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UK government sets out next steps on SDR implementation

The UK government has published an update setting out the next steps of implementing the UK Sustainability Disclosure Requirements (SDR).

A summary is set out below.

Endorsement of IFRS / ISSB Sustainability Disclosure Standards 

  • Following the assessment of the International Financial Reporting Standards (IFRS) S1 and S2 by the UK Technical Advisory Committee, which should conclude at the end of 2024, the government aims to make the UK-endorsed ISSB standards - known as UK Sustainability Reporting Standards (UK SRS) - available in Q1 2025.
  • Subject to a positive endorsement decision by the government, and following a consultation process, the FCA will be able to use the UK SRS to introduce requirements for UK-listed companies to report sustainability-related information.  
  • In Q2 2025, the government will consult on disclosure requirements against the UK SRS for UK companies that do not fall within the FCA’s regulatory perimeter. This will take into account a number of factors, including costs for reporting companies and benefits for investors that may wish to use this information.
  • At that time, the government will also consider whether to create exemptions from pre-existing requirements in the Companies Act 2006 for those companies that choose to use the standards on a voluntary basis. Any changes that may be introduced would be effective no earlier than accounting periods beginning on or after 1 January 2026.

Transition Plan Disclosures

  • The government will consult “shortly” (sometime in Q2 2024) on how the UK’s largest companies can disclose their transition plans with reference to the UK TPT disclosure framework.
  • The FCA expects to consult in 2025 on strengthening transition plan disclosure expectations in line with the TPT disclosure framework. (Read our earlier blog post for more on the UK TPT.)

SDR & Investment Labels

  • As already announced, in Q3 2024, the government intends to launch a consultation on whether to broaden the scope of the SDR to include funds recognised under the Overseas Funds Regime. Subject to the government’s consultation, the FCA will follow a separate process in 2025 to consult and make rules for overseas funds. Legislation to implement the SDR and labelling for OFR funds is likely to be published in 2025. (Read our earlier blog post for more.)
  • As already expected, the FCA has also issued its consultation on extending the SDR regime to portfolio managers and will publish its final rules in the second half of 2024. (Read our earlier blog post for more). The FCA’s final anti-greenwashing guidance have also now been seen. (Listen to our webinar on the anti-greenwashing rule, and read our blog post for more.)

UK Green Taxonomy

  • The government continues to work at pace and expects to launch a consultation on the design of the UK Green Taxonomy in “due course”.  (Read our earlier blog post for more.)
  • After the Taxonomy has been finalised following consultation feedback, the government will introduce a testing period for voluntary disclosures and use for at least two reporting years before exploring mandatory disclosures. 
  • The government has not yet made a decision on whether to introduce mandatory disclosures against the Taxonomy. Any decision on this would be subject to further consultation and would take account of the evidence from the initial voluntary phase of reporting to ensure that any potential reporting against a future Taxonomy provides accessible and reliable information that is useful to markets.

Nature-Related Disclosures 

  • The government has not given an indication in its update on what (if anything) it proposes to do in respect of nature-related disclosures. 
  • It has merely encouraged firms to engage in the TNFD UK National Consultation Group and consider their recommendations and is waiting to see what (if anything) the ISSB decides to do in respect of a global nature/biodiversity disclosure standard.
  • For more information on the TNFD and the ISSB's proposed work on nature, see our earlier blog posts here and here

The Sustainability Disclosure Requirements: Implementation Update 2024 published on 16 May 2024 is available here.

This document provides stakeholders with a concise summary of how SDR fits together across the financial services sector, wider economy, and when they can expect to engage with proposals.


asset managers & funds, banks & insurers, corporates, disclosure & reporting, greenwashing, sustainable finance, uk, blog posts