DBT: The UK’s Modern Industrial Strategy – Policy paper

On 23 June 2025, the Department for Business and Trade (DBT) published a document setting out the Government’s Industrial Strategy. This is a 10-year plan to, among other things, significantly increase business investment in eight sectors. 

As well as backing eight sectors in particular, the International Strategy focuses on the need to increase business investment more generally, capturing a greater share of internationally mobile capital, spurring domestic businesses to scale up, and supporting small and medium-sized business. It includes the following:

Plans to transform the UK’s eight highest-potential sectors 

The eight sectors selected are those identified as having the greatest growth potential over the next decade and which have a critical role to play in supporting economic security and resilience, net zero and regional growth. These are as follows: 

• Advanced Manufacturing
• Creative Industries
• Clean Energy Industries
• Digital and Technologies
• Professional and Business Services
• Life Sciences
• Financial Services 
• Defence

Each of the eight sectors will have a bespoke Sector Plan, developed with industry, setting out a vision of the sector’s transformation by 2035. DBT has published five of the Sector Plans, with Life Sciences, Financial Services and Defence to follow. Those that are available can be accessed here.

Expanding access to finance

DBT sets out the proposed approach to ensuring high-growth sectors can access the domestic capital they require to reach their potential and this includes the following:

• Developing the UK’s venture ecosystem, through strategically targeted public finance to encourage scale-up funds to raise more capital and lead larger investment rounds in UK businesses. 
• Reforming capital markets and pensions investment to support the most innovative firms to start, scale, list, and build their future in the UK. This will build on reforms to the UK’s listing regime; PISCES, a new type of stock exchange for companies who want to stay private for longer; and reforms which will secure £50 billion from Britain’s biggest pension funds for investment in UK businesses and infrastructure. 
• Ensuring high-growth firms that act to support their resilience and national security are not put at a competitive disadvantage. This means using public finance to help the eight sectors access critical supply-chain inputs or develop critical capabilities.

Strengthening economic and national security

One of the commitments in this part of the Policy Paper is the launch a 12-week consultation on updating the definitions covering the 17 sensitive areas of the economy subject to mandatory notification under the National Security and Investment Act (NS&I Act). The consultation will propose amendments to ensure that regulatory requirements remain targeted and proportionate, protecting national security and giving certainty to investors. 

The Government commits to continuing to update guidance to ensure there is clarity for investors on how the NS&I Act works, including decision-making processes. It will also shortly announce specific new exemptions to the mandatory regime and will explore opportunities to bring greater transparency to the NS&I Act process and ensure that it protects national security while minimising burdens cand supporting growth. 

Reducing regulatory burdens

Noting that the UK’s regulatory framework has become too complex, uncertain and risk averse, one step to reduce this burden will be to simplify corporate reporting requirements and explore how to make it easier for foreign companies to move to the UK. 

As well as having committed to take forward a wider range of measures to streamline and modernise company law, the Government intends to publish a consultation on streamlining non-financial reporting requirements under the Companies Act 2006. In addition, in view of the 2024 Independent Expert Panel’s report on introducing a UK corporate re-domiciliation regime in the UK, the Government will consult on how to design and implement such a regime (see further here).

(DBT, The UK’s Modern Industrial Strategy – Policy Paper, 23.06.2025)

DBT: Draft UK Sustainability Reporting Standards - Consultation

On 25 June 2025, the Department for Business and Trade (DBT) published a consultation seeking views on draft UK Sustainability Reporting Standards (UK SRS). These are based on IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures published by the International Sustainability Standards Board in June 2023.

The consultation forms part of the first phase of consultations to modernise the UK’s sustainable finance framework, and has been published alongside:

• Department for Business and Trade consultation: Assurance of sustainability reporting
• Department for Energy Security and Net Zero consultation: Climate-related Transition Plans

The Government proposes six minor amendments to the IFRS SRS for application in a UK context. to reflect their use in a UK context, while retaining the advantages of international comparability that the ISSB Standards are intended to achieve. These are set out in Chapters 2 and 3 of the consultation, with the reasons for the proposals set out, and are as follows:

