UK SRS: FCA proposes mandatory climate disclosures from 2027, except for Scope 3 emissions, for which it is "comply-or-explain" from 2028

Having indicated in its regulatory initiatives grid that it would consult on disclosure requirements for UK listed companies in January 2026, the FCA has delivered – just.  Previously expected in Q3/4  2025, the FCA has now published its long awaited consultation on changes to the Listing Rules to reflect the incoming UK Sustainability Reporting Standards (UK SRS) to replace existing TCFD based rules.  

Interested parties have until 20 March 2026 to provide their feedback to the FCA.

With the UK Government’s UK SRS yet to be finalised (currently due to be published in February 2026), the FCA’s position could still change, as the FCA intend for their final rules to reflect the final UK SRS. 

Given the Government’s consultations in June 2025 (see our previous blog posts here and here), the FCA also does not consider it appropriate at this stage to set out requirements for transition plans or for mandatory assurance – but this may be revisited at a later date. 

However, given that many companies have already begun looking ahead to the IFRS sustainability standards to guide them as to the global benchmarks their future sustainability disclosures might need to meet, these draft FCA rules will nevertheless provide some helpful insight to assist them in their forward planning. 

What’s in the detail?

Scope

The FCA’s proposal aligns with its existing TCFD-based rules, that is rules for: 

• 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)

with some variation in the application of the rules depending on the category.  The following paragraphs cover the position (including timing and transitional provisions) for the commercial companies, non-equity shares and non-voting equity shares and transition categories.  We deal with the secondary listing and depositary receipts categories in a separate section.

Climate-related disclosures

The FCA proposes that sustainability-related disclosures and, where relevant, any related explanations be made in companies’ annual financial reports, consistent with UK SRS S1 para 60.

• Mandatory Reporting: 

  UK SRS S2 broadly corresponds with the TCFD recommendations, and the FCA have seen evidence of consistent improvement in the alignment of disclosures with those TCFD recommendations since climate reporting was introduced on a comply or explain basis.  As such, the FCA is proposing mandatory reporting against UK SRS S2 (with the exception of disclosures relating to Scope 3 emissions – see below).  There is acknowledgement that whilst the majority of core content requirements for these disclosures are included in UK SRS S2, certain elements underpinning this reporting are outlined in UK SRS S1 – the FCA therefore proposes that when reporting climate related disclosures under UK SRS S2 (including disclosures relating to Scope 3 emissions), companies will be required to apply those sections of UK SRS S1 as relevant to such disclosures. 

• Comply or Explain:

  Acknowledging the difficulty for listed companies to access quality emissions data, the FCA proposes replacing its TCFD-aligned rules and guidance with rules implementing Scope 3 emissions reporting under UK SRS S2 provisions on a “comply or explain” basis. The FCA sets out specific requirements where a company chooses the “explain route” to: 

• Identify the specific paragraphs of UK SRS S2 where it has not produced Scope 3 disclosures;

• Explain the reasons for not making these Scope 3 disclosures; and

• Explain any steps being taken or planned to be taken to make those disclosures in the future, including the timeframe for making the disclosures.

  The FCA is not proposing to include a requirement for a compliance statement in its rules in addition to the requirement already set out in UK SRS S1. However, where opting to “explain” rather than comply, this could prevent an issuer from being able to state compliance with UK SRS – this is an area to watch as the Government final proposals materialise and the FCA position develops.

Transition Plan disclosures

Listed companies are not currently required to produce transition plans, however FCA handbook guidance directs companies to take TCFD guidance recommending transition plan disclosure into account.  Given the Government’s consultation, the FCA does not consider it appropriate at this stage to mandate transition plans for listed companies, and they propose removing their existing guidance and replacing it with:

• a “disclose or explain” requirement on listed companies to include a statement in their annual financial report explaining whether they have disclosed a climate-related transition plan, and where it can be found. If they have not published a transition plan, the FCA propose that they state why not; and

• guidance stating that listed companies which produce a climate-related transition plan may wish to use the IFRS Educational Material, to encourage international comparability.

Assurance

As the Government is considering the longer-term approach to the operation and oversight of the sustainability assurance market, the FCA is not proposing to set mandatory requirements for the assurance of sustainability reporting at this time.  Nevertheless, to improve transparency for investors, the FCA’s proposals include a requirement for listed companies to specify in their annual financial report, whether or not they have obtained third-party sustainability assurance over their disclosures relating to UK SRS, and, among other matters, the assurance standards used. Any assurance undertaken in relation to an “explain” disclosure would require disclosure, (but listed companies would not need to specify reasons for choosing not to obtain assurance).

Timing and transitional arrangements

The FCA intends to finalise its rules in 2026 (subject to the outcome and timing of the Government’s final UK SRS endorsement decision), with a view to them coming into force on 1 January 2027 and applying to accounting periods beginning on or after that date.

Listed companies would be able to use the transitional reliefs built into the UK SRS which (under the Government’s exposure drafts) permit:

• non-disclosure under UK SRS 1 for non-climate matters for a period of 2 years from initial application (thereby allowing optional transitional relief until the annual reporting period commencing on or after 1 January 2029); and 

• non-disclosure under UK SRS S2 regarding Scope 3 emissions for a period of 1 year from initial application (thereby allowing optional transitional relief until the annual reporting period commencing on or after 1 January 2028).

There is no transitional period for UK SRS 2 other than in relation to Scope 3 emissions.

Secondary Listing and Depositary Receipts Categories

To avoid duplication or frictions arising from its climate and sustainability proposals, the FCA’s proposal is to replace existing TCFD climate-related disclosure requirements with a statement in a company’s annual financial report setting out, as applicable:

• any mandatory climate and/or wider sustainability disclosure requirements (including transition plan requirements) applicable to the company in relation to equity shares in their primary overseas listing location, or their place of incorporation (signposting where the relevant disclosures/information can be found); and/or

• any climate and/or sustainability-related disclosure standards or requirements, including relating to transition plans, voluntarily adopted (signposting where the relevant disclosures can be found); or

• the fact that the issuer is not subject to and does not voluntarily follow any such climate or sustainability disclosure standards or requirements.

The FCA proposes that such companies should disclose whether they have obtained third-party sustainability assurance over the disclosures they have made and/or the related information they have provided (and, if so, to provide details of such assurance).

The rules would apply to companies in the secondary listing and depositary receipts categories for accounting periods beginning from 1 January 2027. Listed companies that have accounting periods beginning before that date will be required to continue to apply the current TCFD aligned rules and guidance for that reporting period.

Resources 

FCA consultation paper (CP26/5) is here.

The FCA webpage is here.

For more information on the current TCFD based rules, see our Quick Guide: Key Sustainability Disclosure Regimes: UK climate disclosure rules under Listing Rules.