UK sustainability reporting: UK government publishes finalised versions of UK SRS, FCA launches consultation on implementation for listed companies

The ISSB released its flagship sustainability reporting standards, IFRS S1 and S2,[1] in June 2023. As of mid-2025, these standards had been adopted for corporate reporting in 17 jurisdictions, with a further 19 in the process of implementation. The UK’s long winding road towards implementing IFRS S1 and S2 for UK issuers and corporates began in May 2024, and has undergone multiple consultations[2] since. This has resulted in a draft of the reporting standards adapted to the UK context, also known as the UK Sustainability Reporting Standards (UK SRS), which the UK government has now endorsed for use in the UK. 

However, the government has endorsed the UK SRS “for voluntary use” on 25 February 2026, but does not otherwise include arrangements concerning how the UK SRS will be applied to UK corporates in practice. To that end, the FCA released Consultation Paper 26/5 on 30 January 2026, which sets out its proposals for UK SRS-aligned reporting requirements to be applied to companies with shares listed in the UK.

Government endorsement of UK SRS

The recent announcement by the DBT followed a consultation which was released in June 2025, which we have detailed in an earlier blogpost. To summarise, the consultation set out exposure drafts of the UK SRS which were largely aligned with IFRS S1 and S2 but with 6 proposed amendments. In its response, the government has confirmed:

1. the removal of transitional timing reliefs which would have allowed companies to publish sustainability-related information at a different time to the financial statements in the first year of reporting;
2. the removal of the ‘effective date’ clauses in favour of alignment with timelines established by implementing regulations or legislation; and
3. the linking of the timing of transitional reliefs for certain disclosures, particularly in relation to non-climate reporting and scope 3 GHG emissions, with any future reporting requirements.

The government has changed its proposals in respect of:

1. extending the ‘climate-first’ reporting relief period to two years, in favour of removing hard-coded relief periods and linking transitional reliefs on non-climate and scope 3 reporting with any applicable reporting requirements; and
2. the use of Global Industry Classification Standard codes, because of changes to IFRS S2 brought in by ISSB which permitted the use of alternative classification systems. 

Upon further consideration, the government has also concluded that its proposed amendments of ‘shall refer’ to ‘may refer’ in respect of metrics specified by the Sustainability Accounting Standards Board were not necessary to achieve its stated policy intent, because the existing drafting already made clear that general industry-based metrics could be used to satisfy the requirements where relevant.

The consultation also sought views in respect of topics such as:

• financed emissions reporting, in respect of which the government has added a mechanism for financial institutions which have not complied with financed emissions disclosure requirements to explain why;
• carbon credit-related disclosures, which had high levels of interest, but no amendments to the reporting standards were proposed in the interests of international alignment;
• requirements for large private companies to report against the UK SRS, where the government noted that non-listed entities were unprepared for UK SRS S1 in particular; and
• whether protections similar to the existing ‘safe harbour’ in s463 of the Companies Act concerning annual reports should be extended to UK SRS reporting requirements, where respondents requested clarity that the provisions would be applicable to sustainability reporting.

Overview of FCA consultation

The main points of note set out in the FCA’s consultation document, which preceded the UK’s endorsement of the UK SRS, include:

• Same rules, different reporting: The existing rules for listed companies’ sustainability disclosures, which are aligned with the disclosure framework and guidance issued by the Task Force on Climate-related Financial Disclosures (TCFD), will be replaced with disclosure requirements which are aligned with the UK SRS.
• Climate reporting mandatory, but Scope 3 optional: Reporting against UK SRS S2, which is a climate-focused disclosure framework which builds on the TCFD framework, is proposed to be mandatory, but the reporting of Scope 3 emissions data (as required by UK SRS S2) will be required on a ‘comply or explain’ basis following a 1-year transitional relief period after the reporting requirements take effect.
• Wider sustainability reporting: Reporting against UK SRS S1, a wider sustainability (non-climate) disclosure framework, is also to be required on a ‘comply or explain’ basis following a 2-year transitional relief period.
• Transition plan disclosures: The FCA proposes that listed companies should be required disclose whether and where they have published a transition plan, or the reason why not, on the basis that such disclosures are useful to investors.
• Assurance: The FCA does not propose to set mandatory requirements for the assurance of sustainability reporting.
• International companies and secondary listings: Companies which have a primary listing in another jurisdiction and a secondary listing in the UK will benefit from a special regime with lighter-touch disclosure requirements.

The proposed reporting requirements against UK SRS are intended to be finalised in the course of this year, and come into force and apply to accounting periods beginning on or after 1 January 2027. This means listed companies can expect to start reporting against the UK SRS (beginning with S2) from 2028.

