Navigating the UK Sustainability Disclosure Requirements (SDR)

Navigating the UK Sustainability Disclosure Requirements (SDR)

If you’re a UK business trying to make sense of sustainability regulations, you’ve probably come across the term Sustainability Disclosure Requirements (SDR). These regulations aim to standardise how companies report environmental, social, and governance (ESG) information, and they’re part of a broader push toward transparency and green finance.

But what exactly are the SDRs, who do they apply to, and how can your business start preparing now? Let’s break it down.

What Are the UK Sustainability Disclosure Requirements (SDRs)?

The SDRs are a set of proposed rules developed by the UK government to improve the quality, consistency, and accessibility of sustainability-related disclosures. They're intended to align with international standards, particularly the International Sustainability Standards Board (ISSB), and will impact how companies report on ESG risks, opportunities, and metrics.

They form part of the UK’s Green Finance Strategy and aim to combat greenwashing by ensuring organisations back up their claims with reliable, comparable data.

Who Will They Affect?

The SDRs will initially apply to:

• Asset managers

• Listed companies

• Pension schemes

• Financial services firms

However, over time, they’re expected to influence broader business practice, particularly as large companies begin to cascade data requirements down their supply chains.

Even if you’re not directly regulated, your clients, investors, or partners may soon expect SDR-aligned reporting.

Key Components to Understand

1. Sustainability Labels: Investment products will need to meet specific criteria to be marketed as sustainable. This is designed to reduce misleading claims and build trust.

2. Disclosure Requirements: Firms will be required to report on how sustainability risks and opportunities impact their business, governance processes, and performance.

3. Anti-Greenwashing Rule: A key feature of SDRs is the focus on clear, evidence-based communication. Companies must ensure all sustainability claims are fair, clear, and not misleading.

4. Alignment With ISSB: The UK plans to integrate ISSB standards (IFRS S1 and S2) into its disclosure expectations, meaning global consistency will be increasingly important.

How to Prepare

If you’re not yet impacted but want to stay ahead, here are some tips:

• Familiarise Yourself with the ISSB standards and the UK government’s SDR policy papers

• Review Your Current ESG Reporting to identify gaps in consistency or credibility

• Engage Your Legal or Compliance Team early to assess future obligations

• Audit Your Data Collection Methods to ensure transparency and traceability

• Build Internal Awareness so relevant teams are aligned and equipped to adapt

Why It Matters

SDRs are more than a box-ticking exercise. They’re designed to strengthen trust in sustainability claims, protect consumers, and shift capital toward genuinely sustainable business models. They also signal a wider global trend: ESG reporting is getting more rigorous and more regulated.

By understanding the UK’s approach now, you can stay compliant, competitive, and credible in a changing landscape.

Final Thought:

The UK’s Sustainability Disclosure Requirements mark a turning point in how businesses communicate their environmental and social impact. Whether you’re directly affected or just want to future-proof your reporting, now is the time to get familiar, get organised, and get ahead.