ICAS endorses IFRS Sustainability Disclosure Standards for UK use

The Institute of Chartered Accountants of Scotland (ICAS) has recommended the endorsement of the IFRS Sustainability Disclosure Standards, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures, for use in the UK.

The announcement comes following the final recommendations put forward to the Secretary of State for Business and Trade by the UK Sustainability Disclosure Technical Advisory Committee (TAC).

Overall, the TAC’s technical assessment has concluded that both the endorsement of IFRS S1 and IFRS S2 would be conducive to the long-term public good in the UK.

Fiona Donnelly CA, director of sustainability at ICAS, said: “The TAC’s recent endorsement of IFRS S1 and S2 is a step in the right direction, but we believe the UK Sustainability Reporting Standards (UK SRS) should go further. Expanding these standards over time to include reporting on the impact of organisations on the environment and society would result in more comprehensive and holistic reporting. This double materiality approach would also better serve the needs of multiple stakeholders, contributing to the long-term public good in the UK. 

“We agree that UK entities shouldn’t be prevented from starting to apply IFRS Sustainability Disclosure Standards or UK SRS on a voluntary basis. However, we urge the UK Government to consider making sustainability reporting mandatory for organisations of a certain size and proportionate to place it on a deservedly equal footing to financial reporting.”

She concluded: “The recommendation to remove the transition relief that allows delayed reporting in the first year is a strong one, given this would compromise the principle of connectivity and remove comparability with the financial statements. While we appreciate the reasons for the recommendation to extend the ‘climate-first’ reporting relief in IFRS S1 up to two years, we are concerned that non-climate sustainability-related issues may not be sufficiently reported.”