There’s currently change underway in how UK companies disclose their environmental impact – with the Sustainability Disclosure Requirements (SDRs) becoming the new standard.
This article will cover everything you need to know if your business operates in the UK:
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Plus, for an overview of current and upcoming corporate climate disclosure regulations across the world, head to our legislation overview blog – we keep it up to date with all the latest on sustainability-related legislation for businesses.
In October 2021 the UK Government announced its green finance strategy as part of the plan to transition to a net zero economy –Greening Finance: A Roadmap to Sustainable Finance report.
The first phase of the roadmap includes the introduction of Sustainability Disclosure Requirements (SDR).
As it stands, there are various different sustainability reporting regulations in the UK:
It’s a complex landscape for companies and investors alike to wrap their heads around.
So, the SDRs aim to unify corporate sustainability reporting into one set of comprehensive rules on climate disclosure – which companies need to report, what should be included, when it should be reported, in what format, by who, and so on.
This will give businesses a clear framework on how to report on climate risks and opportunities, increase the number of businesses reporting on their environmental impact, and ensure investors and stakeholders have access to the information they need to make informed decisions.
The development of the Sustainability Disclosure Requirements is now with the Financial Conduct Authority (FCA) who will develop the legislation itself.
The details are TBC (and we’ll keep this article updated as developments arise) – most recently, the FCA published a discussion paper for public consultation, exploring consumer-facing climate disclosure and sustainability labelling (which is also part of the greening finance roadmap).
The Sustainability Reporting Directive is expected to be finalised and implemented in 2023.
After implementation, there would then be a rollout period for companies to start their annual reporting – with all companies fully on board by 2025.
The Sustainability Reporting Directives will be based on the recommendations of the Taskforce for Climate-related Financial Disclosures (TCFD) and, once finalised, the global standard being developed by the International Sustainability Standards Board (ISSB).
So, although we don’t know the full details of what companies will be required to include in their reports, we can expect that it will require at least what is suggested within the TCFD recommendations – giving us a good idea of what reporting will need to include.
In very brief, the TCFD rules require 11 disclosures across 4 key areas:
If your company operates in the UK, we’d recommend starting to get everything in order sooner rather than later – it’s highly likely you’ll soon be legally required to report on your environmental impact and plans to reduce it, and there’s a lot to do to get prepared for that.
Plus, beyond the legislation, there’s a very strong business case for working on sustainability anyway – from risk management to customer loyalty to employee satisfaction and more.
Luckily, there are plenty of actions to get started with to put you in good stead for upcoming changes:
Want support? We can help with calculating your emissions, high-quality offsetting, and exploring opportunities for embedding climate impact within your product – get in touch.