Aligned definition
Information material for primary users of general purpose financial reports, in both sets of standards.
Guidance, Introduction and §1.1.EU reporting · ESRS and the ISSB
ESRS–ISSB interoperability: one definition aligned, two regimes apart
ESRS–ISSB interoperability means the financial-materiality definition is aligned between the two sets of standards, while the materiality regimes are not, because the ESRS add the impact lens.
The joint interoperability guidance of 2 May 2024 says so in its own words, and adds that almost all ISSB climate disclosures are included in the ESRS.
For a UK group that reports under both, the practical result is one evidence base, with the financially material subset carried into UK SRS.
The core finding
The definition is aligned; the regimes are not
The guidance’s first introductory bullet is the sentence most quoted, and it is precise: “the definition of financial materiality in ESRS is aligned with the definition of materiality in IFRS S1”.
Its §1.1 explains why: the ESRS financial assessment “corresponds to the identification of information that is material for primary users of general purpose financial reports”.
Read §1.1 in the guidance’s own words
§1.1 concludes: “The definition of information that is considered material for users of general purpose financial reports is therefore aligned between the two sets of standards.”
It cites ESRS 1 paragraph 48 and IFRS S1 paragraph 18, which are the 2023 ESRS numbers; in the revised ESRS the financial-materiality assessment sits at paragraphs 45 to 50.
The same section is equally clear about the difference: ESRS disclosures “are subject to materiality as defined under ESRS, which covers also the impact materiality lens”.
Under the ESRS “a sustainability matter is material when it meets the criteria defined for impact materiality or financial materiality, or both”.
So the accurate form is a two-clause sentence that should never be split: the definition is aligned, and the regimes are not.
The concept is set out on financial materiality and single against double materiality.
Financial materiality
Different regimes
The ESRS also report matters material on impact alone; the ISSB do not.
Impact, financial, or both.The document
What the 2 May 2024 guidance is, and what it is not
The guidance was published jointly by the IFRS Foundation and EFRAG on 2 May 2024.
EFRAG’s announcement says it describes the alignment of general requirements, including materiality, and the alignment of climate disclosures, with what a company starting from either set needs to know.
Read how the guidance fences itself
The document says it was published on 2 May 2024 and that future amendments to the ESRS or ISSB Standards may change its analysis.
It says it is not a formal statement of equivalence, and that such a statement is in the remit of public authorities.
Its header calls it educational material that does not override or adjust the requirements of either set of standards.
It attributes the alignment to “the International Sustainability Standards Board (ISSB) and the European Commission services, together with EFRAG”, who worked together during the development of both sets of standards.
So the alignment was built during standard-setting, and the guidance describes it; EFRAG alone did not achieve it, and the document did not create it.
EFRAG gives technical advice to the Commission, which adopts the ESRS; EFRAG’s own role is set out on EFRAG explained.
Three fencesExplore
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Dated
Published 2 May 2024; future amendments to either set of standards may change its analysis.
Module 02 / 04
Not equivalence
Not a formal statement of equivalence, which is for public authorities.
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Educational
Does not override or adjust the requirements of the ESRS or the ISSB Standards.
Who does what
Interoperability is described by advisers, and decided by law-makers
The guidance is a joint publication of two standard-setting bodies, and neither of them makes law in the EU or the UK.
In the EU the Commission adopts the ESRS; in the UK the government published UK SRS on 25 February 2026, and the FCA decided which listed companies report against them.
Read why that matters for a reporter
Because the guidance is educational, a reporter cannot rely on it to meet either set of standards; it can rely on it to understand where its work overlaps.
Whether one regime will accept a report under the other is a question for public authorities, as the guidance itself says.
As at 11 October 2026 no UK or EU authority has declared the two sets of standards equivalent in any instrument this site has read.
The bodiesExplore
Module 01 / 04
ISSB
Sets IFRS S1 and S2, the global baseline, under the IFRS Foundation.
Module 02 / 04
EFRAG
Gives the Commission technical advice on the ESRS; co-published the guidance.
Module 04 / 04
UK government and FCA
DBT published UK SRS; the FCA set the comply-or-explain listing rules.
Climate
Almost all ISSB climate disclosures are in the ESRS, but not the reverse
The guidance’s third introductory bullet says there is “a high degree of alignment of the climate-related disclosures in the two sets of standards and, in particular, almost all the disclosures in ISSB Standards related to climate are included in ESRS”.
The converse does not follow: the ESRS ask for more than the ISSB on climate, and §4.2 lists the E1 disclosures with no equivalent in the ISSB Standards.
