Short answer
The answer, before the reasoning
UK SRS S1 and UK SRS S2 are designed to operate together, not as alternative standards. S1 supplies the general architecture for sustainability-related financial disclosures: objective, investor-focused materiality, reporting entity, connected information, four-pillar structure, location, timing, comparatives, judgements, uncertainties and compliance.
S2 applies that architecture to climate-related physical and transition risks and climate-related opportunities, adding climate-specific requirements such as scenario analysis, resilience, greenhouse gas emissions, industry-based metrics and targets. Appendix E of S1 requires simultaneous application. A climate-only reporter may use S1 paragraph E3, but must disclose that use and cannot claim compliance with UK SRS S1. UK SRS S1 and S2 foundation and workstreams · London Reporting Academy educational visual
In practice
Quick orientation
| Question | Practical answer |
|---|---|
| Is S1 the general standard? | Yes. It establishes concepts, presentation requirements and core content for all material sustainability-related risks and opportunities. |
| Is S2 a stand-alone climate report? | No. S2 must be applied with the S1 requirements that relate to climate disclosures. |
| Do both standards use the four pillars? | Yes. S2 provides climate-specific content within governance, strategy, risk management, and metrics and targets. |
| Must a full S1 reporter apply S2? | Yes. S1 paragraph E2 requires simultaneous application. |
| Can an entity begin with climate only? | Yes, under S1 paragraph E3, subject to any applicable UK regulatory rule. |
| Can a climate-only reporter claim S1 compliance? | No. S1 paragraph 73A prohibits that claim and requires disclosure of the provision used. |
| Can the entity still claim S2 compliance? | Potentially, if all applicable S2 requirements and supporting S1 requirements are met and use of relevant provisions is disclosed. |
The simplest way to understand the relationship
Think of UK SRS S1 as the operating system and UK SRS S2 as the climate application that runs on it.
S1 answers questions such as:
Who are the users of the disclosure?
What information is material?
What is the reporting entity?
How should sustainability information connect with the financial statements?
Where and when should the disclosures be published?
What comparatives, judgements, estimates and error corrections are required?
When is an explicit and unreserved compliance statement permitted?
S2 answers the climate-specific questions, including:
What physical risks, transition risks and climate-related opportunities affect prospects?
How do those matters affect the business model, value chain, strategy and financial planning?
How resilient is the strategy under climate-related changes and uncertainties?
What scenario analysis supports that conclusion?
What are the current and anticipated financial effects?
What Scope 1, Scope 2 and Scope 3 emissions are disclosed?
Which cross-industry, industry-based and entity-specific metrics are used?
What climate targets exist, how are they measured and how is progress assessed?
A climate disclosure that addresses only S2 topic requirements but ignores the S1 foundation is incomplete. Equally, a full S1 report cannot omit S2 when climate-related risks or opportunities are within scope.
Objective and primary users
Both standards are directed to existing and potential investors, lenders and other creditors. Climate information is reported when it could reasonably be expected to affect cash flows, access to finance or cost of capital over the short, medium or long term. The purpose is not to publish every climate fact, but to provide material information relevant to resource-allocation decisions.
Materiality
S1 supplies the materiality definition used for S2. Information is material if omitting, misstating or obscuring it could reasonably be expected to influence primary-user decisions made on the basis of the general purpose financial reports of the specific reporting entity.
This means that S2 is not a fixed checklist to be reproduced regardless of circumstances. The entity applies the climate-specific requirements, then uses S1 materiality to determine which resulting information is material. Materiality can arise from nature, magnitude or both. A qualitative climate matter may be material before a precise amount is available, while excessive immaterial detail can obscure the information that matters.
Reporting entity and value chain
S1 requires sustainability-related financial disclosures to be for the same reporting entity as the related financial statements. S2 then extends analysis across the value chain where climate-related risks, opportunities or emissions arise. The reporting entity and the value-chain scope are therefore related but not identical concepts:
the reporting entity is anchored to the financial statements; and
the value-chain scope is determined for the particular climate risk, opportunity or metric using reasonable and supportable information available without undue cost or effort.
