After much anticipation, regulators have recommended the adoption of two new sustainability reporting standards that should make UK companies more comparable with corporates elsewhere in the world.

A special committee set up in May to review IFRS S1 and S2, published last year by the International Sustainability Standards Board, issued its final recommendation today, following a unanimous vote, saying their adoption would be “conducive to the long-term public good in the UK”.

Sally Duckworth, chair of the UK Sustainability Disclosure Technical Advisory Committee (TAC) said the standards would be recommended to the business secretary for implementation.

“This is a crucial step in aligning UK businesses with global reporting practices, promoting transparency and supporting the transition to a sustainable economy,” she said.

Endorsement comes at a time when other non-financial reporting standards have proved controversial. The EU is in the process of implementing the Corporate Sustainability Reporting Directive (CSRD), though there are complaints—even in high-profile reports—that, along with other measures, the directive constitutes a “major source of regulatory burden”.

US efforts to introduce mandatory climate risk reporting rules were suspended earlier this year because of a legal challenge. However, many experts assume the rules will be killed off once Donald Trump begins his second presidency in January.

IFRS S1 and S2 are now poised to become the base for the UK Sustainability Reporting Standards, though amendments have been recommended that could affect the method for classification of greenhouse gas emissions.

TAC’s report reveals some subjects—among them the application of materiality, guidance and transition plans—provoked significant debate.

Next level

So far, large companies in the UK have been required to report according to the TCFD (Taskforce for Climate-related Financial Disclosures). IFRS S1 and S2—though mirroring much of TCFD—should take sustainability reporting through a step change.

S1 aims for general sustainability disclosures considered to have a “material” impact on a business. S2 focuses on climate-related disclosures, based on TCFD. However, in a departure from TCFD, S2 mandates reporting of Scope 3 emissions, considered the most difficult to calculate. TCFD had encouraged publication of this information, but included no mandate.

Some countries have already adopted S1 and S2. Turkey went through the process last year and its companies should use the standards for reporting on the current financial year. Brazil, too, has completed the adoption process, with the standards applying to accounts covering the period beginning January 2026.

There are some questions to be resolved about the potential assurance of sustainability disclosures. TAC says “limited” assurance, offering “moderate” confidence about the quality of statements, is the most likely approach for sustainability information, at least in the initial years. This mirrors the approach taken by the EU over CSRD.

TAC also worries about the “difficulty for entities in providing certain information for the purposes of obtaining assurance”. Scope 3 emissions are likely to prove particularly sensitive.