UK-listed companies will need to report climate-related risks under a new mandatory framework starting January 2027. The UK Sustainability Reporting Standards (UK SRS) represent the UK government’s endorsed version of the global ISSB standards, with nine targeted amendments to fit the UK regulatory landscape.
UK SRS S2 covers climate-specific disclosure requirements, including physical risk identification, scenario analysis, and a quantitative metric that asks companies to calculate the monetary value of assets exposed to climate hazards. UK SRS S1 covers broader sustainability topics and follows on a later timeline.
Below is a complete guide to what the UK sustainability reporting standards require, who must comply, the FCA consultation timeline, and the nine amendments that distinguish UK SRS from IFRS S2.
What Are the UK Sustainability Reporting Standards?
The UK government published UK SRS S1 and UK SRS S2 on 25 February 2026 through the Department for Business and Trade (DBT). These standards are the UK’s endorsed version of IFRS S1 (General Requirements) and IFRS S2 (Climate-Related Disclosures), originally issued by the International Sustainability Standards Board (ISSB) in June 2023.
UK SRS S1 sets the general framework for sustainability disclosure. UK SRS S2 focuses specifically on climate-related risks and opportunities. Both standards are structured around four disclosure pillars inherited from the TCFD framework: Governance, Strategy, Risk Management, and Metrics and Targets.
The standards are currently available for voluntary adoption by any UK entity. The Financial Conduct Authority (FCA) is consulting on making UK SRS S2 mandatory for listed companies from January 2027, with UK SRS S1 following on a comply-or-explain basis from January 2029.
UK SRS replaces the existing TCFD-aligned listing rules that have governed climate disclosure for UK-listed companies since 2021. The transition from TCFD to UK SRS brings more granular requirements, including quantitative physical risk metrics that TCFD did not explicitly mandate.
Who Must Comply With UK SRS?
FCA-Listed Companies (Mandatory from 2027)
The FCA’s consultation paper CP26/5 proposes mandatory UK SRS S2 reporting for the same categories of listed issuers currently covered by TCFD requirements. These include commercial companies listed under UKLR Chapter 6, secondary listings under UKLR 14, depositary receipts under UKLR 15, non-equity and non-voting equity shares under UKLR 16, and transition category companies under UKLR 22.
Exclusions
Several categories of listed entities fall outside the mandatory scope. Closed-ended investment funds, shell companies, debt and debt-like securities, securitised derivatives, and warrants or options are all excluded. The FCA determined that these entities either lack material climate risk exposure or face impractical reporting burdens relative to their structure.
Broader Government Plans
The UK government’s Modernising Corporate Reporting (MCR) programme may extend UK sustainability reporting standards to large private companies through amendments to the Companies Act 2006. The scope thresholds for private company reporting have not yet been defined, but a consultation is expected in 2026. Any entity can voluntarily adopt UK SRS S1 and S2 immediately, regardless of listing status or size.
UK SRS Timeline: Key Dates
The implementation timeline spans from the original ISSB standards publication through to full mandatory compliance. The FCA consultation on listing rule amendments closed on 20 March 2026, with a policy statement expected in autumn 2026.
| Date | Event | Status |
|---|---|---|
| June 2023 | ISSB publishes IFRS S1 and S2 | Complete |
| Jun-Sep 2025 | UK consultation on exposure draft | Complete |
| Dec 2025 | ISSB GHG amendments issued | Complete |
| 30 Jan 2026 | FCA publishes consultation CP26/5 | Complete |
| 25 Feb 2026 | DBT publishes final UK SRS S1 and S2 | Complete |
| 20 Mar 2026 | FCA consultation closes | Complete |
| Autumn 2026 | FCA Policy Statement expected | Upcoming |
| 1 Jan 2027 | UK SRS S2 mandatory (excl. Scope 3) | Mandatory |
| 1 Jan 2028 | Scope 3 GHG emissions (comply or explain) | Phase 2 |
| 1 Jan 2029 | UK SRS S1 non-climate sustainability (comply or explain) | Phase 3 |
One critical difference from IFRS S2: there is no first-year timing relief under UK SRS. Companies must publish sustainability disclosures simultaneously with their financial statements from day one. IFRS S2 allowed entities to defer publication in the first reporting year. The UK Technical Advisory Committee (TAC) recommended removing this relief because separate publication reduces utility for investors comparing financial and sustainability data side by side.
