The UK Government’s ‘Green Finance Roadmap’, published in October 2021, set out the commitment to adopting the IFRS Sustainability Disclosure Standards for use by the UK registered entities. This commitment was a core component of the economy wide ‘Sustainability Disclosure Requirements’ (SDR) regime. As such, like many other jurisdictions, the UK Government intends to establish a framework for the endorsement and adoption of IFRS Sustainability Disclosure Standards. In the UK, no single organisation has yet been delegated a statutory function to consider and adopt IFRS Sustainability Disclosure Standards for use in the UK. Work to develop the necessary framework is ongoing.
Until an endorsement framework is in place, the UK Government, has asked the UKEB, the Financial Conduct Authority (FCA) and the Financial Reporting Council (FRC) to engage with the International Sustainability Standards Board (ISSB) and to respond to their consultations, according to their respective regulatory objectives and functions. This request was publicly announced in Lord Callanan’s letter to the ISSB regarding their exposure drafts of IFRS S1 and IFRS S2.
The UKEB is carrying out the following work in this area, to consider the overlap or impact of the proposed ISSB IFRS Sustainability Disclosure Standards with IFRS Accounting Standards:
A research project on reporting climate-related matters in financial statements was approved for commencement by the UKEB at the February 2023 UKEB Board meeting. The evidence gathered will help the UKEB to obtain insight on the UK companies’ existing experience of reporting on climate-related matters and the connectivity between sustainability reporting and financial reporting in this respect. This will help the UKEB to provide evidence based responses to both the IASB, on its project on Climate-related Risks in the Financial Statements, and to the ISSB, on its RFI on its future agenda setting.
The UKEB Secretariat has presented to the Board a series of preparatory papers, focusing on connectivity between the IFRS Sustainability Disclosure Standards and International Accounting Standards. The papers are developed to act as background material to inform the UKEB’s consideration of the key matters related to connectivity as it develops its own position.
To inform the UKEB’s work in this area, the following groups have been set up:
The purpose of the NSS Sustainability Forum is to develop an understanding of connectivity issues between IFRS Accounting Standards and IFRS Sustainability Disclosure Standards, consider possible solutions that would address the stakeholder needs for connectivity between information presented in companies’ sustainability reports and financial reports, and share them with ISSB and IASB as they develop high quality international standards.
The Sustainability Working Group (SWG) provides specialist knowledge and technical advice to the Secretariat on connectivity issues between the IASB’s Accounting Standards and the ISSB’s Sustainability Disclosure Standards. The group also contributes practical experience and expertise, including examples of best practice.
Both groups are chaired by the UKEB Technical Director.