The starting gun has fired: Where next for ISSB reporting?

When we wrote last year on ISSB reporting in the UK, the focus was largely on anticipation and preparation. A year on, the conversation has changed. The UK has moved significantly closer to implementation, Australia has already entered its first reporting cycle and is generating valuable practical lessons, while the EU continues to pursue a separate sustainability reporting model, albeit one that is increasingly being simplified and aligned with international reporting frameworks. As we observe in this article, the result is a reporting landscape that is becoming more coherent globally, but which still contains important jurisdictional differences.

 ICYMI: ISSB's growing role as the global baseline

The International Sustainability Standards Board (ISSB) was established to address a long-standing challenge in sustainability reporting: the proliferation of competing disclosure frameworks. IFRS S1 (General requirements for disclosures on sustainability-related financial information) and IFRS S2 (Climate-related disclosures) were designed to provide a globally consistent baseline for sustainability-related disclosures which individual jurisdictions could then tailor to reflect local circumstances. This approach seeks to achieve comparability without sacrificing flexibility. As implementation of sustainability reporting standards progresses globally, the question is now how closely a jurisdiction is choosing to align with the ISSB model.

 The UK: Picking up the pace

The biggest development in the UK in the last year was the UK Government’s endorsement of IFRS S1 and IFRS S2 in February 2026 and the adoption of the first two UK Sustainability Reporting Standards (UK SRS) – UK SRS S1 and UK SRS S2. The Government's approach has been one of intentional alignment with ISSB – while some tweaks have been made to reflect the UK context, they are relatively limited and are primarily technical. These standards are currently available for voluntary use and do not on their own impose ISSB-aligned sustainability reporting requirements on companies incorporated or listed in the UK – yet. Mandatory climate-related reporting for in-scope UK incorporated companies for the time being continues to be aligned with the Taskforce on Climate-related Financial Disclosures (TCFD) framework. The Government has not proposed to amend these requirements as part of its consultation on modernising corporate reporting, as the current climate-related disclosure requirements are the subject of a separate ongoing review. Any transition to UK SRS-aligned reporting will be considered following the completion of that review. (For more detail on the modernising corporate reporting consultation, see our article Information overload: how much disclosure do investors and creditors really want?).

For its part, for listed companies the FCA has decided to move ahead with replacing the existing TCFD-aligned requirements in the UK Listing Rules (UKLRs) with a framework based on UK SRS reporting. Under the FCA’s new rules:

• climate-related disclosures aligned with UK SRS S2, and 
• broader sustainability-related disclosures under UK SRS S1 

will apply to in-scope listed companies on a comply-or-explain basis, subject to certain transitional reliefs in relation to Scope 3 emissions data and non-climate matters in UK SRS S1.

This is a change to the approach the FCA consulted on, which had proposed that the climate-related disclosures under UK SRS S2 would apply on a mandatory basis. The final rules therefore represent less of shift from the existing TCFD-aligned regime (which also applies on a comply or explain basis) and so for many listed companies the gap between TCFD-aligned reporting and ISSB-based reporting may be narrower than first anticipated. However, ISSB-aligned reporting does generally require greater specificity, additional disclosures and more rigorous supporting processes. The transition may therefore be evolution rather than revolution. Helpfully, ISSB has produced a comparison table between IFRS S2 and TCFD, which would be a useful starting point for companies to identify areas that may require additional focus, acknowledging UK SRS S2 is not identical to IFRS S2. 

In another change from its consultation position, the FCA has decided to apply the same comply or explain regime to overseas issuers, rather than merely requiring them to indicate what sustainability-related reporting requirements they are subject to under their domestic reporting regimes. The anticipated relaxation for these companies has therefore not materialised.

Subject to the transitional reliefs, the new rules will apply to reporting periods beginning on or after 1 January 2027, and so the first reports under the new rules will be published in 2028.

The move to ISSB-aligned reporting is therefore well underway in the UK, particularly for listed companies. The race for non-listed UK companies is far from over however, and so they should continue to monitor developments closely.

 Australia: leading the pack on climate reporting

While the UK is still moving through the implementation phase, Australia has already entered the practical phase of ISSB-style reporting. Australia's sustainability reporting framework is based on the Australian Accounting Standards Board’s (AASB) Australian Sustainability Reporting Standards – AASB S1 (a voluntary sustainability standard) and AASB S2. AASB S2 is based on IFRS S2 and incorporates the relevant requirements from IFRS S1 to enable it to operate as a standalone mandatory standard for climate-related financial disclosures in Australia.

As first-wave reporters, the so-called Group 1 reporters, have begun publishing sustainability reports containing the disclosures required under AASB S2, common implementation challenges are beginning to emerge and both ASIC, Australia’s corporate regulator, and the AASB have published reports on implementation so far.