In Conversation: Sustainability reporting and assurance
Published: 27 March 2026
10 minute read
In the latest in-conversation podcast series, Kate O’Neill sits down with Mark Babington, Executive Director of Regulatory Standards, to discuss the UK sustainability reporting landscape and the role of the FRC. Kate and Mark talk through the Government's recently issued UK Sustainability Reporting Standards and the FRC's ongoing work to support high-quality sustainability assurance engagements.
Transcript
00:00:10:16 - 00:00:44:04
Kate O'Neill
Hello there and welcome to another FRC in conversation. My name is Kate O'Neill. I'm the Director of Stakeholder Engagement and Corporate Affairs at FRC, and I'm joined by Mark Babington, the Executive Director of Regulatory Standards, to talk about the topic and goodness. It's a broad topic of sustainability and sustainability reporting. So, Mark, this is a broad topic and it touches lots of areas of government policy regulation, both in the UK and internationally.
00:00:44:06 - 00:00:52:00
Kate O'Neill
But I guess it'd be helpful to start with, you know, what is the force's role in the sustainability space.
00:00:52:02 - 00:01:22:12
Mark Babington
So I suppose you could say, Kate, it's one that continues to develop. So perhaps the earliest part of the sustainability journey has been the work that the FRC has done, working with companies to look at the way they've implemented Tcfd reporting, which has been around in the UK for a while. And then I suppose there's also the work that we've done in working with our colleagues at the ISB to provide input to them as they work through and develop their standards.
00:01:22:12 - 00:01:35:20
Mark Babington
So we issued comment letters and and met with them regularly and similarly with the Ida spend this year to create a framework of ethical standards and performance standards for assurance engagements.
00:01:35:22 - 00:01:46:00
Kate O'Neill
And I guess we'll move on to assurance in a minute. But I guess our role also was on the technical advisory committee. We did the secretariat for that as well.
00:01:46:02 - 00:02:14:02
Mark Babington
That's absolutely right, Kate. So the TAC was there to provide an evaluation of Iasb standards to make a recommendation to the Secretary of State on whether or not they should be endorsed for use in the UK. So the Secretariat was responsible for producing all of the papers for the TAC to consider undertaking the analysis and supporting the TAC, so it was able to make that recommendation to the Secretary of State that he should endorse the.
00:02:14:04 - 00:02:43:15
Kate O'Neill
But I guess for some time, people like you and me and other colleagues on the FRC have heard from preparers that they would really welcome a one size fits all checklist or framework for sustainability reporting, but I guess that wish won't be fulfilled because, you know, it's a very wide spectrum of reporting and high quality sustainability reporting has become an increasing priority as investors demand it to be.
00:02:43:17 - 00:03:10:21
Mark Babington
Yeah, that's right, Kate, but it is the journey that we're on. So as is common with many of the areas that we work in, we recognize the benefits of following international standards. And so that's why we've worked with the boards to help develop international standards that ultimately, over time, will help UK companies not just with reporting in the UK, but also meeting their obligations in other jurisdictions that they might be reporting in.
00:03:10:23 - 00:03:37:12
Kate O'Neill
And so people looking for that one stop shop, it's just not going to happen because sustainability, you know, has so many different linkages for preparers in relation to their business model, their business performance and their organizational purpose. For example, I guess we'd see different sustainability requirements on companies that are very involved in mining and resources. These are financial services companies.
00:03:37:13 - 00:04:01:13
Mark Babington
Well, if you follow the Iasb standards, there are sector specific metrics and reporting requirements that do give you a flexible approach. But I think the bigger challenge is it's going to take a few years for this to all settle down. The first country really to embark on this reporting and assurance for large companies was Australia. And even they are going through like a four year implementation period.
00:04:01:13 - 00:04:07:15
Mark Babington
So I think it's something that will begin to coalesce, but it's not going to do it overnight.
00:04:07:17 - 00:04:28:12
Kate O'Neill
And I think that's right. We've got Russia because it is an evolving space on so many levels. But in February, the government issued the UK Sustainability Reporting Standards, known as SRS, because we all love an acronym. This is an important milestone for the UK, but how do we get to this point and what was our role in it?
00:04:28:14 - 00:05:00:01
Mark Babington
So that's the work of the TAC in supporting the recommendation to the Secretary of State. So, you know, we were able to participate in preparing the information, making the assessments that the TAC considered. And now the Secretary of State has made them available. So they can be used on a voluntary basis. Although many of our stakeholders will have seen that the Financial Conduct Authority has already issued a consultation to add in the UK SRS to its listing rules to replace Tcfd.
