• Build in scenario flexibility for when and how S1/S2 are applied.

• Document your judgements clearly — especially when choosing not to adopt sector guidance.

• Make use of transition relief, but don’t assume it gives you a free pass. Regulators and stakeholders will still expect progress.

Final Thought

The UK government is handing accountants and reporters more power and more responsibility.

As always, we’re not just reporting the past. We’re shaping what gets seen, trusted, and acted on. And these new UK standards are a big part of that shift. See how neoeco can help accountants deliver scalable UK SRS reporting and assurance services.

Download Your Free UK SRS Checklist

Finance leaders, sustainability teams, and strategic operators navigating the UK’s evolving disclosure landscape can use this checklist to align with the draft standards, identify current gaps, and prepare audit-ready, board-level disclosures.