Financial Conduct Authority consults on replacing TCFD-based listing disclosures with UK Sustainability Reporting Standards from 2027

The Financial Conduct Authority has published Consultation Paper CP26/5 proposing to update the UK Listing Rules so in-scope listed companies report sustainability-related financial information against the draft UK Sustainability Reporting Standards (UK SRS), derived from International Sustainability Standards Board standards, replacing the FCA’s current Task Force on Climate-related Financial Disclosures (TCFD)-aligned listing disclosure regime. The package would move climate reporting (UK SRS S2) largely to mandatory disclosure, while retaining a ‘comply or explain’ approach for Scope 3 emissions and introducing ‘comply or explain’ reporting for non-climate sustainability disclosures (UK SRS S1), alongside new transparency requirements on transition plans and any voluntary third-party assurance. The proposals would apply (with variations) to issuers in the commercial companies (UKLR 6), transition (UKLR 22), non-equity shares and non-voting equity shares (UKLR 16), secondary listing (UKLR 14) and depositary receipts (UKLR 15) categories, while excluding, among others, closed-ended and open-ended listed funds, shell companies, debt and debt-like securities, securitised derivatives and warrants and options. For secondary listings and depositary receipts, the FCA proposes removing existing TCFD requirements and instead requiring disclosure of the climate and sustainability reporting requirements (including transition plan requirements) applicable in the issuer’s primary listing market or place of incorporation, or any standards voluntarily adopted, plus assurance transparency. The FCA also proposes consequential changes to the ESG Sourcebook to allow certain firms subject to entity-level TCFD rules (ESG 2) to cross-refer to UKLR UK SRS S2 disclosures, and it seeks views on longer-term topics including digital tagging and its supervisory approach. A cost benefit analysis estimates impacts on around 515 listed companies, with present value benefits of GBP 519.20m and costs of GBP 285.59m (net present value GBP 233.61m). Responses are requested by 20 March 2026. The FCA aims to publish final rules and a policy statement in autumn 2026, subject to the finalisation of UK SRS, with rules intended to come into force on 1 January 2027 and apply for accounting periods beginning on or after 1 January 2027; UK SRS transitional reliefs include a 1-year deferral for Scope 3 and up to a 2-year deferral for non-climate disclosures, alongside FCA transitional provisions including optional early adoption for some issuers.