The UK’s requirements for company disclosure on climate change will be based on the International Sustainability Standards Board (ISBB) sustainable disclosure standards, government officials announced earlier this month.
The UK hopes to appeal to global investors by adopting the standards and help support “the efficient allocation of capital, and smooth running of the UK’s capital markets”.
The ISSB released its official global standards in June, consisting of two components: S1 which deals with general sustainability, and S2 which pertains more to climate-related issues including scopes 1, 2 and 3 emissions. The rules aim to replace private sector practices and increase transparency on a global scale.
Climate disclosures are mandatory for listed companies in the UK, which was one of the first countries to require large companies to disclose the risks they face as a result of climate change.
Britain’s business ministry said it would have its version of the ISSB standards ready by July 2024. The UK will only divert from ISSB’s global standards “if absolutely necessary for UK-specific matters”.
In addition, the Financial Conduct Authority has issued a consultation to bring its climate-related disclosure inline with the ISSB standards and build on existing climate disclosure requirements. The regulator aims to finalise its policy by the end of 2024 and is also consulting on its guidance for listed company transition plan disclosures.
Adopting the ISSB standards will help London keep its competitive advantage in green finance and encourage other jurisdictions to follow, said Heather McKay, a senior policy advisor at advocacy group E3G.
“But this government must stay the course and deliver – or British businesses and investors risk missing out on over £1tn in economic opportunities from providing goods and services for the global net zero transition,” she said.
Incorporating the ISSB’s standards into UK requirements builds on the country’s commitment towards reaching net zero by 2050. The recent Financial Services and Markets Act gives financial institutions more scope to consider net-zero targets, but some critics say regulators don’t have a strong enough climate mandate.
This page was last updated August 17, 2023
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