UK SRS – what now? What we know so far

Read time: 5-6 mins

UK sustainability reporting is taking the biggest shift since TCFD.

With the UK government finalising and publishing its take on the ISSB’s standards in late February and the FCA already considering how these will sit inside the UK Listing Rules, the UK Sustainability Reporting Standards (“UK SRS”) are fast becoming a reality.

Now available for voluntary use, they will soon become mandatory for many issuers, initially through FCA Listing Rules rather than company law – meaning the first wave will affect listed companies before wider economic adoption.

This article breaks down what we know so far.

IN BRIEF

Here’s a brief timeline of the FCA’s proposals.

From accounting periods commencing on or after:

• 1 January 2027: UK SRS S2 (climate) disclosures are mandatory, replacing TCFD. Scope 3 is comply or explain (or one year of transitional relief). UK SRS S1 (general sustainability) disclosures are comply or explain (or in the first of two years of transitional relief).
• 1 January 2028: As above, but Scope 3 is now comply or explain, and UK SRS is on its second and final year of transitional relief.
• 1 January 2029: As above, but UK SRS 1 is now comply or explain.

They’d also request transparency about any transition plans or assurance sought on UK SRS data.

GOVERNMENT POSITION

The UK government consulted on adopting the ISSB’s standards between June and September 2025. This consultation resulted in targeted updates to make them more workable for the UK, while maintaining international comparability.

Throughout the past year, the UK government has also been consulting on both climate-related transition plan requirements and assurance of sustainability reporting, both of which also support the UK’s wider ambition to align sustainability reporting with international standards, improve consistency of sustainability information and support reforms focusing on sustainable growth and investment in the UK.

FCA POSITION

The FCA had already launched their 100+ page consultation paper in January before the government had finalised the UK SRS, which may be a promising sign that capital markets may drive the uptake.

The FCA explain in the consultation that it sought to outline a clear direction of travel, to seek stakeholders’ views and to enable market participants to begin preparing to use the new standards rather than opine on the UK SRS content.

SCOPE

UK listed companies currently subject to TCFD-aligned Listing Rules are expected to transition to the UK SRS.

SRS S2 encompasses and directly builds on TCFD, using the familiar framework of risk, strategy, governance, and metrics and targets, also mirrored in SRS S1.

Large AIM and private companies are currently subject to the Companies Act climate-related financial disclosure requirements, rather than these Listing Rules proposals, but we expect that this group will soon be subject to further legislation too.

A notable exception includes open-ended and closed-ended investment companies, where the FCA prefers obligations on the asset manager.

So, what will the new UK reporting regime actually require in practice?

PROPOSALS

It appears that some of the more challenging ISSB disclosure recommendations have been slightly tempered with transitional reliefs and ‘comply or explain’ allowances – although whether these will provide enough of a ramp, particularly for smaller-cap companies, is under debate.

Mandatory – climate disclosures

The first – and only fully mandatory – disclosures on climate (S2) would kick in from 2027. In effect, these would be a direct, but much more detailed, replacement for existing Listing Rule TCFD disclosures, with S2 requiring, for example, quantitative and qualitative scenario analysis and climate targets, and a greater expectation of cohesion with risks, governance and financial statements.

Comply or explain with transition relief – Scope 3 and general sustainability

The next two significant elements are ‘comply or explain’, which gives some flexibility on application. Scope 3 disclosures would have an optional additional year’s transition relief, meaning complying (or explaining) must be in place from accounting periods commencing in 2028, slowing time to upgrade data collection methods from the value chain.

Any explanation is expected to be robust: not just that the company sees it as immaterial or it is too difficult, but a specific outline of which paragraphs are not complied with, the reasons and a plan and timeframe for making these disclosures in the future. However, if a company wishes to make use of the transition relief, they just need to say so transparently – an “explanation” is not required.

General sustainability disclosures (S1), which don’t have a current Listing Rules equivalent, would apply from 2027, but would benefit from an optional two-year transition relief, meaning complying (or explaining) must commence for accounting periods starting in 2029.

Transparency – transition plans and assurance

The final set of proposals simply calls for transparency around two more big topics – transition plans and assurance.

Transition plans are expected to align with the TPT framework, now maintained by the IFRS Foundation. Not all companies have one, but investors find them useful, so this would involve stating whether the company has one or not (and why not), and where to find it.

The assurance consultation is another significant and quickly evolving area. The FRC (which will receive statutory underpinning) has committed to publishing an interim register of approved sustainability assurance practitioners by the middle of 2026, ready for selection for the first UK SRS-aligned disclosures. Assurance may become mandatory in future, particularly for larger reporters.

NEXT STEPS

We’ve heard from recent industry experts that the FCA has received a lot of investor input on its consultation but not as much from the issuer side. LB is recommending that all our clients have their say on the consultation – it’s open until 20 March – to ensure they are taken into account in the final Listing Rules.

Do you think the proposals provide sufficient time for issuers to adjust and prepare to implement the UK SRS?

Have your say here.

To see what happens next, our blog “UK SRS – what next? How companies can prepare” will be released soon.