UK SRS S2 Climate Targets: Base Years, Boundaries, Milestones and Performance

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

The Standard’s objective is to enable users to understand performance in relation to climate-related risks and opportunities, including progress towards targets the entity has set and targets it is required to meet by law or regulation. It does not impose a universal climate target. Once a target exists and is material to the disclosure, however, the entity must provide the information necessary to understand what the target means and how performance is assessed.

The target population should include more than public net-zero announcements. It may include adaptation targets, renewable-energy targets, capital-deployment goals, physical-risk reduction targets, portfolio-alignment targets or internal management targets used to monitor material climate matters.

A climate target needs a complete anatomy and a controlled lifecycle from approval through measurement, performance, revision and disclosure.

Metric

Identify the metric used to set the target and monitor progress. The metric definition should match the target objective and remain consistent with the metric disclosed elsewhere. A target expressed as a percentage needs a controlled numerator and denominator, not only a headline percentage.

Objective

Explain what the target is intended to achieve: mitigation, adaptation, reduction of physical or transition exposure, capital deployment, opportunity capture or another material outcome. The objective should connect to the relevant risk or opportunity and strategy.

Scope and boundary

State which part of the entity and which activities, emissions scopes, geographies, assets, products or value-chain relationships are covered. A target can have a narrower boundary than the reporting entity or GHG inventory, but the difference must be clear and reconciled.

Target period and base period

The target period defines when the outcome is intended to be achieved. The base period is the reference point from which progress is measured. The base period should use a controlled inventory or metric and should not be changed merely because later performance appears less favourable.

Milestones and interim targets

Long-term targets need milestones that allow users and governance bodies to assess whether the planned pathway is being delivered. Milestones may be emissions outcomes, capital deployment, asset conversion, supplier coverage, adaptation completion or other measurable steps.

Absolute or intensity basis

An absolute target measures total change in the defined population. An intensity target relates performance to a denominator such as production, floor area, revenue or financed value. Intensity improvement can coexist with rising absolute emissions, so the disclosure should not allow one basis to conceal the other where both are relevant to understanding performance.

International-agreement context

The entity explains how the latest international climate agreement, including jurisdictional commitments arising from it, informed the target. This is not the same as declaring the target “Paris-aligned”. Any alignment claim needs a defined pathway, method, assumptions, coverage and limitations.

A gross target focuses on emissions reduction before carbon credits or other offsetting. A net target combines the intended gross emissions outcome with planned offsetting or removals. UK SRS S2 requires the entity to specify whether a GHG target is gross or net and, for a net target, to disclose the associated gross target. This preserves visibility of operational decarbonisation.

The entity explains its approach to setting and reviewing each target. This includes whether and how the target and its methodology were validated by a third party, how the target is reviewed, which metrics monitor progress and whether revisions occurred during the period. Validation should be described precisely: provider, scope, date, criteria and conclusion. A general statement that a target is “validated” may be misleading if only a calculation or a subset of scopes was reviewed.

Target changes and missed milestones require transparent classification, governance and disclosure rather than silent reset of the baseline or pathway.

The entity discloses performance against each target and analyses trends or changes in performance. “On track” should be supported by the actual metric, milestone pathway and reasonable assumptions. A year-on-year reduction does not prove that a cumulative or long-term target is on track if the required trajectory is steeper.

1. Report the current-period metric using the target definition and boundary.

2. Provide the comparative amount or explain applicable first-year relief and any impracticability permitted by UK SRS S1.

3. Compare actual performance with the milestone or pathway for the period.

4. Explain drivers of variance, including structural change, activity levels, methodology, estimates, acquisitions, disposals and external conditions.

5. Identify missed milestones or underperformance plainly and explain management’s response.

6. Explain any target revision, including why the revised target or metric provides more useful information and how comparatives are treated.

7. Distinguish a change in target ambition from a technical recalculation of the base period or inventory.

8. Reconcile target performance to remuneration, transition-plan progress and public claims where relevant.

Changes may be necessary after acquisitions, disposals, major methodology improvements, restatements or changes in business model. The entity should use a controlled policy that distinguishes target recalculation, metric redefinition, error correction and new target approval. It should explain the reason, effect and comparative treatment rather than silently replacing the historical series.

By 2027, intensity has improved by 18%, but absolute emissions are 4% above the base period. The disclosure reports both results, explains acquisition and production effects, shows the target-boundary reconciliation and states that the absolute milestone was missed. Management retains both targets and approves additional electrification investment. It does not describe the target as “on track” solely because intensity improved.

The wording identifies metric, scope, base period, milestones, gross basis, actual performance, missed milestone, drivers and governance response. It requires evidence for the recalculated base period, target boundary, milestone pathway, project delay and board decision.

The target register excludes legally required or internal management targets used for material climate matters.

Target and GHG inventory boundaries are different but unreconciled.

The base year is changed without an approved recalculation policy or explanation.

Long-term targets have no interim milestones or decision-useful performance pathway.

Absolute and intensity measures are used interchangeably.

A net target is disclosed without the associated gross target or planned carbon-credit reliance.

Third-party validation is described more broadly than the actual engagement scope.

Target revisions and missed milestones are hidden by replacing the prior target.

Performance metrics differ from those disclosed elsewhere or used for remuneration.

Comparative changes, estimates and errors are not treated consistently with UK SRS S1.