For years, UK businesses have navigated a fragmented landscape of sustainability reporting obligations: SECR for energy and carbon, TCFD-aligned rules for listed companies, and voluntary frameworks such as GRI or CDP on top. The result was duplicated effort, inconsistent disclosures and limited comparability for investors.
That era is ending. The UK Sustainability Reporting Standards (UK SRS S1 and S2) are now published, and in September 2026 the Financial Conduct Authority (FCA) confirmed in its policy statement PS26/19 how listed companies will have to use them.
This guide explains what the standards require, what the FCA's final rules mean in practice, how they differ from what listed companies do today, and how to prepare.
What are the UK SRS?
The UK SRS are the UK-endorsed versions of the ISSB's IFRS S1 and IFRS S2, adapted with targeted amendments for the UK market. The ISSB was established in 2021 to create a globally consistent baseline for sustainability disclosures aimed at investors and capital markets. It built on, and incorporated, the TCFD Recommendations, which were disbanded as a body in 2023. The UK joins a growing group of jurisdictions, including Australia, Japan, Canada, Singapore and Hong Kong, that have adopted ISSB-aligned standards.
UK SRS S1: general requirements
S1 sets the overall architecture for disclosing sustainability-related financial information. Its core principle is financial materiality: companies identify and report the sustainability-related risks and opportunities, across all topics and not only climate, that could reasonably be expected to affect cash flows, access to finance or cost of capital. A materiality assessment is the starting point, and disclosures must be connected to the financial statements. The same four pillars apply to every topic: Governance, Strategy, Risk Management, and Metrics & Targets.
UK SRS S1 and S2 are designed to be used together: S1 provides the general framework, and S2 goes deep on climate. A company reporting only on climate has not made non-climate disclosures under S1. For listed companies, the FCA allows this for up to two years through “climate-first” relief, provided the use of the relief is stated in the annual report. How this interacts with a statement of compliance with UK SRS is covered in the FCA’s draft guidance (Technical Note 803.1), currently out for consultation.
UK SRS S2: climate-related disclosures
S2 is where the most technically demanding requirements sit. It builds directly on TCFD but goes further in depth and specificity. Parts of S1 (conceptual foundations, general requirements, statement of compliance and application guidance) also apply to climate disclosures.
- Governance: which body oversees climate risks and opportunities, the skills and information it relies on, and whether remuneration is linked to climate performance.
- Strategy: current and anticipated financial effects, the impact on the business model and value chain, and a climate resilience assessment using scenario analysis. S2 does not prescribe the scenarios, but the choices must be justified.
- Risk management: how climate-related risks and opportunities are identified, assessed, prioritised and integrated into overall risk management.
- Metrics and targets: absolute gross Scope 1, 2 and 3 emissions measured under the GHG Protocol, cross-industry and industry-based metrics, and detailed information on each climate target (metric, base year, period, validation and use of carbon credits). Financial institutions must also address financed emissions.
S2 does not require a company to have a transition plan. If it has one, it must disclose certain information about it.
What the FCA's final rules require
The FCA consulted on these rules in CP26/5, published in January 2026. The final rules in PS26/19 are close to the proposals, with two significant simplifications: comply-or-explain now applies to all of UK SRS, and international secondary-listing issuers are brought into scope.
Comply-or-explain, not mandatory
Listed companies must include in their annual financial report either:
- climate-related disclosures prepared in accordance with UK SRS S2 (including Scope 3), or a statement summarising the S2 requirements not met, the reasons, and the steps taken or planned to make those disclosures in future; and
- sustainability-related disclosures prepared in accordance with UK SRS S1, or, where the company has identified risks or opportunities but not disclosed against S1 (or only in part), a statement listing them, the reasons, and the steps planned. Where a company has identified no such risks or opportunities, it must say so.
The FCA decided against a mandatory S2 regime after feedback that it could be disproportionately burdensome for smaller companies and not produce useful information. It also decided against size-based thresholds, because climate risk depends on business model and sector rather than size. The FCA reminds issuers of their duty to disclose principal risks and uncertainties (DTR 4.1.8R): where climate or sustainability risks are among them, issuers should consider how that is reflected before choosing to "explain".
Where the disclosures go?
Disclosures and explanations must be in the annual financial report. The FCA does not specify the section, and companies may cross-refer to other reports in line with UK SRS S1 (Appendix B, paragraphs B45 to B47). Companies must say where in the report the disclosures can be found.
Transition plans
Listed companies must state whether they have published a climate-related transition plan, in the annual report or elsewhere. If they have, they give its location. If they have not, they say why. The FCA is not requiring companies to produce a plan, and sets no rules on where a plan is published or on the content of the explanation. Using the IFRS guidance on transition plan disclosures is optional.
