UK SRS glossary — key terms and definitions

Core standards and framework

UK SRS (UK Sustainability Reporting Standards)

UK Sustainability Reporting Standards S1 and S2 published by the Department for Business and Trade on 25 February 20261. Based on IFRS S1 and S2 with six specific UK amendments addressing UK regulatory integration and practical implementation considerations. See UK SRS S1 and S2.

UK SRS S1

General Requirements for Disclosure of Sustainability-related Financial Information. Covers materiality assessment, disclosure requirements for material sustainability risks and opportunities beyond climate, and connectivity with financial statements1. Apply-or-explain approach under FCA CP26/5 from 1 January 2029.

UK SRS S2

Climate-related Disclosures. Covers the four TCFD pillars (Governance, Strategy, Risk Management, Metrics and Targets) with enhanced quantitative requirements. Mandatory for listed companies in CP26/5 scope from 1 January 20273. See UK SRS S2.

IFRS S1 and S2

International sustainability disclosure standards published by the ISSB in June 20235. Form the baseline for UK SRS with UK amendments. IFRS S1 covers general requirements; IFRS S2 covers climate disclosures. Used by 40+ jurisdictions implementing ISSB-aligned standards.

ISSB (International Sustainability Standards Board)

Independent standard-setting body within the IFRS Foundation. Develops global baseline sustainability disclosure standards including IFRS S1 and S25. UK SRS maintains close alignment with ISSB standards through the six UK amendments structure.

Regulatory bodies

DBT (Department for Business and Trade)

UK government department that published UK SRS S1 and S2 on 25 February 20261. Responsible for UK SRS policy development, the MCR Programme, and coordination with other regulators. Oversees the Sustainability Disclosure Technical Advisory Committee.

FCA (Financial Conduct Authority)

UK financial services regulator responsible for implementing UK SRS for listed companies through CP26/53. Will publish Policy Statement in autumn 2026 confirming final rules for mandatory UK SRS application. Enforces UK Listing Rules including sustainability disclosure requirements.

FRC (Financial Reporting Council)

UK accounting and actuarial regulator. Published ISSA (UK) 5000 sustainability assurance standard9. Maintains interim register of qualified sustainability assurance providers. Provides guidance on UK SRS implementation and corporate reporting integration.

TCFD (Task Force on Climate-related Financial Disclosures)

Financial Stability Board initiative that developed the four-pillar framework (Governance, Strategy, Risk Management, Metrics and Targets) retained in UK SRS S26. TCFD recommendations provide the architectural foundation for climate disclosure under ISSB-aligned standards.

Climate and environmental terms

Scope 1 Emissions

Direct greenhouse gas emissions from sources owned or controlled by the reporting entity7. Examples include combustion in owned boilers, furnaces, vehicles; chemical production in owned process equipment. Measured in CO2 equivalent using appropriate global warming potentials.

Scope 2 Emissions

Indirect greenhouse gas emissions from consumption of purchased electricity, steam, heating, and cooling7. While physically occurring at the facility where electricity is generated, Scope 2 emissions are accounted for by the entity that purchases the electricity.

Scope 3 Emissions

All other indirect greenhouse gas emissions occurring in the value chain of the reporting entity across 15 GHG Protocol categories7. Include upstream activities (purchased goods, business travel) and downstream activities (use of products, end-of-life treatment). Often represent largest portion of corporate carbon footprint.

Physical Risk

Climate-related risks resulting from physical climate change effects. Acute risks from extreme weather events (floods, storms, heatwaves); chronic risks from longer-term climate pattern shifts (sea level rise, temperature changes, precipitation changes)6. Both impact business operations and financial performance.

Transition Risk

Climate-related risks from transitioning to a low-carbon economy. Categories include policy and legal risks (carbon pricing, regulations), technology risks (substitution, innovation), market risks (consumer behaviour, cost changes), and reputation risks (stakeholder perceptions)6.

Scenario Analysis

Process of exploring and comparing possible future outcomes by considering alternative plausible future conditions. Under UK SRS S2, used to assess climate resilience across different climate scenarios including at least one scenario with physical risk increase and one with transition to net-zero by 20501.

