Under current UK listing rules, in-scope companies must make sustainability disclosures in line with the Task Force on Climate-related Financial Disclosures (TCFD) framework, on a comply or explain basis. Once the gold standard, the framework has since been replaced by the IFRS Sustainability Reporting Standards – developed by the International Sustainability Standards Board (ISSB) – which are being adopted in the UK as the UK Sustainability Reporting Standards S1 and S2 (UK SRS S1 and S2).
Following the Government’s proposed plans for UK adoption, published in June 2025, the FCA is now consulting on how they’ll apply to listed companies. The move aims to maintain an aligned international disclosure landscape and give greater consistency and comparability for investors.
Focusing on climate-specific disclosures, UK SRS S2 replaces TCFD in its entirety and reporting will be mandatory for all listed firms for financial years starting on or after 1 January 2027. While TCFD was principles-based, the new standard is more prescriptive and less flexible, with more specific disclosure expectations around risk assessment, financial impacts, and transition planning. Key points of note include:
As such, companies’ processes, data, systems and MI will need to be expanded and updated to meet the new requirements.
UK SRS 2 includes disclosure of scope 3 emissions. This covers all indirect greenhouse gas emissions from the business and the broader value chain, through activities such as transport, investment or distribution (to name a few). As such, it’s inherently tricky to measure and track, although it was included in the earlier TCFD framework.
Acknowledging these challenges, the FCA is proposing a comply or explain approach to scope 3 emissions, with an optional one-year transitional period – bringing implementation to financial years starting on or after 1 January 2028. This will give firms more time to update systems and controls.
Recognising a wider range of challenges pertaining to sustainability-related financial risks and opportunities, the FCA is proposing that listed organisations can report under UK SRS 1 on a comply or explain basis. This is a new direction for listed firms as it goes beyond the original TCFD disclosure framework which focussed on climate. Companies can draw from standards developed by the Climate Disclosure Standards Board (CDSB) covering water and biodiversity, the Sustainability Accounting Standards Board (SASB) in preparation for disclosing against UK SRS S1.
To support organisations, the FCA proposes a two-year transitional period with reporting applying to financial years starting on or after 1 January 2029.
The FCA isn’t mandating disclosure of transition plans. However, companies must disclose whether they have published a transition plan and if not, explain why in their annual financial report.
While the FCA references the Transition Plan Taskforce (TPT) framework, as a market-led framework, it encourages firms to consider the IFRS Educational Material for guidance and greater international comparability.
Third-party assurance isn’t mandatory for now but, where listed companies have sought it, the FCA is proposing greater transparency over its extent and quality. This follows the Government’s proposed voluntary registration regime to confirm that a third-party organisation is qualified to give that assurance.
To enhance transparency, the FCA is asking listed companies to disclose (in their annual report) whether they’ve gained third-party assurance over UK SRS S1, S2 or transition plans. If so, they should give details of the assurance provider, what they’ve gained assurance over, which assurance standards were applied and where the report can be viewed.
International companies with a primary listing in another jurisdiction may follow a more flexible approach. The FCA notes that these companies are mostly incorporated in countries that are adopting IFRS S1 and S2. To avoid duplication of effort, firms must include a statement in their annual report to outline what climate or sustainability disclosure standards or transitional plans they’re subject to in their primary listing location (on either a voluntary or mandatory basis), which relate to equity shares. The same rules apply to companies listed under the depositary receipts category.
The rules broadly apply, with some variation, to the listing categories of: commercial, secondary-listing, depositary receipts, non-equity shares and non-voting equity shares, and transition on the main market. However, out of scope firms may still feel the impact, as UK SRS does place a greater emphasis on the wider value-chain and suppliers may be required to provide additional information on climate risks, emissions and sustainability practices. As such, many firms will need to collect adequate data and develop reporting processes to support in-scope organisations, driving higher expectations and establishing good practice across the market.
UK SRS will have a significant impact on listed organisations and the wider value chain and it’s important not to underestimate the scale of the project. As such, companies need to establish effective project teams, with the right mix of regulatory, sustainability and data skills to keep the project moving forward on target. Key dates to note are:
To get started with the UK SRS, key activities for organisations include:
Recognising the significant work ahead, a proactive approach towards UK SRS adoption will help companies maintain a smooth transition, with minimal disruption to their business, customers and wider supply chain.
For further information, contact Laura Gardner and Irina Velkova.
