This article is provided by BRC Associate Member and Partner, RPC.


There is an increasingly complex web of sustainability reporting requirements for companies across the world (either in force or in the pipeline).  The ISSB standards seek to set a global baseline for sustainability reporting to ensure consistency and comparability of companies' disclosures. With UK implementation of the standards expected next year, retailers and consumer brands should take steps now to prepare. We outline the current plans for sustainability reporting under the ISSB standards in the UK and flag practical steps that businesses should take to prepare (click here to skip straight to these).


Sustainability reporting initiatives over the past few years have involved a number of differing standards, some voluntary and some mandatory, some created by established industry groups, such as the Task Force on Climate-related Financial Disclosures (TCFD), the Sustainability Accounting Standards Board (SASB) and the Global Reporting Initiative (GRI), and some jurisdiction-specific frameworks, such as the European Sustainability Reporting Standards (ESRS) required under the EU’s Corporate Sustainability Reporting Directive (CSRD).

The lack of a standardised approach has proved an obstacle for companies seeking to comply with different applicable regimes and for investors seeking to compare disclosures made in accordance with different requirements.

ISSB Standards

The International Sustainability Standards Board (ISSB) sought to address these challenges with the issue of its inaugural global sustainability disclosure standards, IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2: Climate-related Disclosures, earlier this year.

The standards are designed to provide a global baseline for sustainability-related disclosures in capital markets worldwide, creating a common language for disclosing the effect of climate-related risks and opportunities on a company's prospects and helping to improve trust and confidence in company disclosures about sustainability to inform investment decisions.

IFRS S1 provides a set of disclosure requirements designed to enable companies to communicate to investors about the sustainability-related risks and opportunities they face over the short, medium and long term. IFRS S2 sets out specific climate-related disclosures and is designed to be used with IFRS S1. Significantly, it will require reporting entities to disclose their "scope 3” emissions (indirect emissions that occur in the value chain of the reporting company, including both upstream and downstream emissions).  Both standards fully incorporate the recommendations of the TCFD and support integration and interoperability with other pre-existing standards.

Plans for UK implementation

The ISSB standards are voluntary, but many countries are expected to adopt the standards as, or integrate them into, mandatory reporting frameworks. The UK government has announced formal mechanisms for UK endorsement and adoption and intends to develop UK Sustainability Disclosure Standards (UK SDS) by July 2024, which will be based on the ISSB standards and will only divert from them if absolutely necessary for UK specific matters.

Following endorsement and creation of the UK SDS, the next step will be to introduce legal requirements for UK entities. The UK government will decide how to apply these to UK registered companies and limited liability partnerships and the Financial Conduct Authority (FCA) will decide on the approach for UK listed companies, in each case building on existing TCFD-based mandatory disclosure requirements.

The FCA has confirmed that it plans to consult on the implementation of disclosure rules based on the UK SDS in the first half of 2024. Assuming that the UK endorsement of the first two ISSB Standards is completed by July 2024, the FCA aims to finalise its approach by the end of 2024. The new requirements will apply to financial years beginning on or after 1 January 2025, with the first reporting being required in 2026. Whilst consulting on the ISSB standards, the FCA will also seek feedback on guidance that will set out its expectations for transition plan disclosures for listed companies, which it will develop with reference to the Transition Plan Taskforce Disclosure Framework. By consulting on both topics at the same time, the FCA will explicitly recognise the relationship between the TPT Framework and the ISSB standards, noting that the TPT Framework has been designed purposefully to interoperate with IFRS S2.

Implications for retailers and consumer brands

Once legal requirements based on the ISSB standards are introduced, retailers and consumer brands will be required to report on a range of sustainability and climate matters, including in relation to their supply chains.  Although the ISSB standards are intended to create a global baseline, other disclosure standards may well apply, particularly for global businesses. For example, retailers and consumer brands selling into the EU may also need to report in line with the ESRS, as required by the CSRD. The European Commission has stated that it has aligned the ESRS with the ISSB standards where possible. However, the ESRS go beyond the ISSB’s requirements by adopting a more demanding “double materiality” approach, requiring companies to report on their impact on the climate in addition to reporting on the financial impact of climate change on their businesses. This additional requirement will enable "pro-social" shareholders and other stakeholders to analyse companies' impact on the climate and put pressure on them to improve their performance.

