ISSB readiness: the UK market’s moment of truth

Transition plans show a similar pattern. Companies with transition plans will be required to disclose information about them when applying UK SRS. 

Most large UK listed companies now publish a transition plan or low carbon strategy, signalling genuine intent. Many reference net zero commitments and science-based targets.

Our analysis shows that only a third of the companies currently align with the UK Transition Plan Taskforce (TPT) framework with only a few providing fully quantified emissions‑reduction pathways by decarbonisation lever. Many of the plans lack clear explanations of the assumptions and dependencies that shape their strategies.

Without transparent articulation of these elements including milestones and the links to capex and opex; transition plans risk remaining statements of intent rather than credible delivery roadmaps.

The ISSB Framework, upon which the UK SRS are based, is a framework for reporting on relevant sustainability related risks and opportunities. The draft UK SRS provide for a 2 year transition relief enabling organisations to focus only on climate and the FCA’s proposal include a comply‑or‑explain route for topics beyond climate. This allows companies time to prepare whilst reporting standards or guidance is made available for companies to do so.

In the interim, organisations should avoid interpreting this transition period as permission to defer action. Instead, it should be used to proactively identify sustainability related risks and opportunities beyond climate, in alignment with UK SRS. Under the UK Listing Rules’ ‘explain’ provision, listed companies must still identify any sustainability‑related risks and opportunities for which disclosures are not provided. This means that after the two‑year transition relief, the requirement is more than an opportunity, it becomes a clear obligation to understand and articulate all material sustainability matters.

 Existing materiality assessment processes may require adaptation, and the organisation will need time to adjust.

The identification of sustainability related risks and opportunities in accordance with the UK SRS is more nuanced than in impact materiality exercises which might have been used up to now. It requires companies to assess which sustainability‑related risks and opportunities could reasonably be expected to affect enterprise value, and to understand where they arise across the business model and value chain. Many organisations might already identify principal risks and uncertainties through existing ERM processes, including sustainability topics, which can be leveraged. The UK SRS requirements elevate the expectation, requiring a more forward‑looking and value‑focused assessment, ensuring that sustainability‑related risks and opportunities are clearly linked to enterprise value and integrated into disclosures.

Even if a company adopts a climate first approach, it should still use that time to build the governance, evidence trail and topic roadmap for the full sustainability landscape.

A broader challenge is the lack of sufficient granularity. Many climate disclosures remain high‑level, with aggregated descriptions of risks, opportunities and impacts that do not clearly distinguish differences across geographies, assets, business units or value chain segments.

ISSB raises expectations by requiring companies to explain where within the business model and value chain climate‑related risks and opportunities are expected to arise, and how those exposures link to strategy, capital allocation and financial performance. Improving granularity cannot sit with a sustainability team alone. It requires closer collaboration across sustainability, operations, risk and finance, supported by better underlying data.

The draft UK SRS sets a clear expectation that sustainability information must be verifiable, even if the question of mandatory assurance is subject to further consultation. Our assessment shows that while many listed companies already obtain some form of assurance, it is generally narrow, typically limited to GHG emissions or a small number of operational KPIs such as energy, water or waste.

With full assurance still some way off, the priority now is ensuring that disclosures can genuinely stand up to scrutiny. This means being able to trace data back to source, applying consistent reporting criteria, and operating strong controls, for quantitative metrics as well as assumptions, methodologies and narrative statements.

This shift is reinforced by the UK Corporate Governance Code, 2024, which now requires boards to demonstrate that internal controls across both financial and non‑financial information are well designed and operating effectively.

As sustainability reporting becomes more intertwined with financial statements, it will naturally attract a higher level of scrutiny from the auditors. In this context, companies that invest early in reliable data, clear documentation and robust controls will be best positioned to meet rising expectations regardless of when formal assurance becomes mandatory.