The Four Disclosure Pillars
UK SRS S2 inherits the four-pillar structure from TCFD and IFRS S2. Each pillar contains specific disclosure requirements tied to paragraph references in the standard.
Governance (Paragraphs 5-8): Companies must describe the governance body responsible for overseeing climate-related risks and how climate considerations are integrated into the entity’s strategy, major transactions, and risk management processes.
Strategy (Paragraphs 10-22): Companies must identify specific climate risks (classified as acute physical, chronic physical, or transition), describe their effects on the business model and value chain, quantify financial effects, and assess climate resilience through scenario analysis.
Risk Management (Paragraphs 24-26): Companies must describe the processes used to identify, assess, prioritise, and monitor climate risks. Disclosures must include the data sources and input parameters used for risk assessment.
Metrics and Targets (Paragraphs 29-37): Companies must report seven cross-industry metrics, including greenhouse gas emissions across all three scopes and a quantitative physical risk exposure metric. Paragraph 29(c) requires companies to disclose “the amount and percentage of assets or business
UK SRS S2 carries Paragraph 29(c) verbatim from IFRS S2. The same four definitional questions on amount, denominator, vulnerability, and scope apply. A paragraph-cited walkthrough covers each.
activities vulnerable to climate-related physical risks.” Unlike TCFD’s largely qualitative approach, UK SRS demands a monetary figure.
9 Amendments: How UK SRS S2 Differs From IFRS S2
The UK endorsement process made nine targeted amendments to IFRS S2. None of these changes modify the physical risk disclosure requirements. The amendments focus on GHG methodology, regulatory timing, and reducing dependence on US-centric standards.
| # | Amendment | IFRS S2 | UK SRS S2 | Impact |
|---|---|---|---|---|
| 1 | First-year timing relief | Allowed | Removed | Must report simultaneously with financials from day one |
| 2 | Non-climate relief timeframe | 1-2 year limit | No time limit | Regulatory authorities set mandatory timing |
| 3 | Industry classification | GICS mandatory | Any recognised system | Reduces US-centric requirement for financed emissions |
| 4 | Effective date | 1 Jan 2024 | Removed | Set by FCA/Companies Act, not the standard itself |
| 5 | SASB guidance | “Shall” refer to | “May” refer to | Industry-specific guidance is optional, not required |
| 6 | Relief timeframes | Specific periods | Removed | Regulatory authorities control phasing |
| 7 | Compliance statements | Not addressed | Paras 73A-73B added | Prevents misleading compliance claims |
| 8 | Financed emissions | No explain mechanism | Para B59A added | Financial institutions can explain inability to comply |
| 9 | Dec 2025 GHG amendments | Separate update | Incorporated | Category 15 limitation, derivatives exclusion, GWP flexibility |
Most Substantive Change: SASB “Shall” to “May”
The single most impactful amendment is the shift from mandatory to optional SASB industry guidance. Under IFRS S2, entities “shall” refer to and consider the applicability of SASB Standards when identifying climate risks and preparing disclosures. UK SRS S2 changes this to “may,” affecting Paragraphs 12, 23, and 32.
The TAC recommended this change for three reasons. SASB Standards are US-centric and have not undergone the same due process as ISSB standards. Requiring UK companies to apply US-developed industry guidance creates unnecessary compliance friction. And the amendment does not eliminate industry-specific disclosure obligations. Companies still need to report risks relevant to their sector; they simply have more flexibility in how they identify those risks.
