The way companies report on sustainability is changing fast. With the Corporate Sustainability Reporting Directive (CSRD)now in effect in the EU and the UK Sustainability Disclosure Standards (UK SDS) set to follow, businesses across the UK and EU will soon face mandatory reporting on their environmental, social, and governance (ESG) performance.
Why Is This Happening?
One major change? Under IFRS S2, companies must publish their climate transition plans, including targets, actions, and resources to shift toward a low-carbon economy.
Investors, regulators, and stakeholders have long demanded consistent, reliable sustainability data. The CSRD and UK SDS build on global frameworks like International Sustainability Standards Board (ISSB) IFRS S1 & S2, ensuring companies disclose their real impact on people and the planet.
What Must Be Reported?
- Climate impact & environmental performance.
- Social & human rights considerations.
- Governance policies & anti-corruption efforts.
- Sustainability risks & opportunities.
Who Must Comply?
In the UK:
The timeline is currently being defined but broadly expected to follow EU with a slight lag.
- Initially, large UK-listed companies & financial institutions(transitioning from Task Force on Climate-related Financial Disclosures (TCFD) reporting).
- The Financial Conduct Authority (FCA)is expected to integrate UK SDS into UK listing rules.
In the EU:
More clearly defined timeline with first reporting underway. Note: this will also apply to some non-EU companies trading in the EU.
- 2024 (reports due 2025):Large public interest entities (500+ employees).
- 2025 (reports due 2026): Large companies (meeting 2 of 3: 250+ employees, €40M+ turnover, €20M+ assets).
- 2026 (reports due 2027): Listed SMEs (opt-out available until 2028).
- 2028: Non-EU companies with €150M+ turnover in the EU must comply.
Who’s Enforcing This?
In the UK:
FCA & regulatory bodies.
In the EU:
National regulators in each member state.
Failure to comply? Potential fines and reputational damage.
What’s Next?
This is just the beginning. As sustainability reporting aligns with IFRS & ISSB frameworks, sustainability data will be as critical as financial data.
Is your company ready? Contact us today to find out more
