Listed issuers: FCA proposals for UK sustainability disclosures

ESCC and Transition Categories

Companies with shares admitted to listing on the equity shares (commercial companies) and the equity shares (transition) categories of the Official List are currently required to set out whether they have made disclosures consistent with the TCFD Recommendations in their annual financial report, on a "comply or explain" basis. They are not required to produce transition plans.

Under the proposals, these listed companies will be required to report as follows:

• UK SRS S1 (non-climate reporting) - "comply or explain" basis, with a deferral period of two years as permitted by the UK SRS transitional reliefs. Disclosures should be made in  annual reports but the FCA is not prescribing in which section of the annual report.

• UK SRS S2 (climate reporting but not Scope 3 emissions) - mandatory reporting

• UK SRS 2 Scope 3 emissions reporting - "comply or explain" basis, with a one year deferral as permitted by the UK SRS transitional reliefs

• Transition plans - disclosure in the annual report as to whether there is a transition plan and, if so, where it can be found. If there is no transition plan, the company must explain why.

• Assurance - whether or not they have obtained third-party sustainability assurance over their disclosures relating to UK SRS (both UK SRS S1 and S2 (including scope 3 emissions)), including details such as the name of the assurance provider and the assurance standards used.

The FCA is seeking feedback on whether the proposals are sufficiently flexible for listed companies. It will provide more detail on the interaction with the UK SRS statement of compliance provisions once the final UK SRS have been published.

These proposals will also apply to companies with securities admitted to the non-equity shares and non-voting shares category.

International Secondary Listings and Depositary Receipts

Companies with shares admitted to the equity shares (international commercial companies secondary listing) category and the certificates representing certain securities (depositary receipts) category of the Official List are currently treated the same as ESCC companies and are required to set out whether they have made disclosures consistent with the TCFD's Recommendations in their annual financial report, on a "comply or explain" basis.

The proposals for these companies are very different from the current position. Companies will need to make the following disclosures in their annual report:

• Any climate and/or wider sustainability disclosure requirements, including transition plan requirements, to which the company is subject in their primary overseas listing location, or their place of incorporation, and signposting where the relevant disclosures and/or information can be found.

• Any climate and/or sustainability-related disclosure standards or requirements, including relating to transition plans, voluntarily adopted by the company, and signposting where the relevant disclosures can be found.

• Where neither of the above apply, the fact that the company is not subject to any such climate or sustainability disclosure requirements and/or does not otherwise voluntarily follow any such climate or sustainability disclosure standards or requirements.

• Whether the company has obtained any third-party assurance, with the disclosures being the same as for ESCC/transition category companies.

The FCA's aim is to avoid duplication or frictions with another disclosure regime, particularly as most companies listed in this category are incorporated in overseas jurisdictions that have indicated an intention to align with the ISSB standards.

Investment Companies

Companies with shares admitted to the closed-ended investment funds and open-ended investment companies categories are not currently subject to the FCA's TCFD-aligned rules and will not be required to disclose in relation to UK SRS under the proposals. The FCA's view is that the best way to introduce requirements for investment companies is through obligations on asset managers rather than the listed funds themselves (see CPs 21/17 and 21/18).  

In its sponsor declaration for admission of shares to the ESCC in connection with an IPO, a sponsor is required to confirm that it has come to a reasonable opinion, after having made due and careful enquiry, that the directors of the issuer have established procedures which enable the issuer to comply with the listing rules, the disclosure requirements and the transparency rules on an ongoing basis.

In PS 20/17, the FCA made clear that in order to give the declaration a sponsor would need to consider whether the issuer has established procedures to comply with the UKLR TCFD disclosure requirements (see above). In PMB 46, the FCA acknowledged that whilst it expected sponsors to understand areas such as considering climate related risks for investors in relation to a new applicant it did not expect sponsors themselves to be TCFD experts.

When the new UK SRS rules come into force, we would expect the same to apply in relation to UK SRS, noting that the new regime extends to sustainability more generally as well as climate. We therefore suggest that sponsors should start familiarising themselves with the new regime ahead of time, given the long lead in time (see below).

The FCA expects to publish final rules in autumn 2026, subject to finalisation of the UK SRS. The Department of Business and Trade (DBT) has indicated that the final UK SRS are expected to be published in February 2026. Any company will be able to voluntarily disclose against the UK SRS once published but we are currently waiting for further guidance from DBT as to how the UK SRS will apply to private companies.

The FCA expects the rules for listed companies to come into force from 1 January 2027 and to apply to accounting periods beginning on or after that date, subject to the UK SRS transitional reliefs mentioned above. Amongst detailed proposed transitional arrangements for ESCC issuers, it proposes that companies with an accounting period beginning before 1 January 2027 can either continue to use the existing TCFD-aligned disclosure regime or can voluntarily comply with the proposed new UK SRS disclosure regime. It is also seeking views more generally on whether the detailed transitional proposals together with the UK SRS transitional reliefs provide sufficient time for listed issuers to prepare for the new regime. Companies who have a listing on the equity shares (international commercial companies secondary listing) category which have an accounting reference period starting before 1 January 2027 will be required to continue to apply the TCFD-aligned disclosure regime and will not be able to apply the new rules which apply to them voluntarily.

Separately, DBT has announced that, following consultation, there are plans to establish a voluntary oversight regime for sustainability assurance in the UK. The intention is that the Financial Reporting Council (FRC) will establish an interim, non-legislative regime by mid-2026, with a formal statutory regime being put in place when Parliamentary time allows. The new regime is primarily intended to serve practitioners who currently, or would in future, undertake sustainability assurance engagements for large reporting entities within scope of any current or future TCFD or UK SRS requirements, or similar reporting requirements in other jurisdictions. Sustainability assurance practitioners who meet certain registration conditions will be able to opt in to the regime by registering with the FRC. The register will be made public. 

The FCA states in CP 25/6 that its proposals are "pragmatic and proportionate" and that it is seeking to strike the right balance between providing investors with the information they need to make informed decisions and recognising the maturity of the market. It is notable that there is specific mention of supporting UK competitiveness and growth. This is most clearly seen in the proposals for international secondary listing companies which appear to be an acknowledgement from the FCA that duplication needs to be avoided in order to attract international companies with a listing elsewhere to list in the UK.

It is also clear from the frequent mentions of "flexibility" for listed companies throughout the CP. The FCA is trying to maintain a difficult balance between various competing interests, being its secondary international competitiveness and growth objective, the needs of listed companies (some of whom have significantly less resources than others) and the requirements of investors who want relevant disclosures to enable accurate pricing of securities. Whether it can please everyone will be seen from the responses to the consultation.