• Amendment 1 – removal of the transition relief in IFRS S1 that permits delayed reporting in the first year
• Amendment 2 – extension of the transition relief in IFRS S1 that permits a ‘climate-first’ approach
• Amendment 3 – removal of the requirement to use the Global Industry Classification Standard (GICS) in IFRS S2
• Amendment 4 – removal of the ‘effective date’ clauses in IFRS S1 and IFRS S2 (with PIC consideration)
• Amendment 5 – references to the SASB materials in IFRS S1 and IFRS S2
• Amendment 6 – treatment of transition reliefs

Chapter 4 of the consultation presents an overview of, and seeks views on, the potential benefits and costs of UK SRS, which will inform future UK government decisions on implementation. Chapter 5 seeks stakeholders’ views on the areas where additional guidance may be helpful when reporting information against UK SRS. This will help inform the next phase of work on implementation.

Next steps

Responses to the consultation are requested by 17 September 2025. Following the analysis of responses, the Government will make a final decision on whether to endorse the drafts of UK SRS S1 and UK SRS S2 for use in the UK and make final versions available for any entity to use on a voluntary basis. If endorsed, the aim is to publish the final UK SRS S1 and UK SRS S2 in autumn 2025

The decision on whether to introduce any legal or regulatory requirements in relation to UK SRS will be assessed separately. The Financial Conduct Authority (FCA) will consult on proposals to require the use of UK SRS by listed companies within FCA listing rules. The Government will assess the merits of requirements for entities outside the FCA’s regulatory perimeter, bearing in mind the wider context of proposed legislative changes that may arise from the Government’s review of non-financial reporting. When making these decisions, the FCA and Government will also consider the impact of any proposals on the competitiveness of the UK’s capital markets and the degree to which decisions made within the UK align with international trends.

(DBT, Exposure draft of UK Sustainability Reporting Standards: UK SRS S1 and UK SRS S2 – Open consultation, 25.06.2025 and here)

DESNZ: Climate-related transition plans - Consultation

On 25 June 2025, the Department for Energy Security and Net Zero (DESNZ) published a consultation seeking views on how the Government could take forward its manifesto commitment which involves mandating “UK-regulated financial institutions (including banks, asset managers, pension funds and insurers) and FTSE 100 companies to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement”. 

The consultation seeks views on how the Government should take forward this commitment in a way that: 

• supports an orderly transition in line with global climate goals
• enhances transparency for investors and promotes efficient capital allocation
• supports companies in capturing the opportunities from the global net zero transition
• supports the growth of the UK’s financial services industry by ensuring its sustainable finance framework is internationally competitive and maintains the UK’s status as a global financial hub.

The consultation forms part of the first phase of consultations to modernise the UK’s sustainable finance framework, and has been published alongside:

• Department for Business and Trade consultation: Exposure drafts: UK sustainability reporting standards 
• Department for Business and Trade consultation: Assurance of sustainability reporting 

The consultation seeks views on the benefits and use cases of transition plans, the implementation of transition plan requirements and related policy and frameworks. It is open until 17 September 2025. In tandem, the Government is also commissioning a research project to better understand the benefits and costs of transition planning, including for private companies. 

Next steps

The Government will consider responses to this consultation alongside the consultations on UK sustainability reporting standards (SRS) and the sustainability assurance market. Once responses have been analysed, it intends to bring forward a package of proposals that considers the UK's regulatory landscape as a whole. In the meantime, the Financial Conduct Authority (FCA) intends to consult on strengthening its transition plan expectations for listed companies, which the Government encourages stakeholders to engage with.

(DESNZ, Transition plan requirements consultation seeking views on implementation routes for transition plan requirements, 25.06.2025 and here)

DBT: Assurance of sustainability reporting - Consultation

On 25 June 2025, the Department for Business and Trade (DBT) published a consultation seeking views on the Government's proposal for greater regulatory oversight of third-party assurance services for sustainability-related financial disclosures.

The consultation forms part of the first phase of consultations to modernise the UK’s sustainable finance framework, and has been published alongside:

• Department for Business and Trade consultation: Exposure drafts: UK sustainability reporting standards 
• Department for Energy Security and Net Zero consultation: Climate-related transition plans

The consultation focuses on providers of assurance over sustainability-related financial disclosures and it follows the conclusion of the Financial Reporting Council’s (FRC) recent market study on this theme. The FRC’s Final Report was published in February 2025.In particular, the Government is seeking views on a proposal to introduce a registration regime operated by the Audit, Reporting and Governance Authority (ARGA) once established. The regime would recognise assurance providers as being capable of assuring information disclosed against UK sustainability reporting standards (UK SRS), European Sustainability Reporting Standards (ESRS) and any jurisdictional standards that are aligned to the ISSB Standards.