The headline points of the FCA consultation in more detail

Scope: The new disclosure requirements will be implemented primarily through the FCA’s UK Listing Rules (UKLR) handbook, and will cover companies listed in the following categories: commercial companies (UKLR 6); secondary listing (UKLR 14); depositary receipts (UKLR 15); non-equity shares and non-voting equity shares (UKLR 16); and transition (UKLR 22). 

However, companies in the secondary listing category, which have a primary listing in another jurisdiction, are only required to disclose i) whether they are subject to any climate or other sustainability disclosure requirements in the jurisdiction of their primary listing, ii) whether they have voluntarily adopted any disclosure standards, and/or iii) whether they have subjected their sustainability reporting to assurance. This is intended to minimise duplication with reporting requirements which may apply in the markets where they have their primary listing, although we note that this rationale may not apply in a situation where a company’s primary listing is in a jurisdiction that does not have any sustainability disclosure requirements.

Scope 3 reporting: The FCA’s consultation noted feedback that reporting on Scope 3 emissions creates a potentially significant data collection burden because much of the data has to be obtained from third parties in a value chain which may not have a direct business relationship to the reporting company. On that basis, reporting on Scope 3 emissions is proposed to be on a ‘comply or explain’ basis, although companies that choose not to report are required to explain any steps being taken to enable the company to make those disclosures in the future. There will also be a 1-year transitional period where no Scope 3 reporting is required before the ‘comply or explain’ requirement kicks in, in line with the government’s exposure drafts of UK SRS S2.

Climate vs sustainability reporting: While reporting against UK SRS S2 is to be made mandatory on the basis that reporting against the TCFD is already familiar territory for listed companies, this is not the case for wider sustainability reporting. The FCA noted that many companies already voluntarily report against non-climate sustainability risks and opportunities, pursuant to voluntary standards set by bodies such as the Sustainability Accounting Standards Board and the Global Reporting Initiative. However, given that not all companies have experience with non-climate reporting, reporting against UK SRS S1 will be implemented on a ‘comply or explain’ basis, to allow for some flexibility for companies to adjust to a new reporting topic. There will also be an additional 2-year transitional period where no reporting against UK SRS S1 is required before the ‘comply or explain’ requirement kicks in, in line with the government’s exposure drafts of UK SRS S1.

Transition plan reporting: Notwithstanding the FCA’s involvement in the development of the flagship transition plan disclosure framework released by the UK’s Transition Plan Taskforce, the FCA is proposing to water down its existing guidance to companies to take into account certain transition plan disclosure guidance in the TCFD Annex. This is in recognition of an ongoing consultation by the UK government on how (or whether) to implement disclosure requirements concerning transition plans. On the other hand, the introduction of a requirement for listed companies to either publish a transition plan or explain why not is still significant, because it removes the option for listed companies to stay silent on the topic of transition planning.

Assurance: The issue of regulating assurers of sustainability-related financial disclosure is currently undergoing consultation by the government. On that basis, the FCA has not opted to require sustainability disclosures to be subject to assurance, and has instead opted for a lighter-touch approach of requiring companies to state whether they have obtained third-party assurance on their UK SRS S1 and S2 disclosures. 

The FCA has, however, left the door open to implementing mandatory assurance at a later stage when the outcome of the government consultation is known. To that end, the consultation requests views on the costs and benefits which may arise from assurance requirements, including the feasibility of ‘limited assurance’ or ‘reasonable assurance’ requirements.

Other FCA-mandated TCFD reporting requirements: The FCA notes that although the rule applicable to listed companies which requires disclosure against the TCFD framework is being replaced, there are other rules in its handbook which require TCFD-aligned disclosures, such as those applicable to asset managers, life insurers and pension providers. It is therefore introducing a rule to allow firms within scope of both requirements to cross-refer to their UK SRS S1 and S2 disclosures in their SDR disclosures and TCFD reports (as relevant), while it carries out work “to consider the longer-term sustainability disclosure framework for these firms”.

Looking ahead

Although it is not proposing rules in the following areas, the FCA is also considering:

• The possibility of introducing requirements for issuers to digitally tag their sustainability disclosures, in light of a digital taxonomy that has been created by the IFRS Foundation to allow issuers to digitally mark up their sustainability reporting using Extensible Business Reporting Language (XBRL). This approach would be in line with the approach taken by the EU, which also requires XBRL tagging of sustainability reporting in the interests of encouraging data centralisation and comparability across reporting entities.
• How it should develop a supervisory approach for monitoring and enforcing compliance with the new disclosure requirements which it is introducing.

The endorsement of the UK SRS and the FCA consultation are significant milestones in the UK’s implementation of sustainability reporting, but we await further developments in the wider landscape of corporate reporting in the UK, given that the FCA’s remit traditionally only extends to listed companies. In respect of non-listed companies, the government has indicated in its latest update on the UK SRS that it will be carrying out a consultation on its “Modernising Corporate Reporting” programme later in 2026 which will touch on reporting requirements which may apply to private entities.