A group should not change the legal or consolidation boundary simply because emissions data are organised differently. Instead, it should reconcile the inventory boundary to the reporting entity and explain relevant methodology choices.
Connected information and financial-statement consistency
S1 requires the entity to explain connections between sustainability-related risks and opportunities, the disclosures across the four pillars, and the related financial statements. Data and assumptions should be consistent with the financial statements to the extent possible under the applicable accounting framework.
For S2, this affects matters such as:
asset values used in exposure metrics;
capital expenditure and operating expenditure linked to climate responses;
assumptions used in scenario analysis, impairment, useful lives and provisions;
current and anticipated financial effects;
financing plans and cost-of-capital assumptions; and
presentation currency and reporting period.
A climate report should not use one set of transition assumptions while the financial planning and accounting papers use a contradictory set without explanation.
Location and cross-referencing
S1 governs where sustainability-related financial disclosures are presented and permits cross-referencing only where the referenced information is available on the same terms and at the same time, and where the complete set remains understandable. S2 climate disclosures may be integrated with wider sustainability disclosures or governance reporting, but cross-references must be precise, stable and complete.
A link to a separate climate report does not automatically satisfy S1. The team must test availability, timing, authorisation, prominence and whether users can identify the relevant information without searching across multiple documents.
Timing and comparatives
S1 requires sustainability-related financial disclosures to be reported at the same time as the related financial statements and for the same reporting period. S2 does not create a separate climate timetable.
S1 and S2 each contain first-application comparative reliefs. The comparative calendar should be controlled by disclosure topic and metric, particularly where the entity begins with climate only and later expands to wider S1 reporting. Narrative comparatives may also be needed where useful for understanding the current period.
Judgements, estimates and errors
S1 requires disclosure of significant judgements and of the most significant measurement uncertainties. That foundation applies directly to S2 matters such as:
climate-risk classification and time horizons;
value-chain scope;
scenario selection and assumptions;
anticipated financial effects;
Scope 3 estimation and data quality;
target boundaries and baseline changes; and
treatment of carbon credits.
Reasonable estimates are permitted and often unavoidable. The control objective is not to eliminate uncertainty, but to describe methods, assumptions, limitations and changes faithfully. Material prior-period errors are corrected under the S1 error requirements.
Compliance statement
S1 paragraph 72 provides the overarching compliance test: an explicit and unreserved statement is permitted only when all requirements of UK Sustainability Reporting Standards are met. S1 paragraphs 73A and 73B then address special provisions and regulatory overlays.
For a climate report, the claim review must ask both:
1. Have the applicable S2 requirements been met, including relevant transition relief disclosure?
2. Have all S1 requirements that underpin the S2 disclosures been met?
A report cannot treat S1 as optional background while asserting S2 compliance.
What UK SRS S2 adds to the S1 architecture
S2 does not replace the S1 pillar disclosures. It specifies the information needed for climate within those pillars and, where governance or risk management is integrated, allows unnecessary duplication to be avoided through connected disclosures.
In practice
| S1 architecture | S2 climate-specific content |
|---|---|
| Governance processes, controls and procedures | Climate oversight, skills, information frequency, major transactions, trade-offs, targets and remuneration links. |
| Strategy: risks, opportunities, business model, decision-making, financial effects and resilience | Physical and transition risk classification, climate opportunities, transition plans, climate-related financial effects and climate resilience informed by scenario analysis. |
| Risk-management processes and integration into overall risk management | Climate-specific identification, assessment, prioritisation, monitoring, inputs and changes, including how climate opportunities are assessed. |
| Metrics and targets | Scope 1, Scope 2 and Scope 3 emissions; cross-industry metrics; industry-based metrics; internal carbon price; remuneration; capital deployment; climate targets and progress. |
| General proportionality and reasonable-information concepts | A climate scenario-analysis approach commensurate with circumstances, skills, capabilities and resources, using reasonable and supportable information available without undue cost or effort. |
| General financial connectivity | Specific climate exposure, effects, investment and financial-planning disclosures, connected to financial-statement amounts and assumptions. |
Route 1 - full UK SRS S1 and S2 reporting
The entity identifies all material sustainability-related risks and opportunities. It applies S1 to the full universe and S2 to climate-related matters. If every applicable requirement is met, it may make an explicit and unreserved statement of compliance with UK Sustainability Reporting Standards.