Although increasing the reporting burden on companies, sustainability reporting requirements also have many benefits for UK retailers and consumer brands, such as:

  • Enabling them to better understand key sustainability and climate risks and opportunities for their businesses and thereby develop their business models and strategies to adapt to and harness these.

  • By requiring companies to source data on scope 1-3 emissions, they help companies to develop credible climate transition plans, which will increasingly become mandatory.

  • High quality climate reporting can help companies show to investors and consumers that they are taking their climate responsibilities seriously. This can help to attract equity investment and expand into the rapidly growing ‘green’ consumer market.

  • The data that is sourced for a company's sustainability disclosures can, in turn, be used to substantiate green marketing claims. This can help make green claims more credible and build trust and brand loyalty with consumers.

However, non-compliant or inadequate reporting may result in regulatory action or litigation against a company. It is therefore vital that companies identify and understand the specific requirements applicable to their organisations and adequately prepare for the introduction of mandatory reporting requirements.

Preparing for mandatory reporting requirements

Retail and consumer brands do not need to wait for legislation to start reflecting on the changes the new baseline may require.

The FCA has set out various actions that listed companies can take to prepare for reporting in line with the ISSB standards and enhanced transition plan guidance. Private companies may also want to follow these suggestions:

  • Continue to improve reporting in line with existing climate-related disclosure rules. As the ISSB standards build from existing rules, the FCA encourages listed companies to continue to improve their climate reporting by considering the TCFD recommendations and accompanying guidance and the areas identified for improvement in FCA publications and thematic reviews undertaken by the FCA and FRC. Companies should consider disclosing climate-related matters in financial statements when the effect is material and show clear connectivity between climate-related disclosures and financial statements.

  • Engage early with IFRS S1 and S2, the associated guidance, and the TPT Disclosure Framework and consider reporting on a voluntary basis. Building familiarity with the ISSB standards and the TPT Framework will help listed companies to identify data gaps and opportunities to improve internal processes. The FCA encourages listed companies to supplement their existing reporting with reporting aligned with both the ISSB standards and TPT Framework on a voluntary basis, ahead of potential future requirements. Early compliance will allow companies to get ahead of the opportunities and risks involved.

  • Engage with the UK endorsement and implementation process for the ISSB standards. The FCA encourages listed companies to respond to the FCA’s upcoming consultation. Companies should also consider responding to the Department for Energy Security & Net Zero's call for evidence on Scope 3 emissions, which closes on 14 December 2023.

The incoming disclosure rules, particularly scope 3 reporting, may be very onerous for many companies and embedding the necessary processes (both internally and with suppliers) may take time.

In preparation, businesses should also consider:

  • ensuring the board and executive management are briefed on the reporting obligations and relevant timelines

  • assessing internal resourcing, hiring staff and/or setting up a central team which will be responsible for managing the sustainability reporting process. This includes coordinating input from around the business (eg from strategy, finance, risk, investor relations and senior management), liaising with suppliers, outside advisors and preparing the relevant disclosures

  • reviewing the business’ current reporting systems/processes to consider whether any updates are required

  • understanding the business’ existing technologies to assist with data collation, aggregation and analytics. Think about the most intelligent use of these systems before introducing any new technologies (e.g. AI, blockchain, software platforms)

  • mapping the business’ supply chain and identifying key actors from whom you will need to request sustainability data

  • setting up initial conversations with suppliers to understand what data they have access to, how it is stored, how it can be transferred to you and in what format etc

  • reviewing the business’ supply contracts to ensure they include relevant reporting requirements, standards and enforcement mechanisms, and considering what additional, specialist support (eg technical and legal) might be required to support the business to comply with incoming reporting requirements

  • ensuring you have suitable internal policies and processes in place governing the use of any data collected (particularly any personal data) to reduce the risk of privacy issues/ data breaches.

Disclaimer: The information in this publication is for guidance purposes only and does not constitute legal advice. We attempt to ensure that the content is current as at the date of publication, but we do not guarantee that it remains up to date. You should seek legal or other professional advice before acting or relying on any of the content.