Third-party assurance
Companies must state whether they have obtained third-party assurance over their climate or sustainability disclosures. If they have, they must give:
- the name of the assurance provider;
- which disclosures were assured, and the level (for example limited or reasonable assurance);
- the assurance standards used; and
- where the assurance report is published, with a link if available.
Assurance itself is not mandatory, and no explanation is required if none was obtained. The FCA says it will keep the case for mandatory assurance under review, alongside the FRC's voluntary sustainability assurance register.
Who is in scope?
The rules apply to issuers in these listing categories:
- equity shares (commercial companies);
- equity shares (transition);
- non-equity shares and non-voting equity shares;
- equity shares (international commercial companies secondary listing); and
- certificates representing certain securities (depositary receipts).
International secondary-listing and depositary receipt issuers report against UK SRS on a comply-or-explain basis. They may rely on home-jurisdiction reporting where it meets the outcomes of UK SRS, and must explain any gaps. The transition plan requirement does not apply to them.
The rules do not apply to closed-ended investment funds and open-ended investment companies (these are addressed through asset managers), shell companies, and debt and debt-like securities, securitised derivatives, warrants and other miscellaneous securities.
Key dates and transitional reliefs
The rules apply to accounting periods beginning on or after 1 January 2027, with first reporting in 2028. The FCA gives issuers two transitional reliefs.
- Scope 3 relief (1 year): non-disclosure of Scope 3 emissions for one year from initial application.
- S1 "climate-first" relief (2 years): non-disclosure of non-climate S1 matters for two years from initial application.
Companies using a relief must state in their annual report that they are doing so, but do not need to explain why. Using a relief does not trigger the "explain" rules. Two further UK SRS reliefs also apply: one on comparative information, and one allowing a different GHG measurement method for one year if that method was used immediately before.
What this looks like for a calendar-year company
Comparative information is not required in the first period for which disclosures are made. It is required from the period immediately after.
Early adopters
Companies with an accounting period beginning before 1 January 2027 can keep reporting under the current TCFD-aligned rules, or voluntarily comply with UK SRS. The FCA removed the rule that would have stopped early adopters using the reliefs, so they can use the reliefs again for accounting periods beginning on or after 1 January 2027.
How the new rules differ from TCFD
UK SRS S2 is explicitly built on the TCFD architecture, so the structural transition should be manageable for companies already reporting under TCFD. The difference is in depth: TCFD provided recommendations, while S2 prescribes what must be disclosed.
- Companies with mature TCFD disclosures will usually find the biggest gaps in:
- quantifying financial effects;
- the rigour of scenario analysis;
- Scope 3 data;
- industry-based metrics; and
- connecting sustainability information to the financial statements.
UK SRS, CSRD and SECR
CSRD. CSRD uses double materiality, requiring disclosure of both financial impacts on the company and the company's impacts on people and the planet. UK SRS uses a single, financial materiality approach focused on investors. Compliance with one does not automatically satisfy the other, although there is meaningful overlap on climate.
SECR. Companies subject to Streamlined Energy and Carbon Reporting must continue to comply with it. The two frameworks currently coexist, so some duplication persists. The Department for Energy Security and Net Zero has said it intends to review the interaction, with no timeline set.
Beyond listed companies. The FCA's rules cover listed issuers. The Government has indicated it will explore extending UK SRS to private companies through its corporate reporting programme, with no confirmed timeline.
Next steps for your organisation
- Map your baseline. Compare your current TCFD disclosures with S2, and with S1 if you plan to report on non-climate topics early. The gaps are the start of your work plan.
- Decide your position on each requirement. Under comply-or-explain, you will need to know in advance what you will disclose, what you will explain and which reliefs you will use. Check the FCA's draft guidance on explaining (Technical Note 803.1), which is open for feedback until 28 October 2026.
- Start on Scope 3. It is usually the biggest data gap. The 1-year relief is short, so data collection and supplier engagement should begin now.
- Strengthen scenario analysis so that it is proportionate to your exposure and well justified.
- Connect sustainability to finance. S2 requires quantified financial effects and links to the financial statements, which needs closer work between sustainability and finance teams.
- Clarify your transition plan position. You do not have to have a plan, but you will have to say whether you have published one.
- Decide your assurance approach. Whether or not you seek assurance, you will have to disclose it. Plan providers and standards early.
- Consider early adoption. Early adopters can now use the reliefs again, which removes the main penalty for moving first.
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Conclusion
The FCA's final rules turn the UK SRS from a voluntary option into the reference framework for listed company reporting, but on a comply-or-explain basis rather than a mandatory one. For sustainability and climate teams the question is no longer whether UK SRS will apply, but how well prepared they are to comply, or to explain clearly, when the first reports are due in 2028.
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