UK SRS Explained: New FCA Reporting Rules for 2027

UK SRS S1 and S2 were published on 25 February 2026. Neither standard is mandatory; both are available for voluntary adoption by any entity.

The change taking effect in 2027 concerns the Listing Rules, not the standards themselves. The Financial Conduct Authority (FCA) made instrument FCA 2026/56 on 24 September 2026. It comes into force on 1 January 2027 and applies to accounting periods beginning on or after that date. The accompanying policy statement, PS26/19, was first published on 30 September 2026 and updated on 13 October 2026 to amend a webinar link.

This distinction is important. UK SRS does not, in itself, impose an obligation on companies. Even the Listing Rule operates on a comply-or-explain basis rather than mandating every disclosure. A board briefing that claims “ISSB becomes mandatory in the UK in 2027” misrepresents both the standards and the regulatory mechanism.

What PS26/19 Actually Does

PS26/19 replaces the FCA’s TCFD-aligned climate disclosure rules for listed issuers, introduced in 2021, with requirements referring to the UK-endorsed versions of the ISSB standards.

Scope is determined by the relevant UK Listing Rules (UKLR) chapter. Included are equity shares of commercial companies under UKLR 6; international commercial companies with a secondary listing under UKLR 14; depositary receipts under UKLR 15; non-equity and non-voting equity shares under UKLR 16; and equity shares in the transition category under UKLR 22.

Excluded are closed-ended investment funds under UKLR 11 and open-ended investment companies under UKLR 12, which the FCA addresses through asset manager obligations; shell companies under UKLR 13; debt and debt-like securities under UKLR 17; securitised derivatives under UKLR 18; and warrants, options and miscellaneous securities under UKLR 19.

The amended provisions are UKLR 6.6, 11.4, 14.3, 15.3, 16.3 and 22.2, alongside ESG 2.2.6R, with transitional provisions in UKLR TP 16 and ESG TP1. There is no size threshold or exemption for smaller issuers. Instead, the FCA relies on the comply-or-explain mechanism to address proportionality.

A notable change from the consultation concerns secondary listings and depositary receipts. The original proposal would have required these issuers to signpost relevant information. Under the final rules, they are subject to the same UK SRS comply-or-explain approach as other issuers within scope.

Comply Or Explain, And What An Explanation Has To Contain

The comply-or-explain approach applies at all three levels: climate disclosures under UK SRS S2, Scope 3 emissions and non-climate sustainability matters under UK SRS S1.

The requirement is reflected in the statement of compliance. An annual financial report must include the UK SRS S2 climate disclosures or, if any are incomplete, identify the unmet requirements, explain why they have not been met and set out any steps the issuer intends to take to meet them subsequently. This is required by UKLR 6.6.6R(7A). A corresponding statement for S1 appears at (7B).

For S1 non-climate disclosures, the rules specify what an explanation must cover. An issuer choosing to explain rather than comply must clearly describe any sustainability-related risks or opportunities it has not disclosed. If none have been identified, the annual financial report must say so. Silence is not an option.

The position for S2 is less settled, creating a practical risk in the first reporting year. PS26/19 does not provide a comprehensive list of the information an S2 explanation must contain. Instead, the FCA addressed this in draft Technical Note TN 803.1, consulted on through GC26/6. The consultation, which closed on 28 October 2026, covered the expected level of detail, worked examples and the relationship between explanations and the statement of compliance. The guidance has yet to be finalised.

For an issuer reporting to 31 December 2027, the obligation is therefore established, but the final expectations for the quality of an explanation remain unpublished. The prudent approach is to prepare a disclosure capable of meeting a more demanding interpretation.

Transition plan explanations are an exception: no specific content requirements apply to them.

The Three Commencement Dates

These dates are based on the start of the accounting period, not its year end. This distinction affects issuers that do not follow a calendar year.

For an issuer with a 31 December year end, the first period within scope runs from 1 January to 31 December 2027, with reporting in 2028. Both Scope 3 and S1 benefit from relief during that period. Full comply-or-explain requirements apply to Scope 3 for the 2028 period and to S1 for the 2029 period.

For an issuer with a 30 June year end, the first period within scope runs from 1 July 2027 to 30 June 2028. Scope 3 relief applies because that period begins between 1 January 2027 and 1 January 2028. The following period, beginning on 1 July 2028, is subject to full Scope 3 comply-or-explain requirements. S1 relief remains available for the period beginning on 1 July 2028 but expires for the period beginning on 1 July 2029, which ends on 30 June 2030.

This second example is particularly relevant to groups with June or March year ends. Although the relief periods may appear more generous, they place Scope 3 and S1 implementation on a different internal timetable from that of December year-end reporters and their auditors.

What Changes Against The Current TCFD Rules

There are four substantive changes beyond the shift in the reference framework.

The compliance statement takes a different form. Under the existing regime, issuers state whether their disclosures are consistent with the TCFD recommendations and explain any inconsistencies. Under the new regime, they must provide UK SRS disclosures or identify unmet requirements, explain the reasons and describe intended next steps. This places greater emphasis on how gaps will be addressed.