00:05:00:03 - 00:05:24:10
Kate O'Neill
So what's the purpose of these standards? I mean, are they going to continue to help companies tell their story, and what's the role will they play in supporting investors, not just make informed decisions, but have confidence companies, and as you said, in particular sectors are taking sustainability standards as the measure for where they start with their reporting.
00:05:24:12 - 00:05:59:20
Mark Babington
Well, the UK SRS provides an international based framework that companies can use to report sustainability information using financial materiality that is very common and widely used by investors and other stakeholders. This will provide a way to allow UK companies that choose to use them, or are required to use them to communicate, not just to their UK stakeholders, but also to those in other jurisdictions that follow the same framework.
00:05:59:22 - 00:06:23:01
Kate O'Neill
And I guess the standards have currently been issued on a voluntary basis. The FCA's consulting on how UK IFRS can be incorporated into the listing rules for mandatory use by some companies. What would you say to companies who might be thinking, gosh, I want to get ahead of this and implement the standards on a voluntary basis because they're going to become mandatory, probably.
00:06:23:01 - 00:06:24:19
Kate O'Neill
Anyway.
00:06:24:21 - 00:06:48:22
Mark Babington
Well, I think, you know, you can always usefully think about your governance and oversight of reporting. So this will be a new source of information that comes before the board and might be included in a company's annual reports. So thinking about how you demonstrate to your board that you've got appropriate governance and quality control around it, is is something that's worthwhile doing.
00:06:48:24 - 00:07:11:15
Mark Babington
Would I say go too far before all of the consultations are completed? Now, because all of this reporting is developing at different speeds in a number of jurisdictions. So don't spend too much on it. Wait until the requirements are clear and you know when they're coming in. But think about the useful things like where is your information coming from?
00:07:11:15 - 00:07:20:02
Mark Babington
How reliable are those information reporting systems? Who will you need to rely on to make sure this is good quality information?
00:07:20:04 - 00:07:52:05
Kate O'Neill
Going back to assurance Mark, in November 2025, the FCA issued International Standard on Sustainability Assurance 5000, which provides UK companies, investors and insurance providers with a consistent, internationally aligned assurance standard for voluntary use. I mean, how hard is that going to be for preparers to get the assurance that they need on what will often be quite complex sustainability situations?
00:07:52:05 - 00:08:04:15
Kate O'Neill
I mean, are people just going to use the same assurance providers for example, as bigger audit firms, or will there be other providers who will get involved in that process?
00:08:04:17 - 00:08:34:10
Mark Babington
So with the work that we've done with colleagues in government, they're very keen to ensure that the provision of sustainability assurance isn't just restricted to a narrow group of providers. So there was a statement in the government response recently where the government said that it would be asking the FRC to set up a voluntary register for sustainability assurance providers, and we're in the process of working on that at the moment.
00:08:34:12 - 00:09:03:12
Mark Babington
But as you said, what we're trying to do is offer internationally recognized frameworks that people can use. So at least then you have a read across when a company reports in multiple jurisdictions. So although we've adopted ESI 5000, we know that there are providers using ESI 3000 and older standard, and there are others that will be using other standards, like for instance, ISO standards to support their reporting.
00:09:03:14 - 00:09:29:12
Kate O'Neill
Right. And when you say all that, it does sound like there's still lots of moving parts there. But I guess the ISO 5000 really demonstrates the FRC continued support of internationally aligned standards that support investor confidence in the UK because I guess from an investor perspective, on a global basis, you know, you really want to understand what being supplied, how it's being assured.
00:09:29:14 - 00:09:54:22
Mark Babington
Absolutely. Like, you know, we don't want to invest time and resource into developing a UK specific solution when we can support an international solution which will be widely used. And that's why we chose to consult on adopting ESI 5000. In the UK. And that's why we adopted the international standard and avoided making tweaks and changes to it.
00:09:54:24 - 00:10:14:05
Kate O'Neill
And the register that you referred to, I mean, that's not the FRC endorsing any company or offer of assurance services as to the quality of their work. It is just to have a register that reflects probably what's the wide spectrum of those companies offering assurance on this topic.
00:10:14:07 - 00:10:51:23
Mark Babington
That's right, Kate, and at this stage, some of the most significant areas of assurance work in sustainability will be providing assurance over EU reporting. So CSR reporting. And in order to be able to provide assurance, you have to be registered with your national regulator. So we very much hope that our work in supporting the government will be to provide a UK mechanism for people to register so they can carry out CSR assurance work without having to pass the sign off of that work over to colleagues in other jurisdictions.
00:10:52:00 - 00:11:10:06
Kate O'Neill
All right. So that shows that the international perspective is being taken into account but also not going to have overlap. So really put that filling in prepared that they're doing the same kind of assurance for the same thing in different ways across the globe.
