ESG · the UK standard
ESG integration under UK SRS: one test, three routes
ESG integration under UK SRS runs every environmental, social and governance topic through a single filter in UK SRS S1: could it reasonably be expected to affect the company’s cash flows, access to finance or cost of capital?
Climate then goes through UK SRS S2, other topics through S1’s general requirements, and governance through S1’s own paragraphs.
The framework
One filter, three routes into the report
UK SRS asks for material information about sustainability-related risks and opportunities that could reasonably be expected to affect a company’s prospects, in paragraphs 3 and 17 of UK SRS S1.
Information is material if omitting, misstating or obscuring it could reasonably be expected to influence the decisions of investors and lenders.
There is no list of ESG topics to tick off and no quantitative threshold: the company judges which of its risks and opportunities pass.
That makes ESG integration under UK SRS a question of transmission — through which channel does a topic reach cash flows, finance or cost of capital?
The judgement itself is worked through on UK SRS S1 materiality.
| Topic | Route in UK SRS | Paragraphs |
|---|---|---|
| Climate | UK SRS S2 | S2 ¶¶5–37 |
| Water, nature, pollution, resources | UK SRS S1 general requirements | S1 ¶¶17–18, 25 |
| Workforce, supply chain, communities | UK SRS S1 general requirements | S1 ¶¶17–18, 25 |
| Governance of those risks | UK SRS S1 and S2 governance | S1 ¶¶26–27; S2 ¶¶5–7 |
E
Environmental topics: climate in S2, the rest in S1
Climate has a standard of its own, UK SRS S2, which specifies what a company discloses about climate-related risks and opportunities.
Its metrics start from absolute gross Scope 1, 2 and 3 emissions measured on the GHG Protocol Corporate Standard, under paragraph 29(a).
For Scope 3, paragraph B32 asks the company to consider all fifteen categories and disclose which it includes — consider, not report.
Other environmental topics — water, nature, pollution, resource use — have no UK SRS standard of their own and enter through UK SRS S1 when they pass its test; the TNFD recommendations are one voluntary way to structure the nature ones.
The climate standard is explained on UK SRS S2, and nature on nature-related disclosures.
G
Governance: the disclosure that travels with every topic
Governance is not a topic that has to pass the test on its own: once a sustainability risk or opportunity is material, UK SRS S1 paragraph 27 asks how it is governed.
That means naming the body or person responsible, how they are informed, their skills, how the risk enters strategy and major decisions, and whether related targets feed into pay.
The listed-company governance framework around it is the UK Corporate Governance Code 2024, which replaced the 2018 edition and has no sustainability reporting requirement of its own.
The TCFD’s governance recommendation, on its frozen recommendations page, is where both UK SRS standards took the structure from.
Board-level detail is on sustainability governance and UK SRS for boards.
The method
Deciding what gets in: a materiality method
A materiality assessment under UK SRS is a judgement, and the standard tells the company what to judge rather than how to score it.
The SASB Standards are the usual starting list of industry topics, and the UK made them optional: UK SRS S1 says a company “may” refer to them, where the ISSB’s text says “shall”, as the government response records.
Whatever sources a company does use, paragraph 59 requires it to identify them.
Stakeholder views help show which topics investors and lenders care about, but under UK SRS they inform the financial judgement rather than replace it.
The EU’s two-sided version of the same exercise is on double materiality.
| Step | What it produces | Anchor in UK SRS S1 |
|---|---|---|
| List risks and opportunities across the value chain | A long list of ESG topics | ¶¶3, 17 |
| Trace each to cash flows, finance or cost of capital | A transmission route, or none | ¶3 |
| Judge whether omitting it could influence investors | The material set | ¶18; no threshold |
| Use industry sources if helpful | Topics and metrics | ¶¶55(a), 58(a) — “may” |
| Record the sources applied | A disclosed list | ¶59 — “shall identify” |
| Review each year | An updated set | — |
In practice
Integration in practice: one data set, one report
UK SRS S1 requires the disclosures to cover the same reporting entity as the financial statements and to connect with them, in its paragraphs on connected information.
In practice that means one data model, one boundary and one set of assumptions for the sustainability and the financial reporting.
For UK companies there is a second saving: UK SRS S2 is a national reporting framework for section 414CB(6) of the Companies Act 2006, so a company reporting under it need not duplicate its climate-related financial disclosures.
UK SRS is voluntary for any entity, per the government’s guidance, and comply or explain for listed companies in scope from 2027.
Implementation is covered on UK SRS compliance and assurance on UK SRS assurance; the standards themselves are on GOV.UK.
A free 15-minute call can work through which of your ESG topics pass the UK SRS test and where the data will come from.
Frequently asked
ESG integration: frequently asked
What is ESG integration?
