Sustainability reporting requirements and regulations for UK companies

Sustainability reporting landscape for UK companies is entering a period of significant change. We provide an overview and analysis of those changes to sustainability reporting as well as any other important news or developments.
 

Latest news and developments in UK

UK SRS

The UK government has published the final UK Sustainability Reporting Standards (UK SRS). The UK standards remain closely aligned to the international standards, IFRS S1 and S2. In our analysis we focus on the notable differences that entities will need to understand.

Explore the key aspects of UK SRS.

FCA Consultation CP26/5; Transition to UK SRS

The FCA has launched a consultation on a shift in the sustainability reporting requirements for some listed issuers. The proposal is to move TCFD-aligned disclosure rules to reporting under UK SRS.

Find out more about Consultation CP26/5.

Current regulatory changes

Following the consultation undertaken in 2025, UK Government published the final UK Sustainability Reporting standards on the 25th February 2026. 

The standards retain close alignment with the international baseline – IFRS S1 and S2, however there are some notable differences that have been introduced in the final version.

Removal of delayed reporting relief

UK SRS removes the transition relief of IFRS S1 that allows entities to delay the publication of sustainability disclosures in the first year of reporting. Delayed reporting can undermine ‘connectivity’ with financial statements and other narrative reporting. With the existing climate-related financial disclosure requirement in the Companies Act and the Task Force on Climate-related Financial Disclosures ('TCFD') disclosure requirement under the Financial Conduct Authority (FCA) Listing Rules, UK entities are well-positioned to report climate-related disclosures within the same timeframe as other elements in the annual report.

Removal of effective dates

UK SRS does not set any effective dates, as these will be determined by the relevant authorities in the UK, such as the FCA or the UK government.

Removal of time references for the transitional reliefs.

Transitional reliefs in relation to Scope 3 emissions and non-climate topics (under UK SRS S1) are to be defined by the relevant regulations that may be introduced in the future by UK Government or other authorities such as FCA. Companies using the standards on a voluntary basis will be able to benefit from the reliefs indefinitely, however this will have an impact on the statement of compliance with UK SRS. UK Government clarified that such companies will be able to state compliance with UK SRS S2 only subject to explaining their use of transitional relief in relation to Scope 3 emissions. Preparers using the relief in relation to non-climate disclosures under UK SRS S1 will NOT be able to claim compliance with UK SRS S1.

Change of 'shall' to 'may' for SASB Standards

IFRS S1 and S2 require that the Sustainability Accounting Standards Board Standards (SASB Standards) be considered in the context of an entity’s particular business, sector or operations. UK SRS states that an entity 'may refer to and consider the applicability of' SASB Standards to support their voluntary application alongside other sector guidance and to reduce the burden of the entity to prove their consideration of inapplicability of this standard.

"Explain" mechanism for financed emissions

Option to explain why it is impractical to estimate financed emissions for the same reporting period as the financial statements.

The UK SRS standards have also been aligned with the latest IFRS S2 amendments introduced in 2025.

Disclosures under UK SRS made within the Strategic Report will benefit from s463 liability protections.

UK SRS S2 is also confirmed as a national reporting framework under s414CB Companies Act, which means that the companies reporting in accordance with UK SRS S2 will not need to duplicate their disclosures in order to meet their obligations under section 414CB(2A) so long as the relevant requirements under section 414CB (1) to (5) are met and the use of UK SRS S2 is clearly referenced in the relevant statement. This applies whether they are applying UK SRS S2 on a mandatory basis, including under the proposed FCA Listing Rules, or using UK SRS S2 voluntarily. The guidance on climate-related financial disclosures for companies and LLPs  will be updated accordingly to reflect this.

Next steps

Mandatory application of UK SRS will be considered under the Modernising Corporate Reporting (MCR) program, with consultation expected later this year. The FCA is now consulting on updating Listing Rules to reference UK SRS for the periods beginning on or after 1 January 2027.

On 30 January 2026, the FCA published CP26/5 proposing a major shift in sustainability reporting requirements for certain categories of listed issuers. The FCA intends to replace the current TCFD-aligned disclosure rules with reporting under the UK Sustainability Reporting Standards (UK SRS). Understand how the proposals of consultation CP26/5 compare with the current reporting requirements. 

Which companies are in scope of FCA CP26/5?

The company categories listed below will be affected by the FCA’s proposed changes, although there are differing proposals for some categories.

