UK Sustainability Disclosure Requirements (SDR)

What Are UK Sustainability Disclosure Requirements?

The UK Sustainability Disclosure Requirements (SDR) represent the UK's post-Brexit approach to sustainability disclosure regulation. The framework consists of:

1. Corporate reporting: ISSB-based sustainability disclosure for companies
2. Investment labels: FCA sustainability product labeling regime for asset managers
3. Anti-greenwashing: Rules preventing misleading sustainability claims

The UK endorsed ISSB standards as the basis for its corporate sustainability reporting framework, adapting them for the UK context.

Who It Applies To

Corporate reporting:

• UK-listed companies (Premium and Standard Listing segments)
• Phased expansion to large private companies and LLPs
• Expected to cover companies exceeding size thresholds similar to Companies Act reporting requirements

Investment product labels:

• FCA-regulated asset managers
• Firms marketing investment products in the UK
• Applies to UK-domiciled funds and portfolio management services

Key Requirements

Corporate sustainability reporting (ISSB-based):

• Disclose sustainability-related financial information following IFRS S1 and S2 (as endorsed for UK use)
• Governance, strategy, risk management, metrics and targets for material sustainability topics
• Climate-specific disclosures including Scope 1, 2, and 3 emissions
• Scenario analysis and transition plan disclosures
• Consistency with financial statements

Investment product labeling:

• Four sustainability labels: Sustainability Focus, Sustainability Improvers, Sustainability Impact, Sustainability Mixed Goals
• Qualifying criteria including investment strategy, KPIs, stewardship approach
• Anti-greenwashing rule: sustainability-related claims must be fair, clear, and not misleading
• Consumer-facing disclosure requirements and detailed product-level reports

Transition Plan Taskforce (TPT):

• UK-specific framework for transition plan disclosures
• Complements ISSB/TCFD with detailed guidance on climate transition planning
• Expected to become part of formal disclosure requirements

Timeline

• 2023: FCA published SDR policy statement for investment products
• November 2024: Anti-greenwashing rule took effect
• December 2024: Naming and marketing rules for investment products
• 2025-2026: First sustainability labels applied; corporate ISSB-based reporting begins for largest companies
• 2026+: Phased expansion to additional companies

Compliance Steps

For corporates:

1. Assess which ISSB requirements apply under UK endorsement
2. Build GHG inventory and climate risk assessment capabilities
3. Develop transition plan following TPT framework
4. Prepare ISSB-aligned disclosures integrated with financial reporting
5. Engage with auditors/assurers on sustainability information

For asset managers:

1. Review product range against sustainability labeling criteria
2. Assess eligibility for sustainability labels
3. Ensure all sustainability claims meet anti-greenwashing standards
4. Prepare consumer-facing and detailed disclosure documents
5. Implement ongoing monitoring and reporting

How Council Fire Can Help

Council Fire helps UK companies and asset managers navigate SDR requirements — from ISSB implementation and transition plan development through investment product labeling compliance. Contact us for UK SDR support.