A trio of consultations: The UK government consults on sustainability reporting requirements and transition planning

In a speech at the Guildhall during London Climate Action Week, the UK energy and climate change secretary, Ed Miliband announced three consultations.

He stated that the additional sustainability reporting will “ensure public and private investors drive our country and the world towards climate and clean energy.”

Also on 25 June 2025, the UK government published three consultations seeking views on the UK sustainability reporting in three core areas:

• exposure drafts of the much anticipated UK Sustainability Reporting Standards (UK SRS);
• mandatory climate-related transition planning in the UK; and
• regulatory oversight of the assurance of sustainability reporting in the UK.

UK SRS

The Department for Business and Trade (DBT) has published the long-awaited Exposure Drafts of the UK SRS for consultation.

UK SRS is the potential adoption of an anglicised version of IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures (commonly referred to as the ISSB standards, given the standards were created by the International Sustainability Standards Board, now within the IFRS). The consultation proposes six amendments to IFRS S1 and IFRS S2 as follows.

1. Removal of the transition relief in IFRS S1 that permits delayed reporting in the first year, so that reporting entities are no longer able to submit sustainability disclosures at a later time than financial statements.
2. Extension of the transition relief in IFRS S1 that permits a “climate-first” approach which would allow reporting entities to defer the disclosure of sustainability-related risks and opportunities beyond those on climate by an additional year.
3. Removal of the requirement to use the Global Industry Classification Standard (GICS) in IFRS S2.
4. Removal of the “effective date” clauses in IFRS S1 and IFRS S2. Any timetable for applying the standards will be dependent on subsequent rules or regulations put in place by the UK Government or the FCA.
5. Amending “shall” to “may” in relation to referring to the standards published by the Sustainability Accounting Standards Board (SASB).
6. Linking any transition relief to the introduction of any mandatory reporting requirements by the UK Government or the FCA.

If endorsed, the UK government aims to publish the final UK SRS S1 and UK SRS S2 in autumn 2025.

The FCA will consult separately on proposals to require the use of UK SRS by listed companies within the FCA listing rules; there is no proposed timeframe for this consultation as yet.

Climate related transition plan requirements

In the 2024 Labour party manifesto, the Government committed to mandating “UK regulated financial institutions (including asset managers) and FTSE 100 companies to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Climate Agreement”. Consequently, The Department for Energy Security and Net Zero (DESNZ) have now published a consultation on transition plans.

The transition plan consultation does not include any draft rules, however it seeks views on the following two options.

• Option 1:  If an in-scope entity does not publish a transition plan, it would be required to explain why. This is essentially a “comply or explain” approach.
• Option 2:  In-scope entities would be required to disclose and develop a transition plan. There would be no option to decline to develop a plan and explain why.

Further questions relate to:

• the benefits and use cases of transition plans;
• the motivations of entities currently disclosing transition plans;
• how transition plans are used in practice;
• the costs and challenges associated with transition plans;
• developing a transition plan;
• disclosing the plan and how frequently plans should be disclosed;
• having a plan aligned with 1.5°C;
• alignment with nature;
• implementing a plan; and
• legal risks associated with a transition plan.

At present, the Government has not yet determined if it will make transition plans mandatory and we expect to see a further consultation on future obligations.

Regulatory oversight of the assurance of sustainability reporting in the UK

The DBT has also published a consultation on the Government's proposal for greater regulatory oversight of third party assurance providers in relation to sustainability related disclosures.

The Government is seeking views on a proposed voluntary registration regime operated by the Audit, Reporting and Governance Authority (ARGA), which if established would endorse assurance providers of being capable of assuring information disclosed against UK SRS, the European Sustainability Reporting Standards (ESRS) and any other domestic standards that are aligned to the ISSB disclosure standards.

It is expected that ARGA will consult on audit standards in the UK in due course, including for sustainability assurance.

Conclusion

This trio of consultations represents a pivotal moment for the UK’s sustainability disclosure landscape.

Each consultation is open until 17 September 2025 for feedback. Do speak to your usual Macfarlanes contact in the ESG team for more information. 

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For more details on each consultation, read: 

Delayed but not derailed: the UK Sustainability Reporting Standards consultation

Mandatory transition planning – UK government progresses their manifesto commitment

Developing an oversight regime for sustainability assurance: key points from the UK government consultation