Last June (2025), the UK government released a draft of the Sustainability Reporting Standards (UK SRS), which is expected to entirely change how businesses will report on sustainability in 2026 and beyond. In Europe, CSRD latest revisions on the reporting scope have extended the deadline, but it is still in the epicenter of attention, even for the companies that are considering voluntary reporting.
Research indicates that nearly 80% of institutional investors acknowledge sustainability disclosures prior to making investment decisions. But many businesses are confused as to what reporting standard is applicable to them. If you want to know how CSRD and UK SRS differ, this piece breaks down their core differences in requirements and compliance to help you decide which reporting path you should follow and how you can prepare your business.
The European Commission first adopted the CSRD proposal in 2021, with the aim of reshaping sustainability disclosure requirements throughout Europe and amending the existing ones under the Non-Financial Reporting Directive. EFRAG, an independent body that brings together various stakeholders, developed the European Sustainability Reporting Standards (ESRS), according to which the companies must report. Although originally it was supposed to affect many more organizations, the latest updates from Omnibus require compliance only from larger companies (with more than 1000 employees and 450 million in turnover).
CSRD stands apart from other frameworks through its double materiality approach. Companies must report both on their effects on people and the environment and on how social and environmental issues create financial risks and opportunities for the company. This dual viewpoint gives investors and stakeholders detailed insights into sustainability’s performance. The first companies subject to CSRD applied the new rules for the 2024 financial year and published reports in 2025.
The UK Sustainability Reporting Standards take a different path and build directly on the International Sustainability Standards Board’s global baseline. UK SRS S1 derives from IFRS S1 and covers general sustainability-related financial disclosures. UK SRS S2 derives from IFRS S2 and addresses climate-related disclosures. Six minor amendments were made to the IFRS standards to maintain cross-jurisdictional interoperability while adapting them for the UK context.
The UK government consulted on exposure drafts from 25 June to 17 September 2025 and will publish finalized versions for voluntary use in 2026. The UK SRS uses a single materiality lens that focuses on financial materiality, in contrast to the double materiality approach of the CSRD. This document provides investor-focused information on how sustainability risks affect enterprise value. The framework honors the TCFD legacy by maintaining its four familiar pillars: Governance, Strategy, Risk Management, and Metrics & Targets.
The ISSB creation was announced at COP26 in Glasgow, with the role of creating a global baseline for sustainability reporting. The ISSB published its first two standards on 26 June 2023: IFRS S1 and IFRS S2. Both the UK SRS and CSRD reference this global architecture, though they apply it differently based on regional priorities and materiality philosophies.
The most fundamental difference between these frameworks is their approach to materiality. CSRD mandates double materiality and requires you to assess whether impacts, risks, or opportunities are material from either an impact or financial view. Impact materiality focuses on your company’s material impacts on people and the environment over the short, medium, and long term. Financial materiality gets into how sustainability matters trigger material financial effects on your company. The UK SRS does not follow the EU’s broader double-materiality architecture, but it applies a single materiality lens centered on financial materiality. It is designed around investor decision-usefulness (ISSB baseline).
While CSRD covers broader ESG reporting topics (environmental, social, and governance) through ESRS standards, including both risks/opportunities and impacts on people/environment, UK SRS prioritizes climate-related disclosures and general sustainability-related financial disclosures, namely for UK SRS S1 and UK SRS S2, i.e., the ISSB baseline architecture.
CSRD represents mandatory reporting for in-scope companies requiring publication, standards, assurance, and digital format (where applicable).
The UK SRS remains voluntary at first in the UK. The government wants to publish finalized standards for voluntary use in early 2026. The Financial Conduct Authority will then think over introducing requirements for certain UK entities.
Competitiveness concerns narrowed CSRD scope by a lot in 2025. The Council’s 24 Feb 2026 Omnibus press release says the CSRD scope is being narrowed to companies with more than 1,000 employees and more than €450m net annual turnover (plus revised third-country thresholds). The UK SRS targets “economically significant” organizations for listed companies, public interest entities, and large private companies that are based in the UK and it does not currently have a universal mandatory scope because the standards are voluntary. If any future mandatory application takes place, it will depend on UK government/FCA action.
The CSRD mandates reporting of Scope 3 emissions when they are considered material. The UK SRS has a one-year relief from disclosing Scope 3 emissions and allows you to omit these disclosures in your first reporting year.
