Return to index UK SRS vs ESRS Interoperability Analysis

Interoperability Analysis: UK SRS vs ESRS (CSRD)

Last updated: June 28, 2025

Executive Summary

The UK Sustainability Reporting Standards (UK SRS) and European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD) represent two major sustainability reporting frameworks with significant areas of alignment and key differences. This analysis examines their interoperability based on current exposure drafts and implemented standards [citation:1][citation:3].

1. Foundational Framework Comparison

Feature UK SRS ESRS (CSRD)
Governing Body UK Department for Business and Trade (based on ISSB standards) European Financial Reporting Advisory Group (EFRAG)
Legal Basis Future UK regulations (currently in consultation) EU Corporate Sustainability Reporting Directive (CSRD)
Underlying Principle Financial materiality (single materiality) Double materiality (financial + impact)
Primary Audience Investors and capital markets Investors plus broader stakeholders (employees, communities, etc.)
Global Alignment Directly based on ISSB standards (IFRS S1/S2) Aligned with ISSB but with additional requirements

Core Interoperability Points

The ISSB and EFRAG jointly published interoperability guidance in May 2024 highlighting areas of alignment between IFRS S2 (basis for UK SRS) and ESRS E1 (climate standard under CSRD) [citation:6]:

2. Materiality Assessment Comparison

Key Difference: Single vs Double Materiality

The most significant conceptual difference between the frameworks is their approach to materiality:

Materiality Aspect UK SRS ESRS (CSRD)
Assessment Scope Financial impacts only Financial + environmental/social impacts
Value Chain Consideration Required for financially material items Required for both materiality perspectives
Disclosure Flexibility Can omit immaterial items without explanation Must explain omission of climate disclosures even if deemed immaterial
Assurance Requirements To be determined (likely financial audit standard) Requires limited assurance on materiality assessment process

3. Climate Disclosure Alignment

The climate-related disclosures show the highest degree of interoperability between the frameworks [citation:6]:

Climate Disclosure Element UK SRS (IFRS S2) ESRS E1 Interoperability Status
Governance Required Required Fully aligned
Strategy Required Required Fully aligned
Risk Management Required Required Fully aligned
Metrics and Targets Required Required Mostly aligned (see GHG notes)
Scope 1-2 GHG Emissions Required Required Fully aligned
Scope 3 GHG Emissions Required (with 1-year relief) Required if material Mostly aligned (materiality difference)
Transition Planning Encouraged Required if material Partial alignment
Climate Scenario Analysis Required Required if material Partial alignment

Practical Interoperability Guidance

For companies reporting under both frameworks, the joint EFRAG-ISSB guidance recommends [citation:6]:

  1. Start with ISSB-aligned UK SRS disclosures as core content
  2. Add ESRS-specific requirements for:
    • Impact materiality disclosures
    • Additional social and governance metrics
    • Value chain due diligence information
  3. Use common tagging for aligned data points to reduce duplication
  4. Maintain a single data repository with flags for framework-specific requirements

4. Non-Climate Disclosure Comparison

Beyond climate, the frameworks diverge more significantly in coverage and requirements:

Topic Area UK SRS Coverage ESRS Coverage Interoperability Considerations
Environment (non-climate) Only if financially material 10 detailed standards (E1-E5) Limited alignment - ESRS much more comprehensive
Social Only if financially material 4 detailed standards (S1-S4) Limited alignment - ESRS requires workforce disclosures
Governance Integrated in general requirements 1 dedicated standard (G1) Partial alignment - similar principles but ESRS more detailed
Value Chain Required for material items Comprehensive requirements ESRS has more stringent due diligence rules

Key Structural Difference

The UK SRS follows ISSB's "building blocks" approach with:

ESRS has a more complex structure with [citation:3]:

5. Implementation Timeline Comparison

Implementation Aspect UK SRS ESRS (CSRD)
Current Status Exposure draft consultation (closes Sep 2025) [citation:1] Adopted and being implemented
First Mandatory Application Expected 2026 for listed companies Phased from 2024-2028 [citation:3]
Transition Relief 2-year "climate-first" relief proposed Phase-in relief for smaller companies
Assurance Requirements To be determined (consultation ongoing) Limited assurance required from 2024

Strategic Recommendations for Companies

For organizations needing to comply with both frameworks:

  1. Start with UK SRS/ISSB core: Build foundational systems around ISSB-aligned requirements [citation:6]
  2. Layer on ESRS additions: Add impact materiality and sector-specific ESRS requirements
  3. Implement unified data architecture: Create single source of truth with tagging for framework-specific elements
  4. Coordinate assurance: Align internal controls to meet both frameworks' verification needs
  5. Monitor regulatory updates: Both frameworks are evolving - maintain flexible implementation approach

Sources: UK Government Consultation [citation:1], Hogan Lovells Analysis [citation:3], Deloitte Double Materiality Assessment [citation:5], EFRAG-ISSB Interoperability Guidance [citation:6]

Note: This analysis reflects the status of standards as of June 2025. Both UK SRS and ESRS are subject to ongoing revisions and implementation adjustments.