Modernising Corporate Reporting: Key Points for Sustainability Practitioners

Earlier this week the Department for Business, Innovation, Science and Trade published the long awaited Modernising Corporate Reporting consultation, seeking views on how the corporate reporting framework in the UK could be modernised to better meet the needs of companies, investors and the wider economy. The government describes the consultation as a ‘once-in-a-generation’ opportunity to reset the UK’s corporate reporting framework. 

The consultation closes on 30 November, with the outcome due to be published by the end of May next year. Amending legislation will then need to be drafted and taken through Parliament, so none of the proposed changes are likely to come into force until next summer at the earliest. 

We have set out below a summary of the key proposals in relation to sustainability reporting. Other aspects of the consultation may impact the sustainability reporting landscape more indirectly, such as proposals to rationalise the size categories for companies and reduce the relevant disclosure obligations such that certain non-financial reporting obligations would apply only to a new category of ‘very large’ companies.

Whilst the consultation is detailed, several significant sustainability points such as the government’s manifesto commitment on transition plans are not dealt with materially and will be the subject of future communications.

• Meaningful changes to the strategic report, in particular the non-financial and sustainability information statement (NFSIS): Many of the content requirements would be dropped or simplified, and replaced with a core set of baseline narrative disclosures covering a company’s business model, performance, resources and relationships, strategy and principal risks. The government proposes to remove specific disclosures on environmental matters, employees, social matters, community matters, respect for human rights, and anti-corruption and bribery matters. Companies should continue to report on these topics where they are financially material, as part of the baseline disclosures. This proposal would not impact the climate-related financial disclosure (CFD) requirements in the NFSIS (i.e., those based on the TCFD framework). The government is conducting a post-implementation review of the CFD requirements which is due to be completed by Spring 2027 and will inform future changes. 
• Timings for introduction of UK Sustainability Reporting Standards (SRS) disclosures in the Companies Act 2006 remain uncertain: The government will consider how the UK SRS should be reflected, ‘taking into consideration’ feedback from the consultation, the CFD post-implementation review ‘and related processes’. The consultation does confirm that the Financial Conduct Authority (FCA) will publish its final listing rules on UK SRS disclosure requirements for in-scope issuers in autumn 2026 (the rules are expected to apply from 1 January 2027), and notes that companies caught by the FCA’s proposed rules and the CFD requirements can use their UK SRS S2 disclosures to meet their CFD obligations. 
• Location of disclosures and section 463 Companies Act 2006 (‘safe harbour’ for directors): The government confirms that unless section 463, which limits when a company director is personally liable for false, misleading or missing information, is expanded, only UK SRS disclosures that are included within the strategic report will be covered. However, it goes on to suggest that should sustainability-related financial disclosures be required to be located outside the strategic report, it would seek to expand section 463 to cover these disclosures. 
• The location of streamlined energy and carbon reporting (SECR) disclosures will be moved because of the removal of the directors’ report from the annual report: The government does not intend to prescribe a specific reporting location for SECR reporting in the annual report. A consultation on SECR and the Energy Savings Opportunity Scheme is planned for later in 2026, which will explore longer-term options for reform.
• No meaningful update on transition plans: The government is still considering responses to its transition plan consultation and notes that ‘future decisions will have regard to the objectives and context of this wider review of corporate reporting’. 
• No mandatory sustainability assurance at this stage: The government does not have any plans to introduce new requirements for reporting companies to obtain assurance over future UK SRS reporting at this stage, or for other strategic reporting topics. However, it seeks views on whether in-scope companies should have to report on what, if any, assurance they have obtained over sustainability reporting, including the scope and level of assurance, any standards applied and whether an external party was involved. The Financial Reporting Council is still expected to develop a voluntary sustainability assurance provider registration regime from 2026/27.
• Corporate governance reporting: Only the parent of a group would have to report on corporate governance arrangements, and the size threshold that determines which companies have to report may be raised. Companies may be permitted to make corporate governance disclosures on their website instead of in the annual report. 

If you would like to discuss any aspect of the consultation in further detail, do reach out to your usual Slaughter and May contact.