New Sustainability Initiatives for Reporting and Building Standards

Two recent initiatives aim to progress the development of sustainability standards, one for reporting and one for building: the UK Government’s framework to create UK Sustainability Reporting Standards, and a construction industry collaborative initiative to launch a pilot version of the UK Net Zero Carbon Buildings Standard.

Firstly, in its mobilising green investment: 2023 green finance strategy, the UK Government laid plans to establish a framework to assess the suitability of IFRS S1 and IFRS S2 for endorsement in the UK.

If this process concludes with an affirmative endorsement decision, it would result in the creation of the first two UK Sustainability Reporting Standards (SRS), which would be based upon IFRS S1 and IFRS S2. The UK Government aims to make endorsement decisions on the first two standards by Quarter 1 2025 and these standards will form part of a wider Sustainability Disclosure Reporting framework led by HM Treasury – for more information, see the SDR Implementation Update (May 2024).

Once the assessment process is complete, and subject to an affirmative endorsement decision, the Financial Conduct Authority (FCA) will be able to use the UK’s standards to introduce requirements for UK-listed companies to report sustainability-related information to their investors, subject to a consultation process.

Subject to an affirmative endorsement decision, the Government will also decide on disclosure requirements against the endorsed standards for UK companies that do not fall within the FCA’s regulatory perimeter. That decision will take into account a number of factors, including costs for reporting companies and benefits for investors that may wish to use this information. 

Secondly, an industry coalition in the construction industry has launched a pilot version of the UK Net Zero Carbon Buildings Standard (UKNZCBS). This Standard is designed for developers, contractors, asset owners and managers, occupiers, investors, financiers and funders, consultants, building industry professionals, building managers and product/material manufacturers, suppliers, and distributors.

The Standard sets out metrics by which net zero carbon aligned performance is evaluated, as well as limits and targets that need to be met. These cover operational energy use, embodied carbon, on-site renewable electricity and refrigerants amongst others, as well as the need to avoid fossil fuel use on site. It also covers the approach to carbon accounting, reporting and submitting mandatory evidence to demonstrate that a building is NZC aligned, as well as the methodology for choosing to offset residual carbon emissions. Claims will be required to be verified by a third party based on in-use measured data. The verification process is not fully detailed in the Pilot Version, but will be released in the future.

BBP, BRE, CIBSE, Carbon Trust, IStructE, LETI, RIBA, RICS and UKGBC joined forces to champion this initiative. More information is available online.