ESG integration means bringing environmental, social and governance factors into the analysis and reporting a company or investor already does, rather than treating them as a separate exercise.
Under UK SRS it has a precise form: every ESG topic goes through one test — could it reasonably be expected to affect the company's cash flows, access to finance or cost of capital — and the ones that pass are reported alongside the financial statements.
Does UK SRS cover all ESG topics?
It covers any sustainability-related risk or opportunity that meets its financial materiality test.
Climate has its own standard, UK SRS S2; everything else — water, nature, workforce, supply chains, governance — is reported under UK SRS S1 if it passes the test.
Topics that matter only for their impact on people or the environment, with no plausible financial effect, fall outside UK SRS and inside frameworks such as GRI.
Is there a materiality threshold in UK SRS?
No. UK SRS S1 sets no quantitative threshold; materiality is a judgement about whether omitting, misstating or obscuring information could reasonably be expected to influence the decisions of investors and lenders.
Do companies have to use the SASB Standards under UK SRS?
No. The UK changed the ISSB's 'shall refer to and consider' to 'may' in UK SRS S1 paragraphs 55(a) and 58(a).
A company may use the SASB Standards to identify topics and metrics; if it does, paragraph 59 requires it to say which sources it applied.
How does the FCA treat non-climate ESG topics?
Under the FCA's final rules, listed companies in scope report against UK SRS S1 on a comply-or-explain basis, with two years' relief from non-climate disclosures.
Where a company has identified a risk or opportunity but not reported on it, the explanation is given at the level of that risk or opportunity, not requirement by requirement.
What is the difference between ESG integration and double materiality?
UK SRS integrates ESG topics through financial materiality only: how sustainability matters affect the company.
Double materiality, used in the EU's ESRS, adds a second test — the company's own impacts on people and the environment — so more topics qualify.
Sources
Primary sources
Every figure, date and status on this page traces to the instrument’s owner.
Secondary commentary is never the source for a number.
- Department for Business and TradeUK SRS S1 (PDF), ¶3, ¶¶17–18, ¶B19
Material information about risks and opportunities that could reasonably be expected to affect cash flows, access to finance or cost of capital; no quantitative threshold.
- Department for Business and TradeUK SRS S1 (PDF), ¶¶20–27, ¶¶55(a), 58(a), 59
Reporting entity, connected information, core content, governance; SASB “may”; sources to be identified.
- Department for Business and TradeUK SRS S2 (PDF), ¶29(a), ¶B32
Gross Scope 1, 2 and 3 emissions; all 15 Scope 3 categories considered.
- Department for Business and TradeUK SRS S1 and S2 — publication page
Published 25 February 2026.
- Department for Business and TradeUK Sustainability Reporting Standards — guidance
Voluntary use by any entity.
- Department for Business and TradeUK SRS consultation response, Annex A
SASB references changed from “shall” to “may”.
- Financial Conduct AuthorityPS26/19: Aligning listed issuers' sustainability disclosures with international standards
Comply or explain from 1 January 2027; two years’ S1 relief, one year’s Scope 3 relief.
- Financial Conduct AuthorityPS26/19 (PDF), Appendix 1, UKLR 6.6.6R(7A)–(7B)
The S2 explanation is by requirement; the S1 explanation is by risk or opportunity.
- IFRS FoundationSASB Standards
- GHG ProtocolCorporate Accounting and Reporting Standard
- TCFDTCFD recommendations (frozen; no longer maintained)
- TNFDRecommendations of the TNFD
- legislation.gov.ukCompanies Act 2006
- legislation.gov.ukCompanies Act 2006, section 414CB(6)
The national reporting framework route.
- Financial Reporting CouncilUK Corporate Governance Code 2024
- Financial Reporting CouncilThe UK Corporate Governance Code, July 2018 (superseded edition, PDF)
S
Social topics: through S1, if they move the numbers
Social topics — workforce, skills, health and safety, supply-chain labour, communities — are reported under UK SRS S1 only where they could affect the company’s prospects.
The route is usually one of three: cost (wages, turnover, disruption), revenue (customers who buy on conduct), or finance (lenders and investors who price the risk).
A supply-chain labour risk, for example, passes the test if a finding could interrupt supply, lose a customer or trigger a legal cost.
A topic that matters only for its impact on people, with no plausible financial effect, is outside UK SRS — though it may still be inside a UK duty such as the modern slavery statement.
The general standard is on UK SRS S1, and the difference from the EU’s two-sided test on double materiality.
Listed companies in scope have two years’ relief from UK SRS S1 non-climate disclosures under PS26/19.
After that, a company that has identified a risk or opportunity but not reported it explains by risk or opportunity, not by requirement — UKLR 6.6.6R(7B).