This route requires non-climate workstreams as well as climate work. A mature TCFD or S2 programme is not, by itself, a complete S1 system.
Route 2 - climate-only reporting under S1 paragraph E3
The entity exclusively discloses climate-related risks and opportunities and applies S1 only insofar as its requirements relate to those climate disclosures. This is a permission in the standard, not a statement that non-climate matters are immaterial.
The entity must:
disclose use of the E3 provision;
refrain from claiming UK SRS S1 compliance;
apply the S1 foundations relevant to S2;
satisfy the applicable S2 requirements; and
disclose use of S2 transition provisions alongside any S2 compliance statement.
Where reporting becomes mandatory, the availability or duration of E3 is subject to Companies Act, FCA or other competent UK rules.
Route 3 - partial or aligned climate reporting without a compliance claim
An entity may use parts of S1 and S2 to improve an annual report, lender pack or voluntary climate report without claiming compliance. It should describe the basis accurately, identify omissions and avoid wording that implies complete application.
This route can be appropriate during a dry run, but “aligned with” or “informed by” wording should still be supported by a documented gap assessment and legal review where public claims are made.
Workstream responsibilities
The workstream model should avoid a climate silo. Climate data may have specialist owners, but the reporting entity, materiality, finance, governance and compliance decisions remain part of the wider S1 system.
In practice
| Workstream | S1 responsibility | S2 responsibility — Key control or output |
|---|---|---|
| Board and company secretariat | Approve reporting basis, material matters, significant judgements, compliance wording and final disclosures. | Oversee climate strategy, trade-offs, targets, resilience and major transactions. — Terms of reference, board calendar, papers, minutes and approval record. |
| Finance | Align reporting entity, periods, financial effects, assumptions, currency and annual-report timetable. | Map climate effects to revenue, costs, assets, liabilities, cash flows, finance and capital deployment. — Financial-effect model, reconciliation file and finance sign-off. |
| Sustainability reporting | Coordinate the S1 universe, materiality, disclosure matrix, metrics and evidence. | Coordinate climate register, GHG inventory, targets, S2 mapping and narrative. — Controlled disclosure matrix, source register and issue log. |
| Enterprise risk | Integrate sustainability risks and opportunities into identification, assessment, prioritisation and monitoring. | Classify physical and transition risks, assess climate opportunities and maintain scenario-informed risk analysis. — ERM methodology, risk register, thresholds and monitoring reports. |
| Strategy and business units | Connect risks and opportunities to business model, value chain, decisions and resource allocation. | Document transition and adaptation responses, resilience options and decision triggers. — Strategic plans, investment papers and business-owner attestations. |
| Data and IT | Maintain definitions, lineage, access controls, retention and change management. | Support emissions, exposure, target and climate-financial datasets. — Data dictionary, lineage map, system extracts and change log. |
| Legal and compliance | Assess current and future UK rules, report location, confidentiality and claims. | Review climate commitments, transition-plan language, carbon-credit statements and regulatory explanations. — Applicability memorandum and claims review. |
| Internal audit or assurance readiness | Review design and operation of sustainability disclosure controls. | Test GHG, scenario, financial-effect, metric and target evidence. — Findings register, remediation plan and evidence-request pack. |
Hypothetical integrated reporting example
A listed logistics group has a mature climate programme covering fuel use, fleet transition, warehouse energy, Scope 3 subcontractor emissions and physical-risk scenarios. It now wants to prepare a full voluntary UK SRS S1 report.