Reporting concepts

Financial Materiality (Single Materiality)

Information is material if it could reasonably influence primary users' decisions about providing resources to the entity5. UK SRS uses financial materiality like IFRS S1/S2 and all ISSB-based standards. This is single materiality — focused on impact on the entity rather than the entity's impact on society and environment.

Double Materiality

Approach used by EU CSRD covering both financial materiality (impact on the entity) and impact materiality (entity's impact on people and environment)10. UK SRS uses single (financial) materiality, not double materiality. The distinction is between ISSB-based standards (single) versus EU approach (double).

Connectivity

Principle requiring sustainability disclosure to connect with information in financial statements1. Includes consistency in scope, timing, and assumptions; connection of sustainability risks/opportunities to financial statement line items; and explanation of how sustainability matters affect financial position and performance.

Comply-or-Explain

Regulatory approach where entities must either comply with requirements or provide substantive explanation for non-compliance3. UK SRS S1 follows comply-or-explain under FCA CP26/5 from 1 January 2029. Requires detailed explanation rather than brief statements about non-application.

UK-specific terms

CFD Regime (Climate-related Financial Disclosure)

Legal practitioners' term for Companies Act 2006 section 414CB climate disclosure requirements4. Section 414CB(2A) designates UK SRS S2 as satisfying CFD regime requirements. UK SRS S2 compliance fulfils both UK SRS and Companies Act climate disclosure obligations simultaneously.

MCR Programme (Modernising Corporate Reporting)

Government programme announced 21 October 2025 with two strands2. Strand 1: listed company sustainability disclosure via FCA rules. Strand 2: private company mandatory disclosure anticipated 2028+. Designed to modernise UK corporate reporting framework including sustainability integration.

Section 414CB(2A)

Companies Act 2006 provision designating UK SRS S2 as national reporting framework satisfying climate-related financial disclosure requirements4. Enables entities applying UK SRS S2 to fulfil Companies Act climate disclosure obligations without additional disclosure. Critical legal integration provision.

Section 463

Companies Act 2006 director safe harbour provision protecting directors making good-faith statements in Strategic Report4. Covers claims by company against directors who make false statements without knowledge and having taken reasonable care. Does NOT protect against third-party claims or regulatory enforcement.

SECR (Streamlined Energy and Carbon Reporting)

UK mandatory energy and carbon disclosure regime under SI 2018/11558. Applies to large companies meeting two-of-three thresholds (£36m turnover, £18m balance sheet, 250 employees). Annual disclosure in Directors' Report. See SECR Thresholds.

Assurance terms

ISSA (UK) 5000

UK sustainability assurance standard published by FRC on 12 November 2025, effective 15 December 20269. Establishes methodology for sustainability assurance engagements including practitioner qualifications, evidence requirements, and reporting standards. Not mandatory but proposed under FCA CP26/5.

Limited Assurance

Lower level of assurance where practitioner expresses conclusion in negative form ("nothing has come to our attention"). Requires less extensive procedures than reasonable assurance. Sufficient for initial sustainability assurance implementations9.

Reasonable Assurance

Higher level of assurance where practitioner expresses positive conclusion ("in our opinion"). Requires extensive procedures and evidence gathering. More demanding than limited assurance but provides greater stakeholder confidence9.

International equivalents

EU CSRD (Corporate Sustainability Reporting Directive)

European Union sustainability disclosure framework using ESRS (European Sustainability Reporting Standards)10. Uses double materiality approach covering both financial impact and entity impact on society/environment. More extensive scope than ISSB-aligned standards.

US SEC Climate Disclosure Rules

Proposed (not yet finalised) climate disclosure requirements for US public companies. Expected to align broadly with TCFD framework. Different scope and implementation timeline from UK SRS.

Voluntary frameworks

GRI Standards

Global Reporting Initiative sustainability reporting standards. Uses impact materiality (double materiality) approach. Widely used voluntary framework with comprehensive coverage of environmental, social, and governance topics.

SASB Standards

Sustainability Accounting Standards Board industry-specific standards using financial materiality. Now integrated into IFRS Foundation work supporting ISSB standards development. Industry-based guidance referenced in UK SRS S2.