Author: Inci Hazal Kilic

The UK corporate landscape is facing a significant transformation. With the incoming UK Sustainability Reporting Standards (UK SRS), we are moving beyond voluntary "CSR" reports into an era of rigorous, financially integrated disclosure. Based closely on the global IFRS S1 and S2 standards, UK SRS requires companies to disclose sustainability and climate-related risks with the same discipline as their financial accounts. This is a giant step towards transparency and long-term value creation.

However, for UK companies embarking on this journey, particularly those moving beyond TCFD for the first time, the process can be daunting.

At EOS Climate, we have already navigated the implementation of these exact standards (via the parallel TSRS rollout in Turkey). Here are the main challenges first-time reporters face and the practical steps to overcome them.

Breaking Silos

The most critical starting point isn't data collection; it is governance. UK SRS requires a perspective that integrates financial reporting with sustainability metrics.

In many firms, the Sustainability Team and the Finance Team speak different languages. Sustainability talks in "tonnes of CO2e," while Finance talks in "£ at risk."

Don't wait for the reporting deadline. Create a working group that includes the CFO, Risk, and Sustainability heads now. Establishing this cross-functional culture early is vital because UK SRS is an accounting standard, not just an environmental one.

The "Investor-Focused" Shift

Traditional sustainability reporting often focuses on "impact on the world." UK SRS flips this to focus on "impact on the company"  meaning financial materiality.

Determining what is "material" will be the challange. The main question you must answer is: "Could this risk reasonably affect our cash flows, access to finance, or cost of capital?" Use the SASB Standards (which underpin IFRS S1) as your sectoral guide. Importantly, UK SRS expects you to explain how you determined materiality. Documenting your methodology is just as important as the result itself for audit purposes.

Data Management Beyond Spreadsheets

Perhaps the biggest hurdle is the sheer volume of data required, particularly for Scope 3 emissions.

In most companies, this data is scattered across procurement, logistics, and HR, often with varying quality. Companies will benefit from performing a "Data Gap Analysis" immediately. Identify which data points you have, which are estimates, and which are missing entirely. While you can start with Excel, the complexity of UK SRS often necessitates digital solutions to ensure the "audit trail" that regulators will eventually demand.

Expanding the Value Chain 

One of the most significant shifts from TCFD to UK SRS is the rigorous requirement to look beyond your own operations.

Mapping the entire value chain is resource-intensive, especially for complex manufacturing or energy sectors is a main challange. But remember, you do not need to analyse the entire universe at once. Start with your "Hotspots", the key suppliers or categories that constitute the bulk of your emissions or financial risk. Prioritise quality data for these high-impact areas rather than trying to get perfect data for 100% of your tail-spend suppliers.

Bridging Finance and Climate

Finally, the distinct feature of UK SRS is the requirement to quantify the financial impact of climate change on your future cash flows.

The challenge is translating physical climate risks (e.g., flooding risk to a factory) into a specific balance sheet impairment. The fix requires new capabilities. Your sustainability engineers need to sit with your financial planners to build "Translation Models." This is where external expertise can be most valuable in the early years,helping you build the logic that satisfies both the climate scientists and the financial auditors. The conclusin will be progress over perfection.

Your first UK SRS report is not expected to be perfect. Both regulators and investors understand this is a learning curve. What matters is transparency. Honestly present your current situation, state your limitations, and explain your plan to improve.

How EOS Climate Can Help

With over 15 years of experience EOS Climate (and our sister company Life Climate) helps companies bridge the gap between technical sustainability data and financial reporting.

We have successfully guided complex organisations through the early adoption of IFRS S1 & S2 standards in Turkiye via our sister company Life Climate. Whether you need a Gap Analysis for your current TCFD reporting or a full Scope 3 measurement strategy, we provide the audit-ready assurance you need.