FCA clarifies how UK Sustainability Reporting Standards apply to issuers

On 30 September 2026, the Financial Conduct Authority (FCA) published its policy statement on aligning listed issuers’ sustainability disclosures with international standards, following a consultation that closed in March 2026.

These are the first market rules explaining how the recently endorsed UK Sustainability Reporting Standards (UK SRS) will apply. The standards comprise UK SRS S1, General Requirements for Disclosure of Sustainability-related Financial Information, and UK SRS S2, which covers climate-related disclosures. 

From accounting periods beginning on or after 1 January 2027, issuers must make climate-related disclosures on a comply-or-explain basis. They’ll have an additional year’s relief for Scope 3 emissions. Non-climate-related elements of UK SRS S1 will apply on a comply-or-explain basis from 2029. Early adoption is permitted. Several transitional reliefs, set out in paragraph 3.14 onwards, give issuers flexibility over the pace of implementation. 

This climate-first approach is likely to have a limited impact on issuers already reporting on climate-related information. The UK SRS climate-related requirements closely follow the equivalent international standards and remain broadly aligned with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, which underpin the current UK reporting framework. 

However, the new rules bring more issuers into scope, including secondary-listed companies and depositary receipt issuers. Disclosures made under the requirements of an issuer’s home jurisdiction may broadly comply with the new FCA rules. 

The FCA’s current rules require issuers to report against the TCFD recommendations on a comply-or-explain basis. While the policy statement represents a significant shift from the FCA’s consultation proposals, which would have made some disclosures mandatory, the final rules set clear expectations for an explanation. 

Where an issuer has not made full or partial disclosures in accordance with UK SRS S2, it must include a statement setting out: 

• A summary of the disclosure requirements it hasn't met. 
• The reasons for not making those disclosures. 
• Details of any steps being taken to enable it to make the disclosures in future. 

These requirements should help prevent the explain option from becoming a loophole that allows issuers to avoid providing useful disclosures. 

Other key points from the policy statement include: 

• The FCA will keep mandatory sustainability assurance under review. Where assurance is obtained, issuers should disclose the provider, scope, level of assurance and standards applied. 
• Issuers have flexibility over where disclosures are presented within annual reports. 
• Transition plans are not mandatory. However, where an issuer prepares one, it should complement UK SRS S2 disclosures and may be published as a standalone document or included within another report. 

The FCA says its goal is to “protect and enhance the integrity of the UK financial system” while supporting its secondary objective of international competitiveness and growth. One key test will be whether these rules produce disclosures that support global comparability, which is one of the intended benefits of endorsing UK SRS. 

The FCA has effectively set the tone for how they will apply in the UK. Its less prescriptive approach, with no mandatory requirements in the near term, could be seen as being at odds with the UK’s ambition to reform its frameworks to be a world-leading global capital market.  

We support simpler and proportionate reporting requirements that are phased in and do not place an excessive burden on issuers. Application rules for sustainability reporting standards must balance proportionate reporting with the need for decision-useful disclosures that support action on increasingly urgent global issues. 

Fiona Donnelly CA, Director of Sustainability at ICAS, said: “This gradual approach by the FCA may be the most sensible for now until the wider plans for modernising corporate reporting and related proposals become clear. We would expect to see mandatory sustainability reporting for some businesses in due course." 

Find out more 

Read the FCA’s policy statement on aligning listed issuers’ sustainability disclosures with international standards. 

Find out more about our work on modernising corporate reporting.