ICAS backs FCA’s UK SRS plan but warns on proposed reliefs

The Institute of Chartered Accountants of Scotland (ICAS) said that it welcomes the Financial Conduct Authority’s (FCA) plans to reshape listed institution sustainability reporting astir the UK Sustainability Reporting Standards (UK SRS).

In its effect to Consultation Paper CP26/5, ICAS backed the connection to regenerate the existent clime disclosure rules with requirements built connected UK SRS S2 for climate-related disclosures, alongside an enactment to usage UK SRS S1, “General Requirements for Disclosure of Sustainability-related Financial Information”.

ICAS said it supports FCA’s intent and to supply clarity connected the exertion of the UK SRS.

It added that the FCA is efficaciously “setting the trajectory successful the market” for the gait and scope of adoption, on with the reliefs that volition apply.

The institute said bringing UK rules into enactment with IFRS sustainability disclosure standards is cardinal to improving planetary comparability and shoring up capitalist confidence.

It said it besides supports proportionality and believes the displacement from existent rules to the caller model should beryllium clear, gradual and good signposted.

However, ICAS raised concerns that immoderate projected reliefs could weaken reporting.

It said sustainability reporting “shouldn’t spell backwards” and warned the FCA’s projected reliefs could weaken comparability of UK SRS disclosures astatine location and abroad.

ICAS said: “The FCA’s attack signals a measurement alteration successful the UK’s erstwhile attack from being a archetypal mover and progressive astir changes to sustainability disclosures (as evidenced by the enactment of the likes of TCFD and Transition program taskforce).

“The FCA’s proposals are tame and don’t bespeak the urgency of the captious underlying sustainable improvement issues that immoderate sustainability disclosures are intended to serve.”

On emissions, it noted that Scope 3 often makes up astir of an organisation’s greenhouse state output, truthful excluding these figures tin permission disclosures incomplete oregon misleading.

While recognising information challenges, ICAS said “these disclosures should beryllium mandated wrong a tenable timeframe, with earlier adoption encouraged and robust explanations required successful the interim”.

It besides opposes plans to propulsion non-climate reporting down the docket via a longer ‘comply oregon explain’ approach, saying galore specified issues are financially worldly and utile for capitalist decisions.

The FCA volition reappraisal responses and is owed to outline successful 2026 however issuers should use the UK SRSs, up of rules expected to commencement connected 1 January 2027.

ICAS precocious called for restraint connected the King’s Speech reforms, informing against casting regularisation arsenic a resistance connected growth.