UK FCA Proposes New Sustainability Disclosure Rules for Listed Companies

The UK Financial Conduct Authority (FCA) recently issued consultation paper CP26/5, proposing to replace the existing Task Force on Climate-related Financial Disclosures (TCFD) requirements with new rules mandating listed companies to report against the UK Sustainability Reporting Standards (UK SRS). These are based on the IFRS Sustainability Disclosure Standards developed by the International Sustainability Standards Board (ISSB).

Following the disbandment of the TCFD in 2023, approximately 40 jurisdictions globally have adopted or intend to adopt the ISSB Standards.

Why the need for change?

The FCA believes these changes will better address investors' needs for improved, decision-relevant sustainability information, enhancing assessment of companies' sustainability profiles—including related risks, opportunities, and capital allocation.

The FCA also aims to promote international alignment, stating the new standards should "drive greater consistency and comparability in disclosures."

Will it impact your business?

The draft rules would apply to UK-listed companies in the following categories: commercial companies (UKLR 6); non-equity shares and non-voting equity shares (UKLR 16); transition category (UKLR 22); secondary listing (UKLR 14); and depositary receipts (UKLR 15).

The proposed rules will require companies to make disclosures about their sustainability-related risks and opportunities, the governance and strategy for managing these risks, and metrics and targets used to monitor related performance.

Key aspects of the proposals include:

• Climate disclosures (UK SRS S2, excluding Scope 3 emissions): Mandatory reporting.
• Scope 3 emissions: 'Comply or explain' basis.
• Non-climate sustainability disclosures (UK SRS S1): 'Comply or explain' basis.
• Transition plans: Companies must disclose whether and where they have published a climate-related transition plan or explain why not.
• Assurance: Companies must disclose whether they have obtained third-party assurance on sustainability disclosures.
• Secondary listing/depositary receipt categories: Tailored approach—these companies would be required to disclose the climate and sustainability reporting standards applicable in their primary listing jurisdiction, place of incorporation, or any standards voluntarily adopted.

The following listing categories are excluded from the scope of the proposals: closed-ended investment funds; shell companies; debt and debt-like securities; securitised derivatives; and warrants, options and other miscellaneous securities.

Implementation timeline

The FCA has asked for responses to the consultation paper by 20 March 2026. The FCA aims to review all feedback and publish a policy statement in Autumn 2026 with the new rules being effective from 1 January 2027, applying to accounting periods beginning on or after that date.

Transitional reliefs will be available as follows:

• Scope 3 emissions: 1-year deferral available (reporting required from accounting periods beginning on or after 1 January 2028).
• Non-climate disclosures (UK SRS S1): up to 2-year deferral available (reporting required from accounting periods beginning on or after 1 January 2029).

Practical considerations and global regulatory landscape

The UK's proposal comes at a time when reporting rules in other major markets are in flux. The EU is at the tail-end of revisions to its CSRD and CS3D frameworks, which will still require member state transposition; while in the U.S., California's climate-related disclosure laws are proceeding to the rulemaking stage yet mired in litigation.

This evolving global landscape means UK-listed companies operating outside the UK face the challenge of navigating multiple, potentially divergent sustainability reporting frameworks. While the UK's alignment with ISSB standards may provide some relief by offering a globally recognised baseline, companies operating in or accessing capital markets in the EU and US will still need to monitor and potentially comply with jurisdiction-specific requirements that go beyond or differ from UK SRS.

Affected companies should consider reviewing their current TCFD disclosures against UK SRS requirements, assessing their readiness for mandatory climate reporting, and evaluating their capability to report on Scope 3 emissions and non-climate disclosures. Companies may also wish to consider submitting a response to the consultation.

If you have any questions or would like to discuss the implications of these proposals for your business, please do not hesitate to contact us. In addition, if you would also like to sign up for further updates on this topic, please use following this link.