The consultation notes that the Companies Act 2006 provides for the oversight of assurance over financial accounts, by way of regulating statutory auditors. However, equivalent arrangements for the oversight of providers of assurance for sustainability-related financial disclosures do not exist. The Government is considering how to address this gap and is closely monitoring global developments, noting that several jurisdictions have established arrangements for the registration of providers of sustainability assurance or are currently formulating policy.  

The purpose of this consultation is to progress the first phase of policy development regarding sustainability assurance, in response to the FRC’s market study. Specifically, through the consultation, the Government is seeking views on the proposal to create a registration regime for those who offer assurance services for sustainability-related financial disclosures in the UK. Following this consultation, the Government will continue to consider whether further measures should be pursued.

Next steps

Responses to the consultation are requested by 17 September 2025. The Government will consider all responses to the consultation and implementation is subject to future Government decisions. If agreed, implementation will require changes to legislation and therefore timing of the regime will be subject to Parliamentary approvals and passage. Outcomes of the consultation will also feed into broader Government work to establish ARGA. 

(DBT, Assurance of sustainability reporting – Consultation, 25.06.2025 and here)

IFRS Foundation: Disclosing information about an entity’s climate-related transition, including information about transition plans, in accordance with IFRS S2 - Guidance

On 23 June 2025, the IFRS Foundation published new guidance as part of its commitment to supporting the implementation of IFRS Sustainability Disclosure Standards (ISSB Standards). The document builds on disclosure-specific material developed by the Transition Plan Taskforce (TPT), for which the IFRS Foundation took responsibility in 2024 to reduce fragmentation in disclosures and enhance the quality and comparability of information provided by entities applying the requirements in IFRS S2.

Requirements in IFRS S2 Climate-related Disclosures

The objective of IFRS S2 Climate-related Disclosures is to provide users of general purpose financial reports with decision-useful information about climate-related risks and opportunities. Although IFRS S2 does not require an entity to have a transition plan (described as the outcome of the transition planning process), it does require an entity to provide material information about the sustainability-related risks and opportunities that could reasonably be expected to affect its prospects. This includes information about its climate-related transition because it relates to how the entity mitigates and adapts to climate-related transition and physical risks.

The new guidance document aims to guide entities in reporting information about their climate-related transition when applying the requirements in IFRS S2, as part of wider sustainability-related disclosures in their general purpose financial reports but it does not provide guidance on the transition planning process, for example, how to develop a transition plan.

The guidance:

• explains that an entity’s climate-related transition is a process through which the entity, in the context of its overall strategy, pursues targets, undertakes actions or deploys resources to respond to climate-related risks and opportunities;
• explains to entities the information that it is necessary to disclose when applying IFRS S2, if the entity has set a strategy for its transition to a lower-carbon and/or climate-resilient economy (for example, reducing its greenhouse gas (GHG) emissions and adjusting its business model to become more resilient to climate-related physical risks); and
• sets out guidance on disclosures about entities’ climate-related transitions. 

Implications for jurisdictions

This guidance is intended to be used by jurisdictions adopting or otherwise using ISSB Standards. Jurisdictions can, if they choose, supplement the disclosures required by IFRS S2 with requirements for further information aimed at meeting the needs of a broader group of stakeholders or to address specific jurisdictional information needs, to the extent that the sustainability-related financial disclosures are clearly identifiable and not obscured by additional information. For example, a jurisdictional authority might require that entities operating in the jurisdiction disclose information on how their GHG targets will enable global warming to be limited to 1.5 degrees Celsius, in line with the latest international agreement on climate change.

Next steps

This guidance document does not add to or otherwise change the requirements in IFRS S2. The IFRS Foundation will continue to monitor disclosures provided by entities applying IFRS S2 and will consider the need to enhance the application guidance in IFRS S2. 

(IFRS Foundation, Disclosing information about an entity’s climate-related transition, including information about transition plans, in accordance with IFRS S2 – Guidance document, 23.06.2025) 

(IFRS Foundation press release, 23.06.2025)