On 30 January 2026, the FCA launched Consultation Paper 26/5: Aligning sustainability disclosures with international standards (CP 26/5), setting out proposals to replace existing climate-related disclosure rules for listed companies with new reporting requirements in line with UK Sustainability Reporting Standards (UK SRS). The proposals are designed to improve the quality and comparability of financially material information relating to sustainability risks and opportunities, increase transparency and promote international alignment of sustainability disclosures. Responses to CP 26/5 are requested by 20 March 2026. Subject to the outcome and timing of the government's final endorsement of the UK SRS, the FCA aims to publish its final rules and policy position in Autumn 2026, with the rules coming into force on 1 January 2027.
Background
Under rules first introduced for premium listed companies in 2020, a company listed on the commercial companies category must include a statement in its annual report on whether it has made climate-related financial disclosures which are consistent with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). The statement operates on a 'comply or explain' basis (see UK listed regime: continuing obligations, Q&A here).
In 2023, the International Sustainability Standards Board (ISSB) issued its first global sustainability disclosure standards IFRS S1 and S2, with the aim of consolidating existing reporting frameworks including the TCFD recommendations (see FC Feature 26 June 2023). IFRS S2 builds on the TCFD's recommended climate disclosures, while IFRS S1 covers wider sustainability-related risks and opportunities that could reasonably be expected to affect companies' prospects. The TCFD was subsequently disbanded and its monitoring responsibilities transferred to the ISSB.
The government is in the process of developing the UK SRS based on the ISSB standards and is expected to publish final versions of the UK SRS for voluntary use early in 2026 (DBT Webpage: UK SRS). Alongside its 2025 consultation on exposure drafts of UK SRS S1 and S2, the government also requested views on proposals requiring UK-regulated financial institutions and large companies to develop and implement climate-related transition plans that align with the 1.5C goal of the Paris Agreement (see FC Feature 26 June 2025).
Proposed changes to the UK Listing Rules (UKLRs)
In CP 26/5, the FCA discusses plans to delete the current TCFD-aligned rules on climate-related disclosures and replace them with new requirements for in-scope listed companies to report against UK SRS S1 and S2. The FCA is consulting on the basis of the draft UK SRS published for consultation in June 2025. Once the government issues the final standards, the FCA will consider these together with feedback on CP 26/5 to determine if any further changes should be made to its proposals before finalising the relevant UKLRs.
The FCA is proposing the following new framework for sustainability reporting against the UK SRS by in-scope listed companies.
- Companies will be required to make climate-related disclosures in their annual reports against UK SRS S2 on a mandatory basis. This is with the exception of Scope 3 emissions data, which would continue to be reported on a comply or explain basis.
- The revised rules introduce a requirement for companies to make non-climate related sustainability disclosures in their annual reports against UK SRS S1 on a comply or explain basis. The FCA recognises that wider sustainability reporting will be new to many listed companies and may present challenges.
- The FCA does not intend to require companies to produce climate-related transition plans as it considers this to be a matter for the government. Instead, CP 26/5 proposes that companies should include a statement in their annual reports explaining whether they have published a transition plan and where it can be found. If a listed company does not have a transition plan in place, an explanation should be given.
- Companies will also be required to disclose whether they have obtained third party sustainability assurance over disclosures relating to the UK SRS.
The new rules will apply to issuers in the following listing categories:
- commercial companies (equity shares) (UKLR 6);
- non-equity shares and non-voting equity shares (UKLR 16); and
- transition companies (equity shares) (UKLR 22).
The FCA proposes a more flexible approach for international companies with a primary listing in another jurisdiction, to minimise duplication with other market rules. Companies in the secondary listing and depositary receipts categories will be required to disclose the climate and sustainability reporting requirements applicable to the company in its primary listing location or place of incorporation (or which they voluntarily adopt) and signpost where the relevant information can be found.
The FCA aims to strike a balance between providing investors with information needed to make informed decisions and recognising the maturity of listed companies' reporting and market readiness. The FCA welcomes feedback on these proposals, with a view to helping the UK retain its position as a leader in sustainable finance and supporting competitiveness and growth.
Proposed amendments to the UKLRs are set out in redline in Appendix 1 of CP 26/5.
Implementation and transitional arrangements
The FCA intends that the new rules will come into force on 1 January 2027 and apply in relation to accounting periods beginning on or after that date.
Chapter 8 of CP 26/5 sets out the FCA's proposals for implementation and transitional arrangements, which are designed to ensure listed companies can benefit from transitional reliefs built into the UK SRS and allow companies sufficient time to prepare for the new rules.
Companies may defer by one year reporting against UK SRS S2 in relation to Scope 3 emissions, while reporting under UK SRS S1 in relation to non-climate disclosures may be deferred by two years. To ensure transparent use of these reliefs, a company would be required to disclose in its annual financial report if it has not made the relevant disclosures.
First published on the Corporate News Service on 30 January 2026
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