FCA proposes updates to listed company sustainability disclosures

What does this mean?

The FCA’s proposals seek to modernise sustainability disclosures for listed issuers, reflecting the transition to the ISSB standards, which are being adopted internationally and in the UK. Following the formal disbandment of the TCFD, the FCA considers that continued reliance on TCFD-aligned disclosures risks misalignment with international best practice. The proposals are intended to improve the quality, consistency and international comparability of sustainability disclosures for investors.

The proposals are also closely linked to wider Government and regulatory initiatives. The FCA explicitly recognises dependencies on the Government’s process to endorse the UK SRS and ongoing Government work on potential policy options for transition plans as well as the future framework for sustainability assurance and broader reforms to the UK corporate reporting framework. While the timing of these developments remains uncertain, progress is expected in 2026; for example, the government expects the Financial Reporting Council to establish an interim voluntary sustainability assurance oversight regime by mid-2026.

Scope

The FCA proposes to broadly retain the scope of issuers currently subject to TCFD-aligned disclosure requirements, but with the application of the requirements differing depending on whether an issuer has a UK primary listing or a secondary listing in the UK. 

UK-listed issuers include commercial companies with equity listings, issuers in the transition category, and issuers of non-equity shares and non-voting equity shares.

Secondary listed issuers and depositary receipt issuers remain in scope, but with a transparency-focused approach. The FCA proposes removing the existing TCFD-aligned disclosure requirements for these categories and does not propose requiring these issuers to report in line with UK SRS. Instead, the FCA would require a statement in the company’s annual financial report setting out:

• any climate and/or sustainability disclosure requirements (including any transition plan requirements) that apply to the issuer in their primary overseas listing jurisdiction or place of incorporation; and 

• any such disclosure standards or requirements (including relating to transition plans) they have voluntarily adopted regarding equity shares which are admitted to trading; and 

• to signpost where any relevant disclosures or information can be found.

If the issuer is not subject to any such requirements or does not voluntarily follow any, a statement to this effect must be included in the annual financial report.

Certain categories remain out of scope. These include closed-ended investment funds, shell companies, and issuers of debt-only securities or securitised derivatives. 

Key proposals  

The proposals are structured across four main areas: 

• climate-related disclosures;

• wider sustainability disclosures;

• transition plan disclosures; and 

• assurance.  

Across the regime, the FCA does not propose introducing a new compliance statement requirement beyond that already set out in UK SRS S1, with further detail on the interaction between the SRS S1 statement of compliance and the FCA’s rules to follow the publication of the final UK SRS.

Climate-related disclosures

The FCA proposes that climate-related disclosures would move from the current TCFD-aligned rules to mandatory reporting under UK SRS S2 for UK-listed issuers. UK SRS S2 would be applied alongside key provisions in UK SRS S1, including the general requirements, conceptual foundations, materiality, judgements, uncertainties and errors, and requirements relating to metrics, targets and time horizons. Scope 3 greenhouse gas emissions would continue to be disclosed on a ‘comply or explain’ basis, reflecting current data quality challenges across value chains. 

Where firms choose to explain, the FCA proposes that issuers identify the relevant parts of UK SRS S2 not disclosed, explain the reasons why, and outline any steps being taken to enable future disclosure, including indicative timeframes.

Wider sustainability disclosures

Disclosures beyond climate, covered by UK SRS S1, would be required on a ‘comply or explain’ basis for UK-listed issuers, allowing firms time to develop reporting capability. Firms would either need to disclose information on material sustainability-related risks and opportunities (SROs) according to UK SRS S1 or explain their approach to reporting any material SROs.

Where an issuer has identified material SROs and chooses to ‘explain’ (either in full or in part), the explanation should:

• identify the relevant SROs for which disclosures have not been made;

• explain why the disclosures have not been included; and

• outline any steps it is taking/ planning to take for making these disclosures in future as well as the expected timeframe for making these disclosures.

Where a firm has concluded that no material SROs exist, this conclusion must be clearly stated in the annual financial report.

