The UK government has launched three consultations on sustainability reporting.
The country’s Department for Business and Trade took the market by surprise on Wednesday when it announced it was officially seeking feedback on proposed Sustainability Reporting Standards (SRS).
One of the consultations focuses on how the UK should adopt the International Sustainability Standards Board’s (ISSB) framework.
Its proposal is based on recommendations made by a dedicated technical advisory committee in December, and largely follows that advice.
Neither the technical advisory committee nor the government want to deviate materially from what ISSB outlines in its initial two standards: IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures.
It comes as the Global Reporting Initiative (GRI) issued two new standards for climate change and energy.
GRI 102 focuses on the importance of reducing emissions, rather than using offsets, and incorporates metrics on the just transition. GRI 103 addresses an organisation’s energy-related impacts and activities.
In addition, the Department for Business and Trade has launched a consultation on requirements for investors and companies to publish climate transition plans.
Earlier this week, the ISSB unveiled its guidance on how to disclose transition plans under IFRS S2. That guidance is based on materials developed by the Transition Plan Taskforce, which was originally set up by the UK government to advise it on how to mandate transition plan reports.
Yesterday’s consultation explores the different approaches the UK could take to introducing such rules.
Claire Jones, head of responsible investment at consultancy LCP, welcomed the consultation on transition plans, describing it as “an important first step”.
“A requirement to prepare and implement transition plans could help align the UK corporate and financial sectors with the UK’s commitment to reach net zero emissions by 2050,” she said, adding that this was important for pension funds because “it will help to prevent damage to the economy and financial markets on which their members’ pensions depend”.
Jones explained that it would be crucial that any requirements introduced struck a balance “between enabling and encouraging actions from companies and financial institutions to reduce emissions while also respecting their legal duties to shareholders and savers and not creating a disproportionate reporting burden”.
A new legal opinion issued by Client Earth this week said that a regulatory requirement for companies to disclose a transition plan would probably not result in materially heightened liability risk for companies or their directors.
A third consultation is also underway, which centres on how sustainability reports and associated disclosures should be assured by auditors.
All three consultations are open until 17 September.
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