The four pillars of UK SRS disclosure

The four pillars overview

UK Sustainability Reporting Standards organises every sustainability disclosure into one of four pillars: Governance, Strategy, Risk Management, and Metrics & Targets. The structure is inherited from the Task Force on Climate-related Financial Disclosures (TCFD)5, adopted by the International Sustainability Standards Board in IFRS S14 and IFRS S23, and endorsed by the UK as UK SRS S1 and S2 in February 20261.

The same four pillars apply both to climate-related disclosures1 and to general sustainability disclosures across all material topics1. The difference is scope: S2 focuses the pillars on climate-related risks and opportunities; S1 applies them across the full range of material sustainability matters.

TCFD origins

The Task Force on Climate-related Financial Disclosures was established in December 2015 by the Financial Stability Board, with final recommendations published in October 20175. TCFD established the four-pillar architecture — Governance, Strategy, Risk Management, Metrics & Targets — as a voluntary framework for climate-related financial disclosure.

TCFD was formally disbanded in October 20236 following the IFRS Foundation's establishment of the International Sustainability Standards Board and publication of IFRS S14 and IFRS S23 in June 2023. The four-pillar structure was preserved in the new standards, but materially enhanced — quantification becomes required, scenario analysis becomes mandatory, financial-statement connectivity is required, and Scope 3 emissions become required disclosure.

UK SRS S21 is therefore the UK's regulatory successor to TCFD-aligned UK Listing Rules. The four pillars are preserved; the depth and rigour of each pillar's requirements expand significantly under compliance requirements.

Pillar 1 — Governance (paragraphs 5–7)

Governance disclosures under UK SRS S2 paragraphs 5-71 require an entity to disclose information that enables users of general purpose financial reports to understand the governance processes, controls, and procedures used to monitor, manage, and oversee climate-related risks and opportunities1.

The specific disclosure requirements include identification of the body or individual responsible for oversight, how responsibilities are reflected in terms of reference and role descriptions, skills and competencies, briefing frequency, consideration of trade-offs in major transactions, target oversight, and remuneration linkage1.

UK SRS S11 applies these same governance requirements across all material sustainability topics — not just climate. The body or individual responsible for oversight must consider sustainability-related risks and opportunities holistically.

Pillar 2 — Strategy (paragraphs 8–23)

The Strategy pillar is the largest of the four — 16 paragraphs in UK SRS S21. It requires disclosure of climate-related risks and opportunities, their effects on business model and value chain, effects on strategy and decision-making, current and anticipated effects on financial position, and climate resilience using scenario analysis.

Scenario analysis under paragraph 22

Paragraph 22 of UK SRS S21 is the most operationally significant requirement in the Strategy pillar. It mandates the use of climate-related scenario analysis to assess the resilience of the entity's strategy and business model to climate-related changes, developments, and uncertainties1.

This is a hard requirement, not a recommendation. The standard requires rigour commensurate with entity exposure1 — entities with greater climate exposure must use more technically sophisticated approaches. At least one scenario must be aligned with the latest international agreement on climate change1. Commonly used frameworks include NGFS climate scenarios9 and IEA Net Zero by 205010. The DBT consultation response11 confirmed that scenario analysis is retained from IFRS S2 without modification.

Pillar 3 — Risk Management (paragraphs 24–26)

The Risk Management pillar under UK SRS S2 paragraphs 24-261 requires disclosure of processes for identifying, assessing, prioritising, and monitoring climate-related risks and opportunities, and how those processes integrate with the entity's overall risk management process.

Where the Strategy pillar asks "what are the risks?", the Risk Management pillar asks "how do you find them, weigh them, and integrate them?" The two pillars are designed to be applied together — Risk Management documents the processes; Strategy documents the outcomes those processes produce.

Integration with overall risk management (paragraph 261) is the most operationally challenging requirement. Many entities maintain sustainability and enterprise risk processes in parallel; UK SRS S2 effectively requires them to converge.

Pillar 4 — Metrics & Targets (paragraphs 27–37)

The Metrics & Targets pillar is the most demanding in terms of data infrastructure. Paragraph 29(a)1 requires disclosure of absolute gross GHG emissions for the reporting period in metric tonnes of CO2 equivalent, classified by Scope 1, Scope 2, and Scope 31, using the seven Kyoto Protocol gases aggregated at 100-year global warming potentials from the latest IPCC assessment1.

Measurement must follow the GHG Protocol Corporate Standard (2004)7 for Scope 1 and Scope 2. Scope 3 reporting follows the GHG Protocol Corporate Value Chain (Scope 3) Standard8 across all 15 categories, with the entity disclosing which categories are included1.

The UK paragraph B59A addition

UK SRS S2 paragraph B59A1 is a UK-specific addition not present in IFRS S23. It allows financial institutions to disclose financed emissions for a reporting period different from the financial statements where alignment is impracticable, provided the entity discloses the reasons, the measurement approach, and the timeline for alignment1.

SASB references softened

The UK softens the IFRS S2 reference to industry-based metrics from "shall refer to" to "may refer to"1 (with two narrow exceptions: paragraphs 37 and B65(d)). This makes SASB application permissive under UK SRS rather than mandatory11.

S1 vs S2: same pillars, different scope

UK SRS S11 applies the four pillars across all material sustainability topics — biodiversity, water, workforce, supply chain, governance and ethics, in addition to climate. UK SRS S21 applies the same four pillars specifically to climate-related risks and opportunities.

The foundational elements of S1 — single materiality definition, value chain scope, financial-statement connectivity1 — apply from January 2027 alongside S2 because S2 cannot be applied without them. The broader S1 sustainability disclosures move to comply-or-explain from January 20292.

What UK SRS enhances beyond TCFD

UK SRS preserves TCFD's four-pillar architecture but enhances requirements in five substantial areas.

The four pillars provide continuity from TCFD-aligned disclosure under the previous UK Listing Rules2 to UK SRS S2 under the new regime — companies that built TCFD reporting capability are not starting from zero. But the rigour required within each pillar increases substantially.

Frequently asked questions