UK government proposals for overseeing third-party assurance of sustainability related financial disclosures

On 25 June 2025, the UK government published three consultations (see press release):

• The Department for Energy Security and Net Zero (DESNZ) published a consultation on transition plans - see here.
• The Department for Business and Trade (DBT) published Exposure Drafts of the UK Sustainability Reporting Standards (UK SRS) for consultation - see here. The UK SRS will implement the ISSB's sustainability disclosures standards (IFRS S1 and IFRS S2) into UK law. 
• The DBT has also published a consultation on the government's proposal for greater regulatory oversight of third-party assurance services for sustainability-related financial disclosures - see here. 

This blog post focuses on the third party assurance consultation. 

The basics

The third party assurance consultation document can be accessed here.

The consultation closes on 17 September 2025.

The government is seeking views on a proposal to introduce a voluntary registration regime operated by the Audit, Reporting and Governance Authority (ARGA) (once established) that would recognise assurance providers as being capable of assuring information disclosed against UK SRS, the European Sustainability Reporting Standards (ESRS) and any jurisdictional standards that are aligned to the ISSB standards.

The proposals

The consultation follows the FRC’s market study on sustainability reporting assurance in late 2024, which saw significant stakeholder appetite for greater regulatory oversight of the assurance market to support the availability of consistent, high quality sustainability information for decision making.  This consultation represents the first phase of policy development regarding sustainability assurance, and would see the government create a new category of “sustainability assurance provider”, qualified to provide third party assurance over an entity’s sustainability-related financial disclosures. 

The proposals envisage ARGA overseeing a publicly available register, and registering sustainability assurance providers, setting eligibility criteria for registration, monitoring their performance and, where necessary, enforcing standards (e.g. by way of fines, or de-registration) where providers perform poorly.

At this stage, and particularly as the relatively immature UK sustainability assurance market develops, the proposal is for a voluntary registration regime, such that registration would not be a precondition to offering assurance services (the government anticipates that it would be in the self-interest of assurance providers to opt in to the regime, with the expectation that reporting entities would be more likely to seek the services of registered providers than unregistered providers).

A number of details are still to be developed. It will be for ARGA, once established, to consult on specific eligibility criteria in due course.  The government is planning to make ARGA responsible for setting audit standards in the UK and this function will extend to setting technical and ethical standards for sustainability assurance - this role would include consideration of how closely UK standards align with international standards, thus the detail here remains to be seen (and indeed how ARGA should exercise its proposed sustainability assurance standard setting functions over time is the subject of consultation questions). In the meantime, the government proposal expresses support for the use of the International Auditing and Assurance Standards Board ISSA 5000 standards (which the FRC are currently consulting on for voluntary use in the UK).

Scope of information being assured

Overall, the objective of the government's proposal is to support a consistent quality of assurance over sustainability related financial disclosures in the UK, in particular disclosures made in accordance with UK SRS. However, it is also envisaged that the registration regime will support UK assurance providers accessing business opportunities overseas or where UK companies are currently subject to assurance regimes originating in other jurisdictions. As such, the intention is that registered UK sustainability assurance providers would be sufficiently qualified to provide assurance over a range of disclosure frameworks, including the TCFD, ESRS (under the EU CSRD), UK SRS, and any other jurisdiction-specific standards that are in line with IFRS sustainability disclosure standards. 

There is specific reference in the consultation to the regime potentially supporting UK assurance providers to “meet the European requirements for sustainability assurance under its CSRD”.  The point here is that the UK registration regime could then also enable UK assurance providers to provide assurance for large UK-parent companies with operations in Europe (currently, subsidiary entities of UK-parent companies can access an exemption from European reporting requirements, on the condition that the parent company’s disclosures satisfy CSRD requirements. These requirements state that reporting by the parent company must be accompanied by an assurance opinion by a person or firm authorised either under the national law of the non-EU company’s home country or of a member state). Of course implementation of the regime requires changes to primary legislation and the government recognises that existing barriers will remain in place until the registration regime is in operation. The government is therefore considering whether it is possible to resolve this issue in the interim period and is seeking further evidence on the scale of the issue and the impact it has on UK companies and service providers.

Mandatory assurance?

Looking ahead, the government intends to issue a consultation on requiring economically significant companies to make disclosures in accordance with UK SRS, following the endorsement consultation (albeit early views are sought as part of the endorsement consultation).  As part of this consultation consideration will also be given to whether to mandate assurance for those entities that might be the subject of future disclosure requirements (and early views are sought from respondents on this question).

Resources:

The third party assurance consultation document can be accessed here.

Find our blog post on the Department for Energy Security and Net Zero (DESNZ) consultation on transition plans here.

Find our blog post on the Department for Business and Trade (DBT) consultation on the Exposure Drafts of the UK Sustainability Reporting Standards (UK SRS) here.