UK Sustainability Disclosure Requirements: UK Sustainability TAC issues final recommendations on ISSB Standards

The Financial Reporting Council (FRC), in its role as the Secretariat to the UK Sustainability Disclosure Technical Advisory Committee ("TAC"), has published its final recommendations to the Secretary of State for Business and Trade, recommending endorsement of the first two IFRS Sustainability Disclosure Standards ("ISSB Standards") for use in the UK.

The decision is a significant milestone in the move towards enhanced sustainability reporting under the UK Sustainability Disclosure Requirements ("UK SDR") for which the ISSB Standards will form a core component.

In line with the current timeline, the next expected steps are:

• the UK Government endorsement is expected to issue its during Q1 2025;
• FCA will then launch a consultation on replacing TCFD with UK SDR for UK listed companies, with the aim of finalising its policy position by the end of 2025;
• once the FCA has finalised its position, UK SDR is expected to be in force for reporting in 2027 for accounting periods beginning on or after 1 January 2026.

The UK Government is expected to endorse ISSB, with ISSB S1 and S2 forming the core component of.

TAC's decision is also noteworthy for confirming its endorsement on ISSB with almost no proposed amendments (including in relation to reporting of Scope 3 emissions and transition plans), other than two minor omissions:

• TAC recommended amending the requirement in IFRS S2 relating to the use of Global Industry Classification Standard (GICS) when disaggregating gross financed emissions;
• TAC also suggested removing the transition relief in IFRS S1 that permits delayed reporting in the first year but extending the ‘climate-first’ reporting relief to up to two years.