Transition plan disclosures

The FCA does not propose to mandate transition plans, noting that this remains a matter for Government policy and is the subject of a government consultation launched in June 2025. Instead, firms would be required to include a statement in their annual financial report indicating whether they have published a transition plan and where it can be found, or to explain why not.

To support the move away from TCFD, the FCA proposes removing existing Listing Rule guidance that references TCFD materials and introducing FCA Handbook Guidance noting that listed companies which produce a climate-related transition plan may wish to use the IFRS Educational Material on transition plan disclosures.

Assurance

The FCA does not propose to mandate third-party assurance over sustainability disclosures but would require enhanced transparency in annual financial reports on whether assurance has been obtained over disclosures relating to UK SRS S1 and S2, including Scope 3 emissions. Where assurance has been obtained, firms would be required to disclose the assurance provider, the scope and level of assurance, the standards applied, and where the assurance report can be accessed.

Listed companies in the secondary listing and depositary receipts category would also be required to provide certain information on whether they have obtained third-party sustainability assurance over their disclosures and the scope / type of assurance.

The FCA links this approach to ongoing Government work on the future framework for sustainability reporting and assurance, noting that its decision on mandatory assurance may be revisited in future and seeking views on the potential benefits and costs associated from mandatory assurance requirements for sustainability-related information.

Future development 

The FCA is also seeking views on longer-term topics that will inform implementation and future development of the regime, including digital reporting and the development of a supervisory strategy. The latter may include further guidance on disclosure expectations, which the FCA indicates would be set out in a future Primary Market Bulletin.

What do firms need to do?

CP26/5 should be viewed as part of a wider and evolving UK sustainability reporting framework, rather than a standalone change. Some elements of the FCA’s approach are intentionally limited to transparency requirements, reflecting that several related policy decisions sit outside the FCA’s remit and remain under consideration. Firms will therefore need to continue monitoring how the regime develops as outstanding aspects of the framework are finalised.

In response, firms should adopt a transition approach, supported by appropriate governance (including integration into annual report production processes and related controls), resourcing and training that retains flexibility as related policy developments - including sustainability assurance arrangements and potential transition plan requirements - are finalised.  Issuers should also consider the practical implications for governance and operating models, including how disclosure responsibilities are embedded within existing reporting cycles and control frameworks.

Against this backdrop, firms should prioritise foundational, no-regret actions. A key priority is undertaking a materiality assessment aligned to the proposed approach under UK SRS S1, once finalised, as this will determine the scope and depth of disclosures across both UK SRS S1 and S2. A clear, well-governed materiality assessment will be central to proportionate reporting, supporting firms’ judgements on what to disclose and providing a defensible basis as expectations continue to evolve. 

In parallel, issuers should carry out a gap analysis between existing TCFD-aligned disclosures and proposed UK SRS requirements, particularly UK SRS S2. The results of this analysis should be used to identify priority areas for uplift and inform implementation planning for mandatory climate-related disclosures from 1 January 2027.  

This should include consideration of implications for organisational capabilities and governance, as well as data, systems and controls, and how any identified gaps can be addressed in a way that supports interoperability with other sustainability reporting frameworks under which firms already report, whether voluntarily or mandatorily. For example, the European Sustainability Reporting Standards (ESRS), the Global Reporting Initiative (GRI) Reporting Standards or the Sustainability Accounting Standards Board Standards (SASB).

Next steps

The consultation period closes 20 March 2026 and the FCA plans to finalise rules in autumn 2026, after considering feedback and the final UK SRS. 

The FCA is aiming for the new disclosure regime to come into force for accounting periods beginning on or after 1 January 2027. Issuers would need to comply with the requirements unless they utilise optional transitional provisions, including:

• a one-year relief for ‘comply or explain’ Scope 3 disclosures; and 

• up to two years of transitional relief on wider sustainability disclosures aligned to UK SRS S1 on a ‘comply or explain’ basis.