CSRD introduces mandatory limited assurances starting in 2025. Accredited independent auditors perform this assurance. Possible reasonable assurance standards might be introduced later.
UK SRS does not mandate external assurance at first, though regulators show that frameworks for independent assurance may be introduced in future phases.
Let’s go over the timelines for the two different standards and the implementation phases.
The UK SRS S1 and S2 were published on 25 February 2026 and they are available for voluntary use. The UK finalized standards remove “effective date” clauses, so the standards themselves don’t mandate a start date.
Regarding the mandatory pathway, so far, in March, there will be an FCA consultation CP26/5 response deadline, and in autumn, the FCA aims to publish a Policy Statement. Next year, in 2027, the rules would come into force. If you’re a UK listed issuer in scope of FCA rules, your first mandatory reporting period would typically be the financial year starting on/after 1 Jan 2027 to publish the report in 2028, depending on the year-end. This “first report year” detail depends on the final FCA rules text and each issuer’s FY start/end.
Before the “stop-the-clock” delay, the European Commission CSRD materials describe the phased roll-out starting with FY 2024 reporting (published 2025). But following the directive’s two-year postponement, the companies already in scope first applied CSRD and published their report in 2025, while the second wave of large companies will report in 2028 (fy 2027). Now the listed SMEs will then report in 2029 (fy 2028), with the SME opt-out/deferral mechanics still discussed in the CSRD FAQ.
The latest Omnibus I updates show that the Council has approved a change that reduces the number of companies covered by the CSRD and allows some “wave one” companies to be exempt from reporting for FY 2025 and FY 2026. Regarding the assurance, the Commission is empowered to adopt limited assurance standards by 1 October 2026 (and potentially reasonable assurance standards by 1 October 2028).
You need to assess your business circumstances in a systematic way to choose between UK sustainability reporting standards and CSRD.
Step 1: Determine Your Legal Jurisdiction and Operations
Map your group structure first. This includes EU parent entities, non-EU parent companies, subsidiaries and branch operations. Companies with EU net turnover exceeding €450 million and subsidiaries that generate over €200 million in EU revenue face CSRD obligations.
Step 2: Assess Company Size and Listing Status
CSRD now applies to companies with more than 1,000 employees and annual net turnover exceeding €450 million. UK SRS targets organizations that are economically important. These include UK-listed companies, public interest entities, and large private companies.
Step 3: Assess Existing Reporting Frameworks
Companies that use SECR or TCFD frameworks will adapt more easily. They understand sustainability reporting principles. Organizations that follow GRI have a clear advantage as they track material sustainability risks and opportunities. Businesses accustomed to CSRD reporting have the financial risk disclosures in place.
Step 4: Plan for Dual Compliance if Required
Many entities expecting scope under both the UK SRS and CSRD focus their efforts on CSRD right now. They predict it will apply sooner.
Starting Preparation: Data Systems and Materiality Assessment
A readiness assessment will help you compare current sustainability reporting practices against predicted UK SRS requirements. A materiality assessment that lines up with your business model will determine financially material sustainability-related risks. Governance that integrates sustainability into board-level oversight needs to be established. Data infrastructure should be strengthened by implementing reliable internal controls. This supports the collection and reporting of consistent, auditable sustainability metrics.
CSRD and UK SRS are moving in the same direction, meaning with more consistent, decision-useful sustainability reporting. However, they are built for different regulatory outcomes. CSRD is a compliance regime: if you’re in scope, you’ll need ESRS-aligned disclosures, a double materiality assessment, and audit-ready data and controls. UK SRS is an investor-focused baseline: it starts with financially material sustainability and climate information (S1 and S2), giving UK businesses a clearer pathway, especially those already familiar with TCFD-style reporting, while regulators determine the pace and breadth of mandatory adoption.
For most organizations, the right path comes down to jurisdiction, scope, and timing. If your group structure or EU footprint puts you within CSRD thresholds, CSRD should drive your near-term program because it carries the strongest legal obligations and assurance expectations. If you’re primarily UK-based and not yet legally required to report, UK SRS is still highly valuable as a credible voluntary framework that can help you strengthen governance, improve investor communications, and build the systems you’ll need if mandatory requirements expand.
Either way, the practical move is the same: start now on the foundations: mapping your entity scope, strengthening data systems and internal controls, clarifying governance ownership, and running a robust materiality process. These steps reduce compliance risk under CSRD, accelerate adoption under UK SRS, and make dual reporting far more manageable if your business ultimately needs to meet both.
