The UK’s financial markets regulator has outlined plans to significantly expand sustainability reporting requirements for listed companies, proposing a shift to IFRS-aligned standards beginning in 2027. The move signals a transition from climate-only disclosures toward a broader, more internationally consistent sustainability reporting framework.

The consultation, launched by the Financial Conduct Authority, proposes new rules that would require in-scope companies to adopt the UK’s forthcoming Sustainability Reporting Standards, known as UK SRS. These standards are based on the work of the International Sustainability Standards Board and are intended to provide investors with clearer and more comparable information on sustainability risks and opportunities.

Moving Beyond Climate-Only Disclosures

Under the proposal, sustainability reporting obligations would extend beyond the current climate-focused regime, which is largely built on the recommendations of the Task Force on Climate-related Financial Disclosures. While climate reporting would remain central, companies would also be expected to begin reporting on broader sustainability topics over time.

The FCA said the revised approach is designed to align UK disclosure requirements with international standards, reducing fragmentation and making it easier for investors to compare companies across markets. For overseas issuers listed in the UK, the alignment is also intended to limit duplication in reporting obligations.

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Alignment with Global IFRS Sustainability Standards

The proposed UK SRS framework draws directly from the standards developed by the IFRS Foundation through its sustainability arm, the International Sustainability Standards Board. The ISSB was established in 2021 to create a global baseline for sustainability disclosures focused on enterprise value and investor needs.

In June 2023, the ISSB released its first two standards, IFRS S1 on general sustainability-related disclosures and IFRS S2 on climate-related disclosures. The UK government followed in June 2025 by publishing exposure drafts of UK SRS S1 and UK SRS S2, closely aligned with the ISSB standards. Final versions of the UK standards are expected in early 2026.

Climate Reporting and Transitional Reliefs

Under the FCA’s proposal, companies within scope would be required to report climate-related information in line with UK SRS S2. The regulator noted that these requirements broadly correspond to existing TCFD-based disclosures, which should ease the transition for many companies.

Recognising ongoing data challenges, particularly for value chain emissions, the FCA proposes a phased approach to Scope 3 reporting. Companies would benefit from a one-year transition period during which Scope 3 disclosures would not be required. After that, Scope 3 reporting would operate on a comply-or-explain basis, reflecting the difficulty many companies face in obtaining reliable third-party emissions data.

Phased Introduction of Broader Sustainability Reporting

For general sustainability disclosures under UK SRS S1, the proposal introduces an even longer transition. Companies reporting on non-climate sustainability topics for the first time would receive a two-year transitional relief period. Following this, disclosures would also be subject to a comply-or-explain approach.

The FCA has not set a definitive timeline for when Scope 3 emissions or broader sustainability disclosures would become fully mandatory. Instead, it said the comply-or-explain mechanism is intended to give companies time to build systems, data processes, and internal capabilities before stricter requirements are considered.

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Transition Plans and Assurance Expectations

The proposal stops short of mandating the publication of climate transition plans, with the FCA noting that such a requirement sits with the UK government rather than the regulator. However, companies would be required to state whether they have published a transition plan and, if not, explain why.

Similarly, while the FCA does not impose mandatory assurance of sustainability disclosures, it proposes that companies disclose whether their UK SRS-aligned reporting has been subject to third-party assurance. This is intended to improve transparency for investors assessing the reliability of reported information.

Timeline and Next Steps

The FCA’s consultation will remain open until March 20, 2026. The regulator plans to publish a final policy statement in autumn 2026, with the new sustainability reporting rules expected to take effect from January 2027.

If implemented, the proposal would mark a significant evolution in UK sustainability reporting, moving listed companies onto an IFRS-aligned footing and reinforcing the UK’s participation in the emerging global baseline for sustainability disclosures.

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