  • Commercial companies category (UKLR 6)
  • Secondary listing category (UKLR 14)
  • Depositary receipts category (UKLR 15)
  • Non-equity shares and non-voting equity shares category (UKLR 16)
  • Transition category (UKLR 22)

 

FCA proposals for companies in scope of UK LR6, UK LR16 and UK LR22:

Companies in these categories will report under UK SRS for accounting periods beginning on or after 1st January 2027, subject to transitional reliefs:

  • One-year transitional relief on Scope 3 emissions reporting followed by a "comply or explain" approach in subsequent periods
  • Two-year transitional relief for non-climate sustainability disclosures under UK SRS S1 with a "comply or explain" approach thereafter

Mandatory reporting under UK SRS S2 (climate) from 1st January 2027 with no 'comply or explain' option.

  • A Mandatory statement of compliance will be required, although the "comply-or-explain" option may affect the ability of companies to state full compliance. A final decision on this will be made after consideration of responses to the consultation.

For accounting periods starting before 1 January 2027, companies may choose to continue reporting under the TCFD framework or to adopt UK SRS early. Transitional reliefs will not be available on early adoption of UK SRS, but companies can still make use of the 'comply or explain' option where permitted.

FCA proposals for companies in scope of UK LR14, UK LR15:

These listing rules only apply to non-UK companies with primary listing in other jurisdictions. The proposed approach removes the requirement to report in line with TCFD rules to avoid duplication with sustainability reporting requirements of other jurisdictions. The relevant companies will not be required to apply UK SRS. Instead, companies will need to make a statement in their annual report, setting out:

  • Any mandatory climate or sustainability disclosure requirements applying in their primary listing market or place of incorporation and where those disclosures, including exemptions and reliefs, are made
  • Any voluntarily adopted climate or sustainability standards, signposting the disclosures
  • Confirmation where no climate or sustainability disclosure requirements apply and none are voluntarily followed

 

The rules would apply for accounting periods beginning from 1 January 2027. For accounting periods beginning before that date companies will be required to continue to apply the current TCFD aligned rules and guidance for that reporting period.

Other proposals included in FCA CP26/5

Transition plans
Companies will not be required to prepare a transition plan. However, if a transition plan exists, companies will need to disclose that fact and where the plan is published. If no transition plan is prepared, companies will need to explain why this is the case.

Assurance
Assurance over UK SRS disclosures is not mandatory at this stage. However, companies will need to disclose whether third-party assurance has been obtained and provide information including the name of the assurance provider, the scope of the engagement, the assurance standard applied and a reference to the assurance opinion.

Next steps

The consultation is open until 20 March 2026. The FCA aims to finalise the new rules and publish the final policy statement in autumn 2026.

In January 2026, the Department for Business & Trade published the government response to the earlier consultation on establishing a registration regime for UK sustainability assurance providers and determining the requirements in relation to Sustainability assurance over the future UK SRS. The response confirms the intention to introduce a voluntary registration regime for sustainability assurance providers.

The regime will primarily serve practitioners who currently, or would in future, undertake sustainability assurance engagements for large reporting entities within scope of any current or future Task Force on Climate-related Financial Disclosures (TCFD) or UK SRS requirements, or similar reporting requirements in other jurisdictions, such as the EU Corporate Sustainability Reporting Directive (CSRD).

The aim is for the regime to strengthen the quality and consistency of sustainability assurance across the market. Registration would help companies identify suitably qualified providers and support the development of a more credible and competitive assurance market. The regime is also intended to ensure that UK assurance providers will be eligible to undertake CSRD assurance engagements in the future.

Previous consultations and publications

Transition plan requirements consultation

In 2025, UK Government launched a consultation on Transition plans requirements for UK companies.

The transition plan consultation proposed two approaches to integrate transition plans into sustainability reporting: a 'comply or explain' approach, or a mandatory development and disclosure of transition plans approach.

Comply or explain

Under the 'comply or explain' approach, there would be no compulsory requirement to disclose a transition plan outside of annual sustainability reporting. However, entities that have not published a transition plan, nor included transition plan-related information in accordance with UK SRS S2, would be required to explain their reasons for non-disclosure.

Mandatory development and disclosure of transition plans

Entities would be obliged to develop a transition plan and disclose the related information as part of their annual sustainability reporting. The requirement could extend to publishing a separate transition plan document at specified intervals, following the recommendations of the Transition Plan Taskforce. This approach helps balance the challenges arising from changes in reporting practices.

Other requirements

The UK government is also considering whether it would be appropriate to require transition plan reporting for listed entities and economically significant entities, which aligns with the potential scope of mandatory UK SRS implementation. UK-registered financial institutions and FTSE 100 companies are expected to demonstrate greater commitment than simply fulfilling reporting requirements, by developing transition plans aligned with the goals set in the Paris Agreement.

Apart from consultation on the disclosure of transition plans, this consultation also covered other areas of transition plan implementation including accountability for delivery, alignment of transition plans to the wider target of net zero by 2050, adaptation and resilience under 2°C and 4°C global warming scenarios and incorporation of nature-related considerations.



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