Transition plans move from consideration to disclosure of status. Previous Handbook guidance asked listed companies to consider TCFD Annex Section C on transition plans. The replacement requirement asks issuers to state whether a transition plan exists and, if so, where it can be found. The content requirement is narrower, but the factual position must be made public.

Scope 3 now has a defined timetable. Under the existing rules, it falls within the TCFD metrics recommendation, leaving considerable scope for interpretation. Under the new rules, it is a distinct stage with a one-year relief period and a specified commencement date.

The existing rules do not cease to apply immediately. Under ESG 2.2.6R, the pre-2027 version continues to apply until a firm reports under the new UK SRS requirements. Early voluntary adopters, and issuers whose accounting periods span the transition, must therefore establish which version applies to each report.

The First-Year Reliefs

Five reliefs are available, each with practical implications for reporting plans.

Scope 3 emissions benefit from one year of relief from initial application. The climate-first relief for non-climate matters under S1 lasts two years. A separate one-year relief allows issuers to continue using their previous greenhouse gas measurement method, which may help those changing methodologies. Comparative information is not required in the first reporting period. Finally, entities that voluntarily adopt the standards before 1 January 2027 may use the reliefs for an additional year.

The final provision is particularly relevant to planning. Early voluntary adoption can provide an additional year of relief rather than reduce the available transition period, changing the usual calculation about adopting ahead of schedule.

There is, however, a disclosure condition. Issuers must identify in their annual reports which reliefs they have used, although they need not explain their reasons. This is a relatively light requirement, but it makes omissions visible. Decisions on reliefs should therefore be made deliberately as part of the reporting strategy, rather than left to the reporting team by default.

The rules also refer to the IFRS S2 transition guidance published in June 2025. It should be considered alongside the reliefs during planning, not only after decisions have been made.

Where The Disclosures Go, And The Assurance Statement

All relevant information belongs in the annual financial report: climate disclosures, Scope 3 disclosures, S1 disclosures and any accompanying explanations. Issuers must identify where each item appears. Cross-referencing is permitted in accordance with paragraphs B45 to B47 of UK SRS S1.

The report must also state whether a transition plan exists and, if it does, where it has been published.

Assurance is not compulsory, but any assurance obtained must be disclosed. The annual report must identify the assurance provider, the subject matter and level of assurance, the standards applied and the location of the assurance report. This is a requirement to explain the assurance obtained, not to commission it. It also makes the extent of partial assurance clear: for example, limited assurance covering only two Scope 1 and 2 disclosures can be identified as such.

What Is Still Open

Three matters remain unresolved and should be treated as risks in a first-year implementation plan, rather than as settled assumptions.

S2 explanation guidance. Draft Technical Note TN 803.1 was consulted on through GC26/6, with the consultation closing on 28 October 2026. The final guidance will clarify the expected standard for explanations under the new regime.

Scope beyond listed issuers. The standards remain voluntary, and the government has not established statutory size thresholds. Its stated intentions for private companies have referred to “economically significant” entities without defining the term. PS26/19 therefore does not resolve the position of large unlisted UK subsidiaries.

Further FCA activity. The policy statement indicates that the regulator will review market data periodically and discuss market sentiment with stakeholders, but does not expect to conduct a formal post-implementation review. Issuers should anticipate supervisory commentary and comparisons with peers rather than a scheduled reassessment of the rules.

A First-Week Checklist

Confirm the UKLR chapter under which your securities are listed. Scope and exclusions are determined by chapter.

Identify the start date of your first accounting period within scope, rather than relying on the year end, and calculate the corresponding Scope 3 and S1 dates.

Agree at board level which of the five reliefs to use and document the decision. The annual report will need to identify them.

Assess whether voluntary adoption before 1 January 2027 remains feasible, given the additional year of relief available to early adopters.

Prepare an S2 explanation now for a requirement you expect to be unable to meet fully. Retain the draft until TN 803.1 is finalised, then compare it with the published guidance. This allows you to address any gaps before the annual report is issued.

Position as of 3 November 2026. Rule references, dates and reliefs are taken from FCA Policy Statement PS26/19 and the related instrument FCA 2026/56 as published, and from the UK Sustainability Reporting Standards published on 25 February 2026; the FCA page records the policy statement as first published on 30 September 2026 and updated on 13 October 2026. Draft guidance referred to here, including TN 803.1 consulted on under GC26/6, was not final at the date of writing and the final text may differ from the draft in ways that affect what an explanation must contain. Summaries of scope, exclusions, commencement and reliefs are condensed from the policy statement and are not a substitute for the made rules in the FCA Handbook, which govern; the worked year-end sequences are the author's own reading of the commencement wording applied to illustrative period dates and should be confirmed for your own accounting reference date. The comparison with the previous TCFD-aligned regime describes changes in the rules and is not an assessment of which produces better disclosure. Nothing here is legal, accounting, assurance or regulatory advice, and in-scope determinations and disclosure decisions should be taken with professional advisers.

Sources

Financial Conduct Authority, Financial Conduct Authority, FCA Handbook, Department for Business and Trade, International Sustainability Standards Board, PwC, DLA Piper

This article is intended for general professional information and does not constitute legal, financial, or investment advice.