The Definition
Am I in scope of UK SRS?
A practical decision tree walking through the rules in CP26/5, the Companies Act, and the proposed mandatory framework. UK SRS itself is available for voluntary adoption by any UK entity — the question of mandatory application is jurisdiction-specific.
Last verified 12 May 2026 · Subject to FCA Policy Statement on CP26/5
Outcome categories
Under UK SRS S1, sustainability-related financial information is material if omitting, misstating, or obscuring it could reasonably be expected to influence decisions that primary users of general-purpose financial reports make on the basis of those reports.
Primary users are defined as existing and potential investors, lenders, and other creditors.
This is not the same as financial statement materiality. Financial statement materiality asks whether information would change the numbers in the accounts.
Sustainability materiality under UK SRS asks whether information about sustainability-related risks and opportunities would influence an investor's assessment of the company's prospects — even if the financial impact has not yet materialised in the accounts.
This distinction is central to the UK SRS framework.
Single Materiality vs Double Materiality
UK SRS uses a single materiality approach, consistent with IFRS S1 globally.
The focus is on how sustainability matters affect enterprise value — the "outside-in" perspective. A company considers sustainability risks and opportunities through the lens of their potential effect on the company's cash flows, access to finance, cost of capital, or business model over the short, medium, and long term.
For the full comparison with the global baseline, see UK SRS vs IFRS S1 and S2.
This differs fundamentally from the double materiality approach used in the EU Corporate Sustainability Reporting Directive (CSRD).
Under CSRD, a company must also consider the "inside-out" perspective — how the company's activities impact people and the environment, regardless of whether those impacts affect enterprise value.
A UK company subject to both UK SRS and CSRD will need to apply both materiality lenses. Overseas companies listed in multiple jurisdictions should review these differences carefully.
How to Assess Materiality in Practice
UK SRS does not prescribe a specific materiality assessment methodology, but requires companies to disclose the process and judgements they used to identify material sustainability topics. In practice, a robust materiality assessment typically involves identifying a long list of potential sustainability topics relevant to the company's industry and value chain, assessing each topic against the materiality definition, engaging with relevant stakeholders, and documenting the rationale for including or excluding each topic. A structured gap analysis can help identify where materiality assessment processes need strengthening.
The SASB Standards — which UK SRS references as a permissive resource — provide industry-specific lists of sustainability topics likely to be material. While not mandatory, they offer a practical starting point for companies building their materiality assessment for the first time. The ISSB maintains these standards alongside its global disclosure framework.
Why This Matters
The materiality definition determines the boundary of a company's UK SRS disclosures. A well-conducted materiality assessment protects the company from both under-disclosure (which risks regulatory challenge from the FCA) and over-disclosure (which creates reporting burden without corresponding value to investors). It is also the foundation for the statement of compliance. For the full disclosure requirements structured around the four-pillar framework, see our dedicated guide. Boards should ensure they understand and can evidence the materiality judgements made. Companies should also review the S1 scope and timing requirements and the mandatory timeline. For professional analysis, see KPMG's CP26/5 analysis and BDO's overview of sustainability reporting requirements.