The government-appointed Technical Advisory Committee (TAC) has completed its review of the S1 and S2 standards to assess them for use in the UK and it's being proposed that the original standards are adopted with only minor changes.
The proposed amendments include a recommendation that compulsory reporting on S1 (the general standard) is granted two years’ “relief”, meaning that only the TCFD-based climate standard (S2) would be compulsory at first. This change will give UK reporters plenty of time to familiarise themselves with the new general standard before they are compelled to report against it.
Another minor change from the original standards was to amend S2 to give financial sector companies the freedom to use alternative globally recognised classification systems beyond the Global Industry Classification Standard, for presenting financed emissions data. However, a proposed change to make companies disclose the reporting year for calculating their financed emissions where current data can’t be used, wasn’t approved by the TAC.
Concerns about (a lack of) compatibility with the EU’s CSRD are also being flagged to the government. This is because the ISSB’s investor-focused definition of material information is different to the “double materiality” approach used by the CSRD, potentially creating challenges for companies who have to comply with both frameworks. The TAC has advised the government to carry out further consultation on this issue with the European regulator, EFRAG, and the ISSB.
The government is expected to endorse the UK standards in Q1 2025, with the earliest potential reporting date expected for financial years from 1 January 2026 (so implemented in reports published from Q1 2027). However, the final date is still unclear and timings are also subject to the new standards being written into UK law.