UK adopts ISSB standards

Written by Adam Cadle

07/08/2023

Company disclosures on climate change will be based on the International Sustainability Standards Board (ISSB) standards, Business and Trade Secretary Kemi Badenoch has announced.

Published by the Department for Business and Trade (DBT), UK SDS will be based on the IFRS Sustainability Disclosure Standards issued by the International Sustainability Standards Board (ISSB). Adoption of the standards will help allow further investment, boosting the UK’s position as a leader in climate finance, and help clamp down on greenwashing.

The UK was amongst the first major economies to require climate disclosures mandatory for listed companies, using standards from the Task Force on Climate-related Financial Disclosures (TCFD), which, in turn, underpin the ISSB standards.

The UK Sustainability Disclosure Standards (SDS) will form the basis of any future requirements in UK legislation or regulation for companies to report on risks and opportunities relating to sustainability matters, including risks and opportunities arising from climate change. The Business and Trade Secretary will consider the endorsement of the IFRS Sustainability Disclosure Standards, to create UK SDS by July 2024. The Department for Business and Trade said that the “UK endorsed standards will only divert from the global baseline if absolutely necessary for UK specific matters”.

By using the standards as a baseline, the aim is for the information companies disclose under UK SDS to be globally comparable and decision-useful for investors. The disclosures required by these standards will help investors to compare information between companies, thereby aiding decision making; supporting the efficient allocation of capital, and smooth running of the UK’s capital markets.

The UK joins Canada, Japan, Singapore, Nigeria, Chile, Malaysia, Brazil, Egypt, Kenya and South Africa, in alignment with the ISSB standards, whilst the EU and the US both have separate competing standards.

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