UK Government Proposes Corporate Reporting Reform and Removal of ESG Reporting Rules

The UK government has launched a consultation that could fundamentally change the UK’s corporate reporting framework. The consultation was published on 7 September 2026 and closes on 30 November 2026. 

What has triggered the need for change? 

The government considers that the UK's corporate reporting framework has become overly complex, with overlapping requirements across company law, accounting standards and regulatory rules. The consultation aims to reset the framework to focus on delivering decision-useful, financially material information for investors and creditors — supporting the UK's competitiveness as a destination for investment and delivering "the most proportionate and effective" corporate reporting framework in the world.  

What is being proposed?  

The government proposes to replace most existing strategic reporting requirements with five baseline narrative disclosures covering a company’s business model, performance, resources and relationships, strategy and principal risk exposures. Critically, the following would be removed as explicit legislative requirements: 

• Environmental matters, including the impact of a company's business on the environment; 
• Employee matters, including employment policies, engagement and diversity; 
• Social and community matters; 
• Respect for human rights; and  
• Anti-corruption and anti-bribery matters. 

The government emphasises that companies would still be expected to report on these topics where they are financially material — for example, where a company has significant dependencies on natural resources, supply chain risks or climate-related exposures. The stated intent is to move away from prescriptive, compliance-driven reporting towards a model in which boards focus on the issues that are genuinely material to their business. Whether this results in more insightful reporting — or simply less reporting — will depend on how companies, investors and regulators respond. 

Who will be affected?  

The government is seeking views on which companies should be subject to the new baseline reporting requirements. The UK’s current framework for non-financial reporting has several thresholds, and the government is seeking to replace these with a single threshold for reporting baseline strategic information.  

Options under consideration include: (a) all publicly listed companies and large private companies; (b) only "very large" companies, under a new consolidated threshold; or (c) only publicly listed companies. The government is also testing whether non-financial reporting requirements for private companies remain justified, given the typically closer relationship between management and ownership in such entities. 

What about climate and sustainability reporting?  

The consultation does not propose changes to existing climate-related financial disclosure ("CFD") requirements under the Companies Act 2006, which are subject to a separate review expected to complete by spring 2027. However, the consultation sits within a broader — and fast-moving — regulatory picture that companies need to track: 

• UK Sustainability Reporting Standards: The government published the UK Sustainability Reporting Standards ("UK SRS") — UK SRS 1 and UK SRS 2 — in February 2026. These are based on the IFRS S1 and IFRS S2 standards developed by the International Sustainability Standards Board ("ISSB"), the body responsible for creating a global baseline for sustainability-related financial disclosures. The UK SRS are already available for voluntary use and are likely to become the benchmark against which future mandatory requirements are set. The government will consider how the UK SRS should be reflected in the Companies Act 2006. 

• FCA listing rules: The FCA has consulted (CP26/5) on requiring listed companies to report against UK SRS S2 on a mandatory basis, with Scope 3 emissions (being indirect greenhouse gas emissions occurring across a company's value chain, including both upstream and downstream activities) on a "comply or explain" basis. The final listing rules are expected in autumn 2026, with the new requirements effective from 1 January 2027. Transitional reliefs would allow a one-year deferral for Scope 3 emissions and up to two years for non-climate UK SRS S1 disclosures — but listed companies should be planning for compliance now. For further detail on the FCA's proposals, see our earlier client alert, "UK FCA Proposes New Sustainability Disclosure Rules for Listed Companies". 

• Avoiding duplication: Companies in scope of both the FCA's proposed UK SRS S2 requirements and existing CFD requirements may be able to use their UK SRS S2 disclosures to satisfy CFD obligations. This is a potentially significant practical benefit, as it would allow companies to report against a single framework rather than preparing separate disclosures under each regime. 

• Sustainability assurance: Mandatory assurance over sustainability reporting is not being introduced at this stage. However, the FCA is separately consulting on requiring listed companies to disclose the scope and level of any assurance obtained over UK SRS disclosures — a step that, while stopping short of a mandate, is likely to increase market expectations around voluntary assurance and should be factored into companies' planning. 

How do these proposals fit within the broader international landscape? 

The UK developments are consistent with recent efforts in other jurisdictions — notably the EU and the US — to clarify, simplify and streamline corporate reporting requirements. In particular, the US government has expressed ongoing dissatisfaction with the EU's approach under the Corporate Sustainability Reporting Directive ("CSRD") and the Corporate Sustainability Due Diligence Directive ("CSDDD"), and continues to raise concerns regarding the impact of those regimes on domestic entities operating internationally. To the extent that the UK's reforms reduce the reporting burden on foreign entities more extensively than the EU's framework, they may be received more favourably by the US and other trading partners, potentially enhancing the UK's attractiveness as a jurisdiction for cross-border business and investment. 

What should companies be doing now? 

These proposals will affect companies in different ways. The key actions will depend on a company's listing status, size and the nature of its operations: 

• Listed companies should prioritise assessing their readiness for the FCA's proposed UK SRS S2 reporting requirements, which are expected to take effect from 1 January 2027. Transitional reliefs are available but early preparation will be critical, particularly for companies with complex value chains. Listed companies may also wish to respond to the consultation, especially on the proposed removal of explicit ESG disclosure requirements and the interaction between CFD and UK SRS S2. 
• Large private companies should pay close attention to the proposed reporting thresholds. The government is testing whether non-financial reporting obligations for private companies remain justified and is considering a new "very large" company category, the definition of which has not yet been settled. Companies that currently report under the existing framework should consider responding to the consultation to help shape the scope of any future requirements. 
• All companies currently in scope of CFD requirements should monitor the separate post-implementation review, which is expected to complete by spring 2027 and will inform any future changes to climate-related disclosure obligations under the Companies Act 2006. 
• Companies should also take stock of how the proposed changes interact with their existing reporting obligations — including any overlap between CFD and UK SRS S2 — and with any voluntary sustainability frameworks they currently follow. Early engagement with advisers will help identify both the risks and the opportunities that these reforms present. 

With the consultation closing on 30 November 2026 and parallel developments in FCA listing rules and the CFD review progressing on separate timescales, companies should act now to assess the potential impact of the proposals on their reporting obligations and to consider whether to submit a response. 

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 follow this link.