Legal development

FCA publishes rules and draft guidance on aligning listed issuer sustainability disclosures with international standards

October 12, 2026

What you need to know

The UK Financial Conduct Authority (FCA) has published rules requiring listed issuers to make climate and sustainability disclosures against the UK Sustainability Reporting Standards (UK SRS) on a 'comply or explain' basis.
The new rules replace existing climate-related financial disclosures and apply to accounting periods starting on or after 1 January 2027, with first reporting in 2028.
Most of the requirements are those consulted on earlier this year. A key change is that all categories of disclosures will be subject to a 'comply or explain' approach, whereas the consultation had proposed that climate disclosures (other than in relation to Scope 3 emissions) would be mandatory.
Transitional reliefs are available, including in relation to Scope 3 emissions and non-climate related sustainability (S1) disclosures.
Alongside the rules, the FCA is consulting on a technical note to help issuers apply the 'comply or explain' approach.

What you need to do

Listed issuers in scope need to understand the new rules and guidance to:

Review/identify financially material sustainability and climate-related risks and opportunities and review existing governance arrangements relating to them.
Assess how such risks and opportunities are integrated into company strategy, and the resilience of that strategy and the business model.
Review and/or develop data, metrics and targets as well as controls and review processes to support UK SRS-aligned disclosures.

Background on the UK SRS and corporate reporting in the UK

The UK SRS were endorsed by the Secretary of State for Business and Trade in February 2026 and are currently available for voluntary use (see Government endorses ISSB sustainability reporting standards to create UK SRS). For their use to become mandatory, the climate-related financial disclosures in the UK Listing Rules (UKLR) and sections 414CA-CB of the Companies Act 2006 need to be amended.

In January 2026, the FCA consulted on amending the UKLR to align listed issuers’ sustainability disclosures with the UK SRS (see FCA consults on aligning listed issuers sustainability disclosures with UK SRS).

The recent government consultation on Modernising Corporate Reporting (MCR) confirms that the existing climate-related financial disclosure (CFD) requirements in the 2006 Act will be retained. Decisions on mandating use of the UK SRS by large private companies and LLPs and on transition plan reporting are deferred pending a post-implementation review (PIR) of the CFD regulations (which is due to be completed in spring 2027) and further consultation. The consultation proposed that companies in scope of the UKLR will be able to choose to use their UK SRS S2 disclosures to meet their CFD obligations as permitted under s.414CB(6) (see Government consults on modernising corporate financial and narrative reporting).

FCA rules on disclosures using the UK SRS and guidance consultation

Overview

On 30 September, the FCA published PS26/19 containing its final rules (UK SRS rules) requiring listed companies to make climate- and sustainability-related disclosures against the UK SRS on a 'comply or explain' basis. The new rules apply to accounting periods starting on or after 1 January 2027, with first reporting in 2028.

The FCA is also consulting on a technical note to help issuers apply 'comply or explain'.

Aligning listed issuers' sustainability disclosures with UK SRS

The FCA's policy paper explains two key changes to the approach to using the UK SRS that the FCA proposed in its January consultation:

Responding to concerns about the complexity of some disclosures being mandatory and some being on a 'comply or explain' basis, the FCA has decided that all categories of disclosure will be subject to a 'comply or explain' approach. This means that all UK SRS S2 (climate disclosures) will be made on a 'comply or explain' basis.
International commercial companies with a secondary listing and depositary receipt issuers will also have to report against UK SRS on a 'comply or explain' basis. The consultation had proposed they would only need to signpost any reporting requirements and disclosures under their home jurisdiction.

Which entities are covered by the new UK SRS rules?

The UK SRS rules will replace TCFD-aligned disclosures and will continue to apply to issuers in five listing categories (equity shares (commercial companies), equity shares (transition), non-equity shares and non-voting equity shares, equity shares (international commercial companies secondary listing) and certificates representing certain securities (depositary receipts)).

As proposed in the consultation, the UK SRS rules will not apply to closed-ended investment funds, open-ended investment companies, shell companies and debt and debt-like securities.

The UK SRS rules include consequential amendments to the ESG Sourcebook (ESG 2.2.6R) to enable asset managers, life insurers and FCA-regulated pension providers to cross-refer to UK SRS S2 disclosures in their TCFD entity report and avoid duplication in their reporting.

