Skip to main contentThe Financial Conduct Authority (FCA) has launched a consultation on aligning listed companies’ sustainability disclosures with the recently finalised UK Sustainability Reporting Standards (UK SRS), marking a significant step forward in the evolution of the UK’s sustainability reporting landscape.
The UK SRS are based on the International Sustainability Standards Board (ISSB) standards IFRS S1 and IFRS S2, which supersede the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.
The consultation (CP26/5) proposes replacing the existing TCFD-aligned listing rules with requirements for in-scope listed companies to report against the UK SRS. The proposals apply to commercial companies and those in the transition and secondary listing categories, with some variation depending on listing category.
The FCA has emphasised the importance of balancing enhanced transparency with pragmatism and proportionality. For the more challenging reporting requirements, the proposal carries forward the ‘comply or explain’ approach used in the current TCFD-aligned listing rules.
For commercial companies, as well as those in the transition and non-equity shares and non-voting equity shares categories, the proposed reporting requirements and timelines are as follows:
From 1st January 2027
- “Climate-first” reporting: Companies will be required to disclose climate-related financial information in accordance with UK SRS S2, alongside specific sections of UK SRS S1 that underpin S2. Structurally, this continues the TCFD framework built around four pillars – Governance, Strategy, Risk Management, and Metrics & Targets – with additional detail in areas such as Scope 3 emissions and transition planning.
- Transition plans: Companies must state whether they have published a climate-related transition plan, or explain why they have not done so. The FCA has not ruled out the possibility of mandatory transition plans in the future but has indicated that this decision sits with the UK Government.
- Assurance: Companies will be required to disclose whether they have obtained any voluntary third-party assurance over their sustainability reporting.
From 1st January 2028
- Scope 3 emissions: Recognising that significant barriers remain in quantifying value chain (Scope 3) emissions, the FCA proposes that Scope 3 disclosures will operate on a ‘comply or explain’ basis.
From 1st January 2029
- Wider sustainability (non-climate) disclosures: Issuers must either report on broader sustainability-related risks and opportunities under UK SRS S1 or explain why they have not done so. For companies with listings in the secondary listing or depositary receipts categories:
- Transparency of climate and sustainability reporting requirements: These issuers must disclose the specific sustainability reporting standards or requirements that apply in their primary listing jurisdiction or place of incorporation.
- Transparency around assurance: Similar to primary listings, these companies must state whether their sustainability disclosures have been verified by an independent third party.
‘Comply or Explain’
The FCA’s proposal continues the ‘comply or explain’ approach that was introduced alongside the original requirements for TCFD-aligned disclosures.
Under this framework, companies must either meet the specific disclosure requirements or provide a clear explanation as to why they have not done so. If a company chooses to explain rather than comply, the following information must be included in its financial reports:
- Identification of gaps: The company must specify which parts of the standard have not been met.
- Justification: The company must provide the reasons why those disclosures have not been made, for example due to challenges obtaining reliable data from the value chain.
- Future plans: The company must outline the steps it is taking – or plans to take – to enable these disclosures in the future, including an estimated timeframe for when reporting will be possible.
While this approach provides flexibility, the FCA notes that companies choosing to ‘explain’ cannot state that their report is fully compliant with the overall UK Sustainability Reporting Standards.
The FCA intends for the new rules to come into force from 1 January 2027, with a Policy Statement expected in autumn 2026.
At Envantage, we are closely following these developments to ensure our clients are well prepared for the evolving reporting landscape and the practical implications of the shift from TCFD to ISSB-aligned standards.
Is your organisation listed in the UK, or could these changes affect your reporting requirements? The consultation closes on 20th March, so get in touch if you would like to understand what the proposed changes could mean for your organisation.
Source: CP26/5: Aligning listed issuers’ sustainability disclosures with international standards | FCA
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