Read what the SR TEG Chair said
In EFRAG’s announcement, the Chair of the Sustainability Reporting Technical Expert Group said ESRS preparers can report on climate in compliance with ISSB Standards “only with a very limited number of points to consider, clearly identified in Section 3 of this document”.
The same announcement said ESRS preparers can use the ESRS to comply with ISSB Standards on matters beyond climate.
The ISSB climate standard itself is on IFRS S2, and the UK version on UK SRS S2.
Climate, both waysExplore
Module 01 / 04
ISSB → ESRS
“Almost all the disclosures in ISSB Standards related to climate are included in ESRS.”
Module 02 / 04
ESRS → ISSB
An ESRS preparer reports ISSB climate disclosures with a very limited number of points to consider, in Section 3.
Module 03 / 04
ESRS adds more
Section 4 lists ESRS E1 disclosures with no equivalent in IFRS S1 or IFRS S2.
Module 04 / 04
Beyond climate
The ESRS cover environmental, social and governance topics the ISSB has no standard for yet.
After the 2026 revision
The principles hold; the paragraph maps do not
The guidance maps ESRS paragraph numbers from the 2023 standards, and the revised ESRS replaced Annex I of the delegated regulation in full.
So the conclusions about definitions still describe the relationship, while every paragraph reference needs translating to the revised text before it is relied on.
- June 202301
IFRS S1 and S2 issued
The ISSB’s materiality definition is aligned with the IASB’s, and “enterprise value” is removed from it. - 31 July 202302
First ESRS adopted
Delegated Regulation (EU) 2023/2772, the numbering the guidance maps. - 2 May 202403
Joint interoperability guidance
IFRS Foundation and EFRAG describe the alignment; educational, not equivalence. - 22 November 202404
- 25 February 202605
- 21 September 202606
Revised ESRS in the Official Journal
Delegated Regulation (EU) 2026/1563 replaces the 2023 Annex I in full. - From 1 January 202707
Both regimes start
Revised ESRS for financial years beginning on or after this date; UK SRS comply or explain for listed periods beginning on or after it.
FY2026: three optionsExplore
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2023 ESRS
As last amended by Delegated Regulation (EU) 2025/1416; the numbering the guidance maps.
Module 02 / 04
2023 with reliefs
The 2023 standards with eight reliefs from the revised set, including top-down materiality.
Module 04 / 04
Say which
The statement must say clearly which version it applied.
Read what changed underneath the guidance
For a financial year starting in 2026 an undertaking may apply the 2023 ESRS, the 2023 ESRS with eight reliefs, or the revised ESRS in full, and must state which.
From financial years beginning on or after 1 January 2027 the revised ESRS apply with no choice, as the CSRD timeline shows.
EFRAG’s interoperability workstream page still lists only the 2 May 2024 version as at 11 October 2026.
Until a revised edition appears, cite the guidance for its principles and the revised ESRS for the paragraphs.
Where the climate standards differ
UK SRS S2 and revised ESRS E1: three differences that matter
Interoperability on climate is high, but a UK group meeting both still has to fill a few specific gaps.
The three below come from the standards themselves, not from the 2024 guidance, which predates both UK SRS and the revised ESRS.
Read the three differences in detail
| Topic | UK SRS S2 | Revised ESRS E1 |
|---|---|---|
| Scenario analysis | Required (¶22) | Information required only if climate-related scenario analysis is used |
| Resilience | Assessment required annually (¶B18) | An annual climate-resilience analysis is not required |
| Scope 2 | Location-based required; market-based permitted (¶29(a)(v), ¶¶B30–B31) | Location-based and market-based |
So an E1 report usually carries the Scope 2 figures UK SRS S2 needs, while a UK SRS S2 report may lack the market-based figure E1 asks for.
On resilience and scenarios the direction reverses: UK SRS S2 asks for more.
The wider comparison is on UK SRS and the ESRS compared.
Three climate gapsExplore
Module 01 / 04
Scenario analysis
UK SRS S2 ¶22 requires it; revised E1 asks for information only if scenario analysis is used.
Module 02 / 04
Resilience
UK SRS S2 ¶B18 requires an annual resilience assessment; revised E1 does not require one annually.
Module 03 / 04
Scope 2
UK SRS S2 requires location-based and permits market-based; E1 asks for both.
Module 04 / 04
Materiality
UK SRS S2 sits under S1’s financial test; E1 sits under double materiality.