00:11:10:08 - 00:11:37:23
Mark Babington
Yeah. This is a widely understood concept of either providing a reasonable assurance or limited assurance opinion, depending on, you know, how developed the reporting is. And we want to be able to do that. We recognize that a lot of UK companies either have material business in other jurisdictions, or they have listings in other jurisdictions, and where those jurisdictions want sustainability reporting and sustainability assurance.
00:11:38:00 - 00:11:43:22
Mark Babington
The work that we've done will support those companies in meeting those requirements.
00:11:43:24 - 00:12:04:05
Kate O'Neill
The standards being issued for voluntary use in the UK and the Register is a voluntary register. Why did we opt for voluntary use for the standard? I mean, do you think this supports flexibility and choice, or do you think people are looking for something very prescriptive to tell them what they should be doing and how?
00:12:04:07 - 00:12:38:11
Mark Babington
So it does give an option for companies to decide to use a recognized international standard if they want to report ahead of statutory requirements, because, for instance, their investors may be asking them to provide certain types of sustainability related information. So it does allow that flexibility. But to be honest, Kate, one of the issues here is that the standards that drive reporting and assurance have been developed a lot faster than the legal and regulatory requirements in many countries, including the UK.
00:12:38:13 - 00:12:51:22
Mark Babington
So in order to make it mandatory, there's a body of work that government will have to do to set legislation to allow a regulatory framework to be developed for this type of reporting and assurance.
00:12:51:24 - 00:13:19:14
Kate O'Neill
Do you think that the voluntary approach helps preparers take a view of these standards and their advisers in a way that really reflects not every companies the same as far as its operational model, its risk appetite, and really lets them approach their sustainability reporting in a way that's flexible and reflects. As I say, not every company is exactly the same in the way that it approaches either.
00:13:19:18 - 00:13:24:06
Kate O'Neill
Its sustainability reporting all the way. It receives its assurance.
00:13:24:08 - 00:14:01:19
Mark Babington
Well, you're right, they won't be the same. But nevertheless, what this does is that if a company is engaging with its shareholders and its wider stakeholders, and they say, we want you to provide us with sustainability related information, well, this gives them a way of doing so and reporting and assuring that information in a way that's comparable, because even though they're doing this on a voluntary basis, there's still a real value in being able to compare different reports from different providers so that investors can assess, for instance, where they might want to put their money.
00:14:01:21 - 00:14:11:22
Kate O'Neill
Or is this a matter of watch this space, or are you asking preparers and others to respond to the FCA consultation to have their voices heard?
00:14:11:24 - 00:14:35:07
Mark Babington
Oh, absolutely. This is a really important part of the jigsaw. And, you know, this is the proposal that takes us on from Tcfd reporting to following the UK SRS. So I would encourage our stakeholders to please respond to it. But you are right, Kate. This is something that they'll need to continue to watch and see how this develops in the months and years ahead.
00:14:35:09 - 00:15:01:04
Kate O'Neill
Thank you. Mark. I mean, as ever, sustainability. As I said at the beginning, a very large and wide topic, but one that the FCA has been proud of the work we've put into the tax. I know you and your team have worked very hard on working alongside all of the players in the piece to help the standards reflect the realities of not just the reporting environment, but what's required from the sustainability perspective.
00:15:01:06 - 00:15:15:01
Mark Babington
Absolutely, Kate, and something that will continue for a long time yet, but I think we've got a really good baseline to help companies report and assure information in a way that will be internationally comparable.
00:15:15:03 - 00:15:43:11
Kate O'Neill
You heard the CRI from Mark. Please do respond to the consultation from the FCA on this important topic. Now watch this space and I guess, Mark, the forces work in areas like the corporate reporting review and our own corporate reporting policy team will be picking up the way in which many preparers are addressing the voluntary standard and working towards making that part of the reporting to the benefit of all of its you.
00:15:43:11 - 00:15:43:17
Kate O'Neill
Yeah, we.
00:15:43:23 - 00:16:05:24
Mark Babington
We certainly will, Kate. And, you know, if our stakeholders remember back to the start of Tcfd, the FRC worked really closely with other regulators, parts of government and reporters to make sure that the UK delivered really high quality reporting of which we could be proud. We're going to try and and leverage that approach and do the same thing again.
00:16:06:01 - 00:16:23:23
Kate O'Neill
Thank you, Mark, for coming on today and updating us about this important topic, which I think people sometimes get the wrong end of the stick about what the F. C's role in sustainability reporting is. And as ever, Mark, you and your team are happy to talk to people about how they are dealing with the standards. Thinking about assurance.
00:16:23:23 - 00:16:31:21
Kate O'Neill
So please do get in touch if you want to share your experiences today or perhaps you have some questions. Thank you Mark.
00:16:31:23 - 00:16:32:14
Mark Babington
Thank you Kate.