The Financial Conduct Authority (FCA), the UK’s conduct regulator for financial services firms and financial markets, announced the launch of a consultation into a new proposal to significantly revise and expand sustainability reporting requirements for listed companies, including a new requirement for companies to implement the UK’s upcoming                 IFRS-based Sustainability Reporting Standards (UK SRS) in their disclosures. The new proposed rules would come into force at the beginning of 2027.

The update would introduce sustainability reporting obligations for companies beyond their currently-mandated climate-related disclosures, and from the current requirement to base disclosures on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

According to the FCA, the new proposal would align sustainability reporting by UK companies with international standards, allowing investors to access clear and consistent information about sustainability risks and opportunities, while enabling overseas companies to avoid duplication in their reporting obligations.

The FCA also said that its approach would reflect the readiness of listed companies, with requirements for some of the more challenging or new aspects – such as Scope 3 data – to be implemented, at least at first, on a “comply or explain” basis.

The IFRS Foundation’s International Sustainability Standards Board (ISSB) was launched in November 2021, with the goal to develop IFRS Sustainability Disclosure Standards to provide investors with information about companies’ sustainability risks and opportunities. The IFRS released the inaugural general sustainability (IFRS S1) and climate (IFRS S2) reporting standards in June 2023. As part of the process to create a unified global climate-reporting framework, the IFRS Foundation took over the responsibilities of the TCFD in 2023.

In June 2025, the UK government announced the release of exposure drafts of new UK Sustainability Reporting Standards (UK SRS), based on the ISSB standards, including “UK SRS S1” and “UK SRS S2,” which correspond to the ISSB’s (ISSB) S1 (sustainability-related) and S2 (climate-related) standards. The finalized UK SRS are anticipated to be released in early 2026.

The new proposal would introduce rules requiring in-scope companies to make mandatory climate-related disclosures in line with UK SRS S2, which the regulator noted broadly correspond to the TCFD recommendations. For Scope 3 reporting, the FCA acknowledged that it “still remains difficult for listed companies to access quality data… particularly because it involves collecting emissions data from third parties in a listed company’s value chain.” In its proposal, the FCA includes a one-year transition relief during which companies would not be required to report Scope 3 data, after which the requirement would be on a “comply or explain” basis.

Similarly, while expanding the scope of reporting requirements beyond climate, the new proposal provides flexibility for companies reporting on general sustainability aspects for the first time, by introducing a 2-year transitional relief for UK SRS S1, and implementing it on a “comply or explain” basis after year 2.

While the proposal doesn’t include a timeline under which the Scope 3 and general sustainability disclosures would become mandatory, it explains that the “comply or explain” process is being used “to give listed companies time to adjust.”

The proposal also does not require that companies disclose transition plan, with the FCA noting that such a requirement “is a matter for the Government,” although it does propose that companies be required to disclose if they have published a transition plan, and a reason why not, if they haven’t. Similarly, while the FCA leaves requirements for assurance of sustainability reporting in the hands of the government, the document proposes a requirement for companies to disclose whether they have attained third-party sustainability assurance over their disclosures relating to UK SRS.

The FCA’s consultation on the proposal is open until March 20, 2026, with the regulator aiming to  publish a Policy Statement in autumn 2026, and to have the rules in force from the beginning of January 2027.

Click here to access the consultation.