The UK lens
UK SRS keeps the ISSB’s single (financial) materiality
UK SRS S1 is the UK’s endorsement of IFRS S1, and its materiality test is the ISSB’s single (financial) materiality.
¶18 says 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.
Read how UK SRS treats the ESRS
¶3 frames the risks and opportunities in scope as those that could reasonably be expected to affect the entity’s cash flows, its access to finance or cost of capital over the short, medium or long term.
¶C2 lets an entity consider the GRI Standards and the ESRS as sources of guidance.
¶C3 adds that applying them without UK SRS does not support an explicit and unreserved statement of compliance.
The IFRS S1 Basis for Conclusions records the same permission at BC34(e): to “permit, but not require” entities to consider GRI and the ESRS.
The UK test, paragraph by paragraph, is on UK SRS materiality, and the standard itself on UK SRS S1.
The UK testExplore
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¶17
Disclose material information about risks and opportunities that could affect the entity’s prospects.
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¶18
Material if it could reasonably be expected to influence primary users’ decisions.
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¶¶C2–C3
The ESRS may be considered as guidance, not as a substitute for UK SRS.
Reporting under both
A UK group with an EU subsidiary: one evidence base, two reports
The common UK case is a group whose EU subsidiary is in CSRD scope while the UK parent reports against UK SRS under the FCA’s comply-or-explain rules.
From financial year 2027 the subsidiary is in scope only if it exceeds both €450 million net turnover and an average of 1,000 employees, under the consolidated Accounting Directive.
Read the scope and reuse detail
Under PS26/19, listed companies in five UK Listing Rules categories report against UK SRS on a comply-or-explain basis for accounting periods beginning on or after 1 January 2027.
Article 19a(9) of the Accounting Directive exempts an EU subsidiary included in its third-country parent’s consolidated sustainability reporting, where that reporting follows the ESRS or is equivalent to them, on conditions; a UK parent that does not report to that standard does not take the subsidiary out of scope.
EFRAG’s IG 1 ¶65 says one assessment “need not perform two separate and independent processes”, which suits a group building one evidence base.
Because the financial definitions are aligned, the financially material subset of the ESRS assessment is the natural starting point for UK SRS S1.
Impact-only conclusions remain on the EU side, because UK SRS S1 treats impacts only as sources of risks and opportunities.
The routes into the CSRD are on CSRD reporting for UK groups, and the two regimes side by side on CSRD and UK SRS compared.
- 1
Confirm both routes
An EU subsidiary in CSRD scope, and a UK listed parent in a PS26/19 category.
- 2
Run one assessment
Assess impacts and risks once; IG 1 says both perspectives need not be two processes.
- 3
Take the financial subset
The financially material matters are the starting point for UK SRS S1.
- 4
Keep impacts EU-side
Impact-only conclusions stay in the ESRS statement unless they affect the UK test.
- 5
Fill the gaps
Scenario analysis and annual resilience for UK SRS S2; market-based Scope 2 for E1.
What transfers
What carries across, and what does not
The table sets out the usual answer for a group reporting under both regimes; the group’s own facts decide each line.
| Element | ESRS → UK SRS | UK SRS → ESRS |
|---|---|---|
| Financial-materiality conclusions | Carry across: the definitions are aligned | Carry across, then add the impact assessment |
| Impact-only conclusions | Do not carry: UK SRS uses impacts only as sources of risk | Not available: UK SRS does not assess them |
| Climate disclosures | Largely carry: almost all ISSB climate disclosures are in ESRS | Add the E1 items with no ISSB equivalent |
| Scenario analysis and resilience | Add: UK SRS S2 requires scenario analysis and an annual resilience assessment | Carry: E1 needs this only if used |
| Scope 2 | Carry the location-based figure | Add the market-based figure |
| Paragraph references | Re-map to UK SRS | Re-map to the revised ESRS numbering |
- 01 / Routes01
Map the entities
Which entities are in CSRD scope, and which listing category the parent is in. - 02 / Assess02
One double materiality assessment
Impacts first, then risks and opportunities, under the revised ESRS 1. - 03 / Filter03
- 04 / Climate04
Close the climate gaps
Scenario analysis and annual resilience for UK SRS; market-based Scope 2 for E1. - 05 / Report05
Two statements, one evidence file
An ESRS statement for the subsidiary and UK SRS disclosures, or explanations, for the parent.
The third framework
Where GRI fits beside the two
GRI has its own document with EFRAG: the GRI–ESRS Interoperability Index, V1, published on 22 November 2024.
