Reporting should be the outcome, not the objective
UK SRS presents an opportunity to move beyond a compliance-led approach and embed sustainability more effectively into business strategy, operations and financial planning.
Rather than treating reporting as a standalone exercise, companies should focus on understanding and managing the risks and opportunities that matter to their business.
This requires closer collaboration between sustainability, finance, strategy, operations, risk and investor relations teams.
Comply or explain still requires meaningful disclosure
The move to a comply or explain approach provides flexibility, but it should not be seen as an opportunity to avoid addressing material sustainability issues. Companies will need to consider carefully what they disclose and how they explain their approach, particularly where information is not yet available or reporting practices are still developing.
Clear, credible explanations will be important in helping investors understand a company's position and progress.
Better connectivity will make reporting more useful
Investors need to understand how sustainability-related risks and opportunities affect a company's financial prospects, business model and strategy. UK SRS places more emphasis on connecting sustainability disclosures with financial information.
Making these connections clearer will help investors understand potential financial impacts and make more informed decisions.
Take a joined-up approach to different reporting frameworks
With companies subject to multiple sustainability reporting requirements across different countries, interoperability remains a challenge. Although frameworks such as the UK SRS and the CSRD approach disclosures differently they often try to communicate similar information.
Companies should look for opportunities to align data collection, reporting processes and governance to reduce duplication.
Progress is being made, but challenges remain
Companies are getting better at explaining their sustainability-related risks and transition plans, but quantifying the financial impacts of those risks and demonstrating how ambitions relating to, for example climate/weather variability, water or supply chains, will be funded is proving trickier.
Reporting standards currently appear climate-focused, inadvertently making other sustainability topics look secondary, perhaps due to the legacy of TCFD.
Start preparing now
Although the requirements are being phased in, there are practical steps companies can take now.
These include reviewing internal governance, updating materiality assessments, a gap analysis against UK SRS requirements, and assessing data quality and availability.
Companies should also consider the practicalities of integrating sustainability reporting into the annual reporting cycle, particularly if other standards, such as ESRS, are used.
Would you like to know more about preparing for UK SRS and making your sustainability reporting more connected and effective?
We would love to hear from you.
