What the new IFRS Sustainability Standards mean for SECR

05 Aug 2026

By Louise Neilson, AAB

The UK adopted the IFRS (International Financial Reporting Standards) Sustainability Standards in February 2026, paving the way for future changes to sustainability-related disclosures. 

Available on a voluntary basis initially, the FCA is consulting on mandatory adoption of the Climate-related disclosure standard (UK SRS S2) for listed companies for accounting periods beginning January 1, 2027. Proposed SRS S1 and S2 adoption would also see Scope 3 Greenhouse Gas (GHG) emissions (UK SRS S2) and broader information about sustainability-related risks and opportunities beyond climate (UK SRS S1) captured on a ‘comply or explain’ basis, with deferrals likely being available. 

With final and confirmed rules expected later in 2026, understanding these standards and how sustainability reporting changes could affect your business is important. In this blog, we will highlight some of the key things you need to know.  

Everything you need to know about the new IFRS Sustainability Standards – and how they affect SECR 

What are UK SRS S1 and S2? 

UK SRS S1 – General requirements for disclosure of sustainability-related financial information 

This requires entities to disclose sustainability-related risks and opportunities that would be relevant to investor decision-making. These are sector-specific, drawing on SASB (Sustainability Accounting Standards Board) guidance.  

UK SRS S2 – Climate-related disclosures

Involving a similar investor-usefulness test, SRS S2 focuses specifically on climate-related risks and opportunities. This builds on the TCFD (Taskforce on Climate-Related Financial Disclosures) framework. 

The focus for both standards is a shift towards decision-useful, comparable, and verifiable sustainability-related information for the intended users (investors, lenders, etc). The intention is to simplify, not add to, the reporting burden by providing a single coherent structure. UK SRS will bring sustainability reporting much closer to the rigour of financial reporting, establishing a new baseline for credible sustainability disclosures.  

Sustainability is no longer an add-on to financial analysis but a key indicator of how non-financial factors can influence financial performance. The new standards will allow businesses to easily demonstrate business performance, resilience, and long-term value creation in relation to sustainability. 

How does IFRS adoption affect current SECR requirements? 

These changes are not a direct or immediate replacement for Streamlined Energy and Carbon Reporting (SECR). This remains in place for quoted companies and large unquoted companies and LLPs with: 

• Turnovers exceeding £36m 
• Balance sheets exceeding £18m 
• 250+ employees 

*satisfy 2 of 3 criteria for 2 consecutive years to qualify*

It should be noted that these SECR thresholds remain unchanged and sit outside the April 2025 Companies Act changes, so don’t get it confused with the new £54m/£27m ‘large company’ definition. 

A future transition is expected to come in phases, with more announcements likely to come from the UK Government on streamlining sustainability reporting, given concerns around duplication across multiple existing reporting frameworks like SECR, ESOS, and UK SRS. This is expected to form part of the ‘Modernising Corporate Reporting’ consultation taking place later this year. This will include consideration of whether the Companies Act requirements will extend mandatory UK SRS reporting to private entities. 

While much remains the same, there are some notable differences between the UK SRS and SECR. These include: 

• Climate risk – SECR is backwards-looking. The UK SRS S2 asks for a forward-looking approach, undertaking risk analysis, scenario planning, and governance oversight. 
• Scope 3 data – SECR does not require Scope 3: Indirect greenhouse gas emissions data. The UK SRS expects it. However, transition relief is to be available initially. 
• Financial Materiality – The UK SRS is explicitly framed around what’s decision-useful to investors and capital providers, not just energy and carbon reporting alone. 
• Strategy and governance narrative – You are expected to show how sustainability risk is governed and embedded in your strategy. 

Why should I prepare? 

The most notable implication of UK SRS lies in the capability change it requires. Senior management and boardrooms should be fluent in sustainability-related risks, to accommodate the impact sustainability-related topics can have on financial performance. Therefore, preparing for these changes early is important. Preparation can also help with:  

• Value chain drivers – While not directly in scope, your organisation may still be asked for sustainability data by clients, lenders, or investors. These standards signal a direction of travel; as more entities fall into scope, demands filter down the supply chain. 
• Compliance in the future – These rules are set to become mandatory for listed companies from 2027, so staying ahead of the curve could give you an edge if future compliance follows suit for the private sector. 
• Smoother transition – Those who adopt these rules early are more likely to benefit from a smoother transition.  
• Credibility – It can help build credibility with stakeholders who may already be asking these questions. 
• Assurance expectations - Although mandatory assurance is not likely in the short term, the direction of travel is clear. As sustainability disclosure becomes more comparable to financial reporting, assurance expectations will increase, as is already the case under other jurisdictions (e.g. CSRD in the EU). 

How can I prepare? 

You should begin by: 

• Identifying gaps between the current TCFD/SECR disclosures and UK SRS requirements. 
• Streamlining processes and gathering data, particularly around Scope 3.  
• Strengthen governance oversight and board-level sustainability knowledge, so everyone understands the changes. 

How AAB can help 

Getting ready for the new sustainability reporting requirements doesn't have to be overwhelming. Our Sustainable Business & ESG specialists can help you prepare with practical, tailored support, including: 

• Gap analysis to identify where your reporting needs to evolve. 
• Materiality assessments. 
• Carbon accounting software and support, including Scope 3 mapping and stronger data systems beyond SECR. 
• Sustainability assurance and readiness.  

Whether you’re just getting started or refining your approach, please get in touch with Louise Neilson, a member of the Sustainable Business & ESG team, or your usual AAB contact.