It says an ESRS reporter can be considered to report “with reference to” the GRI Standards, and that reporting “in accordance” with GRI needs the additional GRI requirements.
Read the GRI relationship
Its disclaimer says the index does not imply an entity can comply with the ESRS by reporting in accordance with the GRI Standards.
It maps the 2023 ESRS, like the ESRS–ISSB guidance.
GRI’s own policy guide says its standards represent the impact side of double materiality, a term it attributes to the EU; the details are on the GRI Standards.
Three frameworksExplore
Module 03 / 04
GRI
Most significant impacts; an ESRS reporter reports “with reference to” GRI.
Module 04 / 04
Mapped to 2023
Both interoperability documents describe the 2023 ESRS.
What goes wrong
Six interoperability mistakes
“The standards are equivalent”
The guidance says it is not a formal statement of equivalence.
“The definitions differ”
The financial-materiality definition is aligned; the regimes differ.
“An ISSB report satisfies E1”
Almost all ISSB climate disclosures are in ESRS; E1 asks for more.
“EFRAG aligned them”
The ISSB and the Commission services, together with EFRAG, did so during standard-setting.
Citing 2023 paragraphs
The guidance maps the 2023 ESRS; re-map to DR (EU) 2026/1563.
Carrying impact findings into UK SRS
UK SRS S1 asks about impacts only as sources of risks and opportunities.
Where to go next
The materiality lenses are explained on materiality explained and double materiality.
The ESRS method is on running a double materiality assessment, and the datapoints EFRAG lists for the revised standards on the ESRS datapoint list.
The wider picture of international standards is on global sustainability standards and the ISSB framework.
Frequently asked
Questions people ask
What is ESRS–ISSB interoperability?
It is the degree to which a company can use one body of work to meet both the European Sustainability Reporting Standards and the ISSB’s IFRS Sustainability Disclosure Standards.
The joint guidance published by the IFRS Foundation and EFRAG on 2 May 2024 describes where the two align and what a company starting from either needs to add.
Is the ESRS definition of financial materiality the same as IFRS S1?
The definition is aligned.
The guidance says, in its first introductory bullet, that “the definition of financial materiality in ESRS is aligned with the definition of materiality in IFRS S1”.
What differs is the regime: under the ESRS a matter is material on impact materiality, financial materiality or both, so the ESRS cover more.
Does the interoperability guidance make the ESRS and ISSB Standards equivalent?
No. The guidance says it “is not a formal statement of equivalence”, which is for public authorities, and that it is educational material that does not override or adjust the requirements of either set of standards.
Does an ESRS report satisfy the ISSB climate standard?
Mostly, but not automatically.
The guidance says almost all the climate-related disclosures in ISSB Standards are included in ESRS, and EFRAG’s announcement said an ESRS preparer can report on climate in compliance with ISSB Standards with “a very limited number of points to consider”, identified in Section 3 of the guidance.
The converse does not hold: the ESRS ask for more than the ISSB on climate.
Is the 2024 guidance still valid after the revised ESRS?
Its principles still describe the relationship, but its tables map the 2023 ESRS paragraph numbers, which the revised ESRS in Delegated Regulation (EU) 2026/1563 replaced in full.
The guidance itself says future amendments may change its analysis.
EFRAG’s interoperability page still lists only the 2 May 2024 version as at 11 October 2026.
Who aligned the financial-materiality definitions?
According to the guidance, the ISSB and the European Commission services, together with EFRAG, worked together during the development of both sets of standards.
The alignment was engineered during standard-setting; the guidance describes it rather than creating it.
Does UK SRS use double materiality?
No. UK SRS S1 applies single (financial) materiality: information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions of primary users of general purpose financial reports, by reference to the entity’s cash flows, access to finance or cost of capital.
Can a UK company use the ESRS to help meet UK SRS?
Yes, as a source of guidance.
UK SRS S1 ¶C2 lets an entity consider the ESRS and the GRI Standards, but ¶C3 says applying them without UK SRS does not support an explicit and unreserved statement of compliance with UK SRS.
What does a UK group reporting under both regimes reuse?
The financially material subset of its ESRS double materiality assessment is the natural starting point for UK SRS S1, because the definitions are aligned.
Impact-only conclusions stay on the EU side unless they would affect cash flows, access to finance or cost of capital.
EFRAG’s IG 1 says one assessment can reflect both perspectives without two separate processes.
Where do UK SRS S2 and ESRS E1 differ on climate?
Three examples from the standards.