Transitional reliefs

The following transitional reliefs will apply:

Scope 3. A 1-year transitional relief for Scope 3 disclosures, meaning an issuer's first Scope 3 disclosures would be made in 2029 for accounting periods starting on or after 1 January 2028.
S1. A 2-year transitional relief for S1 disclosures, meaning an issuer's first S1 disclosures would be made in 2030 for accounting periods starting on or after 1 January 2029.
Early adopters. Issuers with an accounting period beginning before 1 January 2027 can choose either to continue to use the TCFD rules and guidance or to become an early UK SRS adopter using the transitional reliefs relating to Scope 3 and S1 disclosures. If an issuer chooses to be an early adopter, it will still retain the Scope 3 and S1 reliefs for accounting periods beginning on or after 1 January 2027.
Methodology. Issuers can use an alternative method for measuring greenhouse gas emissions for a period of 1-year from initial application of the UK SRS rules if that method had been used immediately before. There is also a relief in relation to the disclosure of comparative information.

Issuers using the Scope 3 and S1 reliefs must state in their annual report that they are doing so. There is no need to explain why Scope 3 and S1 disclosures are not included if the reliefs are used.

Comparative information is not required for the first year of reporting under the UK SRS and in respect of information which was subject to a transitional relief in the preceding year.

Location of S1 and S2 disclosures and digital tagging

Sustainability disclosures under S1 and climate disclosures under S2 or explanations should be included in issuers' annual reports but no specific section is specified. The UK SRS rules provide that cross-referencing is permitted in line with the provisions in UK SRS S1.

The UK SRS rules do not contain requirements on digital tagging of sustainability disclosures.

Transition plans

The FCA is implementing its consultation proposals. The UK SRS rules do not introduce a separate requirement to develop a transition plan (TP) but where a TP exists, certain issuers must disclose that and where it can be found. If a TP does not exist, issuers must explain why. The issuers affected by this 'comply or explain' requirement are those listed in the commercial companies, non-equity shares and non-voting equity shares, or transition categories.

The FCA has not set requirements on the content of explanations owing to the "varying maturity of "transition planing" across issuers and its different relevance across sectors".

Assurance

The UK SRS rules implement the FCA's consultation proposals on assurance. The rules require disclosure of third-party sustainability assurance that has been obtained, which climate and sustainability disclosures have been assured and to what level, the assurance standards used and where the assurance report can be accessed.

The FCA will keep the case for mandatory sustainability assurance under review.

Consultation on guidance on the UK SRS rules

Primary Market Bulletin 66 explains that, to support implementation of the UK SRS regime, the FCA is consulting on:

New Technical Note (TN) 803.1, which sets out the FCA's expectations on the level of detail expected from issuers when preparing disclosures and when choosing to explain.
Updates to TN 801.4 on disclosures in relation to sustainability matters, including climate change.
Deletion of TN 802.3 on TCFD-aligned climate-related disclosure requirements.

TN 803.1 explains how the statement of compliance that issuers make under UK SRS S1 interacts with the UK SRS rules where an issuer elects to make an explanationrather than comply with the disclosure requirements. Examples of compliance statements and explanations are provided.

TN 803.1 provides that an explanation is required of the UK SRS S2 disclosures that have not been met or the sustainability-related risks and opportunities (SROs) that are not included in the disclosures together with the reasons for those omissions and the steps the company is taking, or plans to take, to be able to make the disclosures in the future. The FCA does not expect a timeframe for disclosures to be made but if that is known issuers are encouraged to disclose it. The level of explanation is expected to be proportionate and specific to the issuer's circumstances to help investors understand the significance of the omissions. An explanation of each UK SRS requirement is not expected.

International companies may meet the UK SRS requirements by referencing disclosures prepared for their home listing but they must identify where the disclosures can be found and explain where the UK SRS requirements are not covered by the home reporting.

Timeline and next steps

The FCA's consultation on the TNs closes on 28 October 2026. It aims to finalise the guidance before the UK SRS rules come into force in January 2027.

Comment

Issuers will welcome the reduced complexity of the 'comply or explain' approach applying to all disclosures. In practice, an issuer's ability to choose to explain why climate disclosures are not made may be constrained by previous TCFD-aligned disclosures as well as the existing obligations under UKLR DTR 4.1.8R, which require issuers to disclose the principal risks and uncertainties they face.

The FCA's approach to the UK SRS differs from that of other jurisdictions that are adopting the International Sustainability Standards Board (ISSB) standards. For example, Australia mandates climate disclosures under S2 and currently requires limited assurance of those disclosures. However, for international issuers, having requirements based on the same framework across the jurisdictions in which they report the same framework should reduce corporate sustainability reporting burdens and they can decide to comply with the UK's S2 requirements rather than explain.

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Authors: Will Chalk, Partner; Eleanor Reeves, Partner and Becky Clissmann, Global Sustainability Expertise Counsel.

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