FCA consults on UK Sustainability Reporting Standards

What’s new?

On 30 January 2026, the Financial Conduct Authority (FCA) published CP26/5 which proposes to replace the current Task Force on Climate-related Financial Disclosures (TCFD) aligned listing rules.

The new requirements would require in-scope listed companies to report against the new UK Sustainability Reporting Standards (UK SRS).

The consultation is open for comments until 20 March 2026.

Key proposals and questions in CP26/5

Who is affected?

The proposed changes would apply to companies with listings in the following categories:

• commercial companies
• non-equity shares
• non-voting equity shares and
• transition categories.

Mandatory climate disclosures (except Scope 3)

The FCA proposes to replace TCFD-based climate disclosure rules with mandatory reporting against the new UK SRS S2 standard (and relevant parts of S1), except for Scope 3 emissions.

The FCA seeks views on whether UK SRS S2 reporting should be made mandatory for relevant companies (excluding Scope 3 emissions for now) or if alternative approaches should be considered.

‘Comply or explain’ Scope 3 emissions disclosures

The FCA proposes that Scope 3 emissions reporting under UK SRS S2 remains on a ‘comply or explain’ basis, with a one-year transitional relief period. This is due to the ongoing challenges in collecting reliable data from third parties in a listed company’s value chain. Where necessary, companies must also apply relevant UK SRS S1 provisions into their disclosures.

The FCA seeks views on whether Scope 3 reporting should remain on a ‘comply or explain’ basis for in-scope companies or if an alternative approach would be more appropriate.

‘Comply or explain’ sustainability (non-climate) disclosures

The FCA proposes that wider sustainability disclosures (beyond climate) under the UK SRS S1 should be required on a ‘comply or explain’ basis.

Under the FCA’s proposal, companies must either

• comply with UK SRS S1 (by disclosing all material sustainability-related risks and opportunities) or
• explain their approach if they do not comply fully.

If no relevant risks or opportunities are identified this must also be stated in the annual financial report.

The FCA notes that companies may leverage existing analysis already carried out for other disclosure requirements (i.e., DTR 4.1.8R) to help meet these requirements.

The FCA seeks feedback on whether UK SRS S1 non-climate reporting requirements should apply on a ‘comply or explain’ basis for in-scope companies or if alternative approaches should be considered.

Transition plans

The FCA proposes changes to the disclosure of climate-related transition plans by listed companies.

Under the new proposal, companies would be required to state in their annual financial reports whether they have published a transition plan and, if so, where it can be found. If not, they should explain the reason.

The FCA also proposes to introduce Handbook Guidance to encourage companies that do produce transition plans to use the International Financial Reporting Standards Educational Material, which builds on the Transition Plan Taskforce framework.

The FCA seeks feedback on whether these proposals are appropriate and whether further or alternative approaches should be considered.

Assurance

The FCA currently proposes only transparency regarding voluntary third-party assurance of sustainability disclosures. This proposal covers UK SRS S2 (climate, including Scope 3), UK SRS S1 (wider sustainability) and any explanations provided under a ‘comply or explain’ approach.

At this stage, there is no requirement to obtain assurance nor to explain why assurance was not obtained. The FCA may revisit the question of mandatory assurance in the future depending on the outcome of the consultation and market developments.

The FCA seeks views on the costs and benefits of introducing mandatory assurance for sustainability-related information, as well as, how these impacts might vary depending on company size, implementation approach and the level of assurance required.

Secondary listing and depositary receipts categories

The FCA proposes to remove TCFD requirements for companies in the secondary listing and depositary receipts categories. Instead, these companies would be required to disclose in their annual financial statement which overseas or voluntary climate / sustainability standards they apply and to signpost where the disclosures can be found. In addition, companies must state if third party assurance has been obtained.

The FCA seeks feedback on whether companies in the secondary listing and depositary receipts categories should be exempt from reporting against the UK SRS and instead be required to disclose which overseas climate and sustainability standards they are subject to or have voluntarily adopted.

Transitional arrangements

As part of the UK’s new SRS, in-scope companies will benefit from several transitional reliefs when the new rules come into effect:

• non-climate disclosures: companies may defer reporting on non-climate sustainability matters under UK SRS S1 for up to two years from the initial application date
• Scope 3 emissions: disclosure of Scope 3 greenhouse gas emissions under UK SRS S2 can be delayed for one year from the initial application date
• alternative GHG measurement: firms may continue using their existing greenhouse gas measurement methods for one year, provided these were in use before the new rules and
• comparative information: relief is also provided for comparative data, with no requirement to present comparative information in the first reporting period under the new standards.

The initial application date is defined as the start of a company’s annual reporting period beginning on or after 1 January 2027 but before 1 January 2028.

The FCA seeks feedback on whether these arrangements are practical and whether companies expect to be early adopters.

Next Steps

The consultation closes for comments on 20 March 2026.

If its proposals are endorsed, the FCA aims for the rules to come into force from 1 January 2027 and to apply to accounting periods beginning on or after that date.