On 25 June 2025 the UK government published exposure drafts of its new Sustainability Reporting Standards (UK SRS) regarding S1 and S2 disclosures. S1 covers all sustainability information that could affect financial value; and S2 focuses specifically on climate risks, opportunities, emissions, and targets. They are UK adaptations of the International Sustainability Standards Board (ISSB) ’s International Financial Reporting Standards (IFRS) S1 and S2 standards. To stay competitive and reduce risk, UK companies should ensure their systems are equipped for the new standards.

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What the Draft UK SRS S1 and S2 Require

The draft standards bring sustainability and climate reporting onto the same footing as financial reporting. For UK companies, this means new expectations in four areas:

1. Broader Scope (S1)
Companies must disclose any sustainability issues that could affect financial value, not only climate. This includes governance, risk management, strategy and performance metrics across topics such as water, waste, workforce or biodiversity, if they are financially material.

2. Climate Focus (S2)
Detailed climate disclosures are mandatory, including Scope 1, 2 and 3 emissions, transition and physical risks, opportunities, climate targets, and scenario analysis to test business resilience under different warming pathways.

3. Financial Alignment
Disclosures must be published at the same time as annual financial statements. This removes the option to delay, meaning sustainability and finance teams will need to integrate data collection and reporting processes.

4. UK Amendments
The UK draft includes six differences from the ISSB baseline. Among the most significant: no delayed reporting relief, optional SASB industry guidance instead of mandatory, and extended “climate-first” relief (allowing a focus only on climate topics for two years before expanding to broader sustainability).

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Timeline and Regulatory Status

• The consultation on the draft UK SRS S1 and S2 closed on 17 September 2025. The UK government and the UK Endorsement Board are now reviewing responses, with final standards expected in autumn 2025. They will be available for voluntary adoption at first.
• Mandatory reporting is expected to be phased in, but exact dates and scope have not yet been set. Current proposals suggest the first application will be for listed companies under the FCA’s listing rules, with possible later expansion to other economically significant entities. The government is also considering whether to extend the regime to large private companies and Limited Liability Partnerships (LLPs).

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Why This Matters

For UK companies the draft UK SRS S1 and S2 mark a shift in how climate risk will be understood, audited and acted upon. Investors, lenders and customers will increasingly expect clear, comparable disclosures. Companies that prepare early, embedding climate resilience into core strategy, may secure better access to capital and reduce regulatory or reputational risk.

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What Leaders Should Do Now

To prepare for UK SRS S1 and S2, companies should focus on five priorities:

• Close the gaps: Review current reporting against S1 and S2. Check for missing Scope 3 data, weak controls, governance gaps and timing mismatches.
• Build reliable systems: Put in place robust processes for Scope 3 data and supplier engagement. Ensure emissions data can be verified and used for scenario modelling.
• Align with finance: Synchronise sustainability reporting with financial close processes, disclosures must now be published at the same time.
• Elevate governance: Boards must be able to evidence oversight of climate and sustainability risks, targets and opportunities.
• Prepare for assurance: Treat sustainability data like financials. Put audit trails and controls in place so external reviewers can verify accuracy.

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How NetZero Lite and NetZero Pro Can Help

NetZero Lite helps you establish a baseline. It tracks Scope 1 and 2 emissions, waste and water metrics, builds spend-based data sets, and visualises hotspots. This is useful for meeting early requirements, preparing internal reports, and assessing where gaps exist.

NetZero Pro supports the deeper work. It assists with strategy development, detailed Scope 3 emissions and scenario modelling. Our in-house consultants help with assurance preparation and aligning reporting with UK SRS.

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Conclusion

UK SRS S1 and S2 bring a more demanding, integrated and globally aligned standard for climate and broader sustainability disclosure. Baseline your emissions, strengthen your data systems, and align your governance. As you scale, strategy and assurance readiness will be what separates organisations that manage climate risk effectively from those that are caught unprepared.

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Key words

• UK SRS: Sustainability Reporting Standards
• UK SRS S1:  all sustainability information that could affect financial value
• UK SRS S2: focuses specifically on climate risks, opportunities, emissions, and targets.
• ISSB: International Sustainability Standards Board
• IFRS: International Financial Reporting Standards
• SASB: Sustainability Accounting Standards Board
• FCA: Financial Conduct Authority

Sources

• UK Government: Exposure Draft of UK Sustainability Reporting Standards (UK SRS S1 and UK SRS S2), June 25, 2025
• Saffery: UK Sustainability Reporting Standards S1 and S2 – Exposure Draft
• Anthesis Group: Introduction to the UK SRS
• Slaughter and May: UK Government launches UK SRS consultation

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