UK listed companies get ISSB-based rules on a comply or explain basis
The UK Financial Conduct Authority (FCA) has finalised rules requiring listed companies to report against the UK Sustainability Reporting Standards (UK SRS), the UK-endorsed version of the International Sustainability Standards Board (ISSB) standards. Set out in Policy Statement PS26/19, they replace the existing rules based on the Task Force on Climate-related Financial Disclosures (TCFD) and apply to accounting periods beginning on or after 1 January 2027, with first reports in 2028.
The biggest change from the consultation is around climate. The FCA had proposed making UK SRS S2 climate disclosures mandatory, but following consultation responses concerned about respondents the burden on smaller issuers, it has applied a comply or explain policy. Reliefs give a year delay for Scope 3 emissions and two years on non-climate S1 disclosures, and overseas companies with secondary listings or depositary receipts will now also report against UK SRS.
Comply or explain has a history in the UK. The current TCFD-aligned rules work on the same basis and, according to the FCA, have supported high levels of disclosure, particularly among the largest issuers. Draft guidance on what a good explanation looks like is open for comment until 28 October. Some investors and accountants had pressed for mandatory rules, warning of under-reporting and weaker comparability, and the FCA will keep the regime under review.
XBRL International was among the respondents. On digital tagging, respondents were broadly supportive, pointing to better comparability and to how easily tagged data can be extracted and compared, including by AI tools, with quantitative metrics such as Scope 1, 2 and 3 emissions seen as the most suitable starting point. They also cautioned that implementation should wait until taxonomies, practice and systems are more mature. The FCA is not proposing tagging requirements for now, and will keep engaging with the Government on the UK’s digital reporting framework, a conversation already live through the Government’s consultation on modernising corporate reporting. With the new disclosures anchored in the annual financial report, which many UK listed companies already file in Inline XBRL, the step to structured sustainability data is a short one.
Read the policy statement here.
