UK SRS S2 Climate Metrics and Targets: Cross-Industry, Industry-Based and Entity-Specific Data

Educational practitioner guidance. Not legal or assurance advice. Verify the current UK SRS text, applicable reporting rules and entity-specific facts before acting.

The objective of the metrics and targets disclosures is to enable users to understand performance in relation to climate-related risks and opportunities, including progress towards targets set by the entity and targets imposed by law or regulation. UK SRS S2 therefore combines a common cross-industry baseline with information tailored to the entity’s industries and its own strategy and targets.

The first layer is the seven cross-industry categories in paragraph 29. The second is industry-based metrics associated with particular business models, activities or common industry features. The third comprises metrics used to set and monitor climate-related targets, including entity-developed measures where necessary. UK SRS S1 supplies the general requirements for definitions, methods, sources, entity-developed metrics, estimates, comparatives and changes.

Figure 3. UK SRS S2 combines cross-industry categories, industry-based metrics and entity-specific target measures inside one controlled climate performance system.

The entity discloses absolute gross Scope 1, Scope 2 and Scope 3 emissions. The normal measurement basis is the Greenhouse Gas Protocol Corporate Standard unless a jurisdictional authority or listing exchange requires another method for all or part of the entity. The disclosure explains the measurement approach, inputs and assumptions, why they were chosen, and changes made during the period.

Scope 1 and Scope 2 emissions are disaggregated between the consolidated accounting group and other investees outside that group. Scope 2 includes the location-based figure and information about contractual instruments needed for users to understand the emissions. Scope 3 includes the categories in the GHG Protocol Scope 3 Standard and, for asset management, commercial banking or insurance, specified financed-emissions information subject to the UK text and applicable reliefs.

The UK Scope 3 and first-year method provisions

UK SRS S2 includes a standard-level provision in paragraph C4 under which an entity applying the Standard is not required to disclose Scope 3 emissions, including specified financed-emissions information. Paragraph C3 provides a first-year provision for an entity that used another GHG measurement method in the immediately preceding period. Use of C3 or C4 is disclosed alongside the compliance statement and can be carried into comparative information as described in C5.

The amount-and-percentage categories cannot be produced reliably until the entity defines the population against which the percentage is calculated. Depending on the business, the denominator might be assets, revenue-generating activities, financing exposures, production capacity or another decision-useful population. The chosen basis must connect to the risk or opportunity, be clearly labelled, avoid double counting and be reconcilable to controlled financial or operational data.

“Vulnerable” and “aligned” are not self-executing labels. The entity should document the criteria, time horizon, scenario or evidence used, treatment of partial exposure, thresholds, aggregation, changes and uncertainty. A taxonomy or internal classification may help, but the disclosure should not imply official approval or equivalence unless that status is supported.

Paragraph 32 requires industry-based metrics associated with business models, activities or common features that characterise participation in an industry. In the UK text, the entity may refer to and consider the applicability of the metrics in the Industry-based Guidance on Implementing IFRS S2. This is different from saying that industry information itself is optional.

The entity can use the guidance as a structured starting point, adapt a metric where necessary, use another relevant source or develop an entity-specific metric, provided the final information meets UK SRS requirements. The team should retain an industry and source-selection record showing the business models assessed, guidance considered, metrics selected or adapted, materiality judgement and review. Proposed amendments to the IFRS S2 industry guidance should be treated as proposals until finalised and incorporated into the relevant UK source framework.

Where the entity develops a metric, UK SRS S1 paragraph 50 requires disclosure of its definition, whether it is absolute, relative or qualitative, whether it has been validated by a third party, the method used to calculate it, inputs and limitations, and significant assumptions. If a metric adjusts one taken from an external source, the entity explains the source and how its version differs.

Figure 4. Every cross-industry, industry-based and entity-developed climate metric should pass through the same definition, boundary, method, evidence, review and comparative controls.

For each climate-related target, the entity discloses the metric used, objective, scope within the entity, target period, base period, milestones and interim targets, whether a quantitative target is absolute or intensity-based, and how the latest international climate agreement and related jurisdictional commitments informed the target. The entity also explains validation, review processes, progress metrics, revisions and performance trends.

For a GHG target, additional information identifies the gases and scopes covered, whether the target is gross or net, whether a sectoral decarbonisation approach was used and the planned use of carbon credits. A net target does not replace the gross target. Carbon-credit information should make reliance, scheme, type and integrity considerations understandable.

UK SRS S2 C1 removes the need for comparative information in the first annual reporting period of applying the Standard. After that, UK SRS S1 comparative requirements apply. When a metric is estimated, redefined or replaced, or a new metric is introduced, the entity assesses the relevant comparative requirements, practicability, explanation and effect on trend information.

A metric-change register should capture changes in the reporting entity, measurement perimeter, method, factors, assumptions, source systems, denominator, estimate coverage, target baseline and classification criteria. The entity should distinguish a change in estimate from a prior-period error and should not describe a method change as improved performance.

1. Map requirements. Create a paragraph-level inventory of the seven cross-industry categories, applicable industry metrics and target information.

2. Assign metric purposes. Link each metric to a climate risk, opportunity, strategy decision, target or financial effect.

3. Define perimeters and denominators. Reconcile the reporting entity, investees, value chain, assets, activities and time horizons.

4. Build methods and data lineage. Document sources, formulas, factors, assumptions, estimates, transformations and evidence.

5. Select industry information. Assess applicable industries and the optional IFRS S2 industry guidance, alternatives and entity-specific needs.

6. Control targets. Freeze the target metric, baseline, scope, milestones, governance approval and progress method.

7. Reconcile to finance and operations. Tie capital deployment, asset populations, remuneration and other metrics to controlled systems and financial statements where relevant.

8. Apply review and change control. Perform recalculation, analytical review, source checks, comparative assessment and approval.

9. Draft connected disclosures. Present metrics with methods, limitations, changes, target performance and links to strategy, financial effects and resilience.

The group creates an asset population reconciled to the fixed-asset and lease registers, then classifies physical exposure using location, hazard and vulnerability criteria. It defines transition exposure for buildings with energy-performance and retrofit constraints. Opportunity alignment is limited to assets that meet approved criteria rather than all properties with a sustainability initiative. Capital deployment is reconciled to approved capex and project codes. The remuneration metric is tied to the recognised annual bonus outcome and the exact climate component.

The group discloses Scope 1 and location-based Scope 2 emissions, explains contractual renewable arrangements and uses the UK Scope 3 provision while maintaining an internal roadmap. Its energy-intensity target identifies the property perimeter, base year, denominator, interim milestone and actual performance. A building acquisition triggers a baseline and comparative assessment rather than automatic rebasing.

Reporting emissions but omitting the other cross-industry categories without an assessment.

Using an asset or activity percentage without defining and reconciling the denominator.

Calling an activity “aligned” with an opportunity because it has a sustainability label or planned initiative.

Using the specific industry guidance as if every metric were automatically applicable, or ignoring industry-based information because the guidance is optional in the UK text.

Reporting Scope 2 only on a market-based basis and omitting the required location-based amount.

Applying the Scope 3 provision without disclosing its use alongside the compliance statement.

Changing GHG factors, organisational boundary or target baseline without change and comparative controls.

Publishing internal carbon prices that are not actually used in decisions, or combining multiple prices without explaining their use.

Describing remuneration as climate-linked without reconciling to recognised compensation and approved performance outcomes.

Hiding a missed interim target behind long-term ambition language.