The climate team maps its existing work to S2. Finance confirms that asset, capital expenditure and financing assumptions reconcile with the financial planning process. Risk confirms the classification and monitoring of physical and transition risks. The board reviews scenario findings and the fleet transition plan.
The S1 expansion then identifies non-climate matters that may affect prospects, including driver availability, labour relations, digital-system resilience and dependency on critical logistics partners. The entity conducts one overarching materiality process but retains topic-specific evidence and applies S2 to climate. Its final disclosure matrix shows integrated governance and risk-management sections, with separate strategy, financial-effect, metric and target detail where necessary.
The group does not describe the climate programme as the whole S1 report. It makes a compliance claim only after the non-climate requirements, S2 requirements, S1 foundations, comparatives, cross-references, judgements and evidence have been tested.
This example is illustrative and does not determine the outcome for a real entity.
In practice
Common mistakes and corrections
| Mistake | Why it fails | Correction |
|---|---|---|
| Treating S1 and S2 as two optional alternatives | S1 E2 and S2 C2 require them to be applied together. | Build one standards matrix showing S1 foundations and S2 climate content. |
| Copying the four pillars twice | Integrated governance and risk processes may be disclosed without unnecessary duplication. | Use connected disclosures and precise cross-references, while preserving climate-specific detail. |
| Applying S2 without S1 materiality | Climate metrics and narratives can become an unfiltered checklist. | Apply the entity-specific S1 materiality test and obscuring assessment. |
| Using a different climate reporting entity | It disconnects the disclosures from the related financial statements. | Anchor to the financial-statement entity and reconcile methodology boundaries. |
| Publishing climate disclosures later than the accounts | S1 timing governs the S2 report. | Align data close, review and authorisation with the annual report. |
| Claiming S1 compliance under climate-only E3 | S1 paragraph 73A expressly prohibits the claim. | Disclose E3 use and assess a separate S2 claim or descriptive basis statement. |
| Assuming E3 proves non-climate matters are immaterial | E3 is a reporting provision, not a materiality conclusion. | Maintain a wider risk/opportunity universe and expansion plan. |
| Leaving finance to review the finished narrative | Financial effects and assumption consistency require early finance ownership. | Integrate finance into scenarios, metrics, targets and drafting from the start. |
Readiness
Integrated readiness checklist
- The reporting basis states whether the entity is pursuing full S1/S2, climate-only E3 or partial alignment.
- Climate risks and opportunities are assessed using S1 materiality and the S2 scope.
- The sustainability reporting entity matches the related financial statements.
- Climate value-chain and GHG boundaries are reconciled to that entity.
- Governance and risk disclosures avoid duplication without omitting S2-specific information.
- Scenario analysis, resilience and financial effects are connected to strategy and financial planning.
- Scope 1, Scope 2 and Scope 3 data, methods, estimates and controls are documented.
- Industry-based and entity-specific metrics have a controlled selection rationale.
- Targets have approved boundaries, baselines, methodologies and progress evidence.
- Publication timing, location, comparatives and cross-references satisfy S1.
- Significant judgements and measurement uncertainties are disclosed.
- Any E3, S2 C3 or S2 C4 provision is recorded and disclosed correctly.
- The compliance or alignment wording has a separate technical and legal approval memorandum.
Sources
Primary sources
Take it with you
The checklists as a working spreadsheet
Every checklist and table on this page, with empty status, owner and evidence columns for your team to fill in and keep.
✓ Knowledge Hub AI Assistant · Human-in-the-loop
Ask about this guide
It answers from this page, and reaches into the linked disclosure cards when your question is about the standard itself. Your first two answers are free without signing in.
Go deeper · UK SRS S1
Certified IFRS S1 & S2 (ISSB) Applied Sustainability Reporting
This page settles one requirement. The IFRS S1 & S2 course walks the whole ISSB workflow — governance, strategy, risk management, metrics and targets — with drafting exercises on your own data.