UK SRS S2 requires climate-related scenario analysis (¶22) and an annual resilience assessment (¶B18), while revised ESRS E1 asks for scenario-analysis information only if scenario analysis is used and does not require an annual resilience analysis.
On Scope 2, UK SRS S2 requires location-based figures and permits market-based ones, while ESRS E1 asks for both.
Does the ISSB allow companies to consider the ESRS?
Yes.
The IFRS S1 Basis for Conclusions records, at BC34(e), a requirement to permit, but not require, entities to consider the GRI Standards and the ESRS in identifying information about sustainability-related risks and opportunities.
Is there a similar ESRS–GRI document?
Yes.
EFRAG and GRI published a GRI–ESRS Interoperability Index, V1, on 22 November 2024: an ESRS reporter can be considered to report “with reference to” the GRI Standards.
Like the ESRS–ISSB guidance, it maps the 2023 ESRS.
Does EFRAG decide whether the standards are equivalent?
No. EFRAG gives technical advice; the Commission adopts the ESRS, and the guidance says a formal statement of equivalence is in the remit of public authorities.
Which UK companies must report under UK SRS?
Under the FCA’s PS26/19, listed companies in five UK Listing Rules categories report against UK SRS on a comply-or-explain basis for accounting periods beginning on or after 1 January 2027.
It is a disclosure regime with an explanation route, not an unconditional duty.
Sources
Primary sources
Every figure, date and status on this page traces to the instrument’s owner.
Secondary commentary is never the source for a number.
Checked against 14 sources fromEFRAG / IFRS FoundationIFRS FoundationEFRAGEUR-LexDepartment for Business and TradeFinancial Conduct Authority
- EFRAG / IFRS FoundationESRS–ISSB Standards Interoperability Guidance, 2 May 2024 — Introduction, §1.1 Materiality, Sections 3 and 4
The financial-materiality definition is aligned; the ESRS add the impact lens; almost all ISSB climate disclosures are in ESRS. Educational material, not a statement of equivalence.
- IFRS FoundationESRS–ISSB Standards Interoperability Guidance (IFRS Foundation copy)
The same document, hosted by the joint owner.
- EFRAGNews: IFRS Foundation and EFRAG publish interoperability guidance, 2 May 2024
What the guidance covers, and the SR TEG Chair’s “very limited number of points to consider” for climate.
- EFRAGInteroperability workstream page
Still links only the 2 May 2024 version.
- EUR-LexCommission Delegated Regulation (EU) 2026/1563 — the revised ESRS
Replaces Annex I in full; applies to financial years beginning on or after 1 January 2027, with a three-way choice for FY2026.
- EUR-LexCommission Delegated Regulation (EU) 2023/2772 — the 2023 ESRS
The paragraph numbering the 2024 guidance maps.
- EUR-LexDirective 2013/34/EU, consolidated 18 March 2026 — Arts 19a(1), 19a(9), 29a(1)
The two limbs, the €450 million and 1,000-employee test, and the exemption for a subsidiary of a third-country parent.
- EUR-LexDirective (EU) 2026/470 (Omnibus I)
Narrowed CSRD scope from financial year 2027.
- Department for Business and TradeUK SRS S1 — ¶¶3, 17–18, C2–C3
Single (financial) materiality; the ESRS may be considered as a source of guidance.
- Department for Business and TradeUK SRS S2 — ¶22, ¶29(a)(v), ¶¶B18, B30–B31
Scenario analysis, the annual resilience assessment and location-based Scope 2.
- IFRS FoundationIFRS S1 Basis for Conclusions — BC34, BC67
The interoperability decisions, including permission to consider GRI and the ESRS.
- EFRAGIG 1: Materiality Assessment Implementation Guidance, ¶65
One assessment reflecting both perspectives. Non-authoritative; written for the 2023 ESRS.
- Financial Conduct AuthorityPS26/19 — UK SRS on a comply-or-explain basis
Five listing categories, periods beginning on or after 1 January 2027.
- GRI / EFRAGGRI–ESRS Interoperability Index, V1, 22 November 2024
The ESRS–GRI counterpart, also mapped to the 2023 ESRS.
Continue reading
Read next
The adviser
EFRAG explained
Who advises on the ESRS, who adopts them, and why EFRAG has no UK role.
Comparison
UK SRS and the ESRS compared
Paragraph by paragraph, where the two regimes meet and part.
The standards
The ESRS, read from the UK
The twelve standards and what the revision changed.
The UK test
UK SRS materiality
The single (financial) test in UK SRS S1.