No First-Year Timing Relief
IFRS S2 allows entities to publish sustainability disclosures after their financial statements in the first reporting year. UK SRS removes this option entirely. Sustainability and financial reports must be published together from the start. The practical effect is a compressed implementation timeline for companies that have not been voluntarily preparing UK SRS-aligned data.
December 2025 GHG Amendments Incorporated
The ISSB issued amendments to IFRS S2 in December 2025 addressing practical challenges with greenhouse gas reporting. The UK chose to incorporate these directly into the standard at endorsement rather than issuing a separate update. Key provisions include limiting Scope 3 Category 15 to financed emissions only (excluding facilitated and insurance-associated emissions), excluding derivatives from financed emissions calculations, and allowing jurisdictional GWP values instead of mandating the latest IPCC Assessment Report figures.
Physical Risk Disclosure Under UK SRS S2
Physical risk requirements under UK SRS S2 are identical to IFRS S2. None of the nine UK amendments modify the physical risk paragraphs. Companies familiar with IFRS S2’s physical risk framework can apply the same approach to UK SRS compliance.
The standard defines physical risks as event-driven acute hazards (storms, floods, droughts, heatwaves) and longer-term chronic shifts (precipitation changes, temperature rise, sea level rise, reduced water availability). Companies must classify each identified risk as acute or chronic, assign time horizons (short, medium, long term as entity-defined), and describe the geographic concentration of exposure across their operations and value chain.
Scenario analysis (Paragraph 22) requires companies to assess climate resilience using a diverse range of climate scenarios. Appendix B12 notes that entities with “heightened exposure to physical climate-related risks” should use “a localised climate-related scenario that takes into account current policies.” Companies must disclose which scenarios they used, the time horizons covered, and the scope of operations included in the analysis.
Paragraph 29(c) represents the most significant step-up from TCFD. Companies must disclose “the amount and percentage of assets or business activities vulnerable to climate-related physical risks.” TCFD asked for qualitative discussion of physical risk exposure. UK SRS S2 demands a monetary figure and a percentage. Meeting this requirement needs location-level hazard data under multiple climate scenarios and time horizons.
UK-listed companies moving from TCFD to mandatory UK SRS S2 reporting face a step change in quantitative rigor. Platforms like Continuuiti provide 12-hazard, multi-scenario assessment data that turns this from an estimation exercise into a calculation, with flood damage estimates that directly quantify asset-level exposure.
UK SRS vs IFRS S2 vs CSRD: Key Differences
Companies operating across multiple jurisdictions often need to navigate overlapping disclosure requirements. The three major frameworks differ in materiality approach, scope, and specific requirements.
| Element | UK SRS S2 | IFRS S2 | CSRD/ESRS |
|---|---|---|---|
| Materiality | Financial only | Financial only | Double materiality |
| Scope | UK-listed companies | Jurisdiction-dependent | ~50,000 EU companies |
| SASB guidance | Optional (“may”) | Required (“shall”) | Not referenced |
| Physical risk metric | Para 29(c): amount + % | Para 29(c): amount + % | ESRS E1-2: screening |
| Mandatory from | Jan 2027 (proposed) | Varies by jurisdiction | FY 2024 (Wave 1) |
| Scope 3 | Comply-or-explain (2028) | Year-one relief | ESRS E1-6 (phased) |
| Assurance | Disclosure-based | Not specified | Limited, moving to reasonable |
UK SRS and IFRS S2 both use financial materiality, focusing on information relevant to investor decision-making. CSRD applies double materiality, requiring companies to report both the financial impact of climate risks on the company and the company’s impact on the environment.
The most practical difference for UK companies with EU operations is scope. CSRD applies to approximately 50,000 EU companies based on employee count and revenue thresholds. UK SRS currently targets only listed issuers. A dual-listed company may need to satisfy both frameworks, though the ISSB and EFRAG have published interoperability guidance to reduce duplication.
For physical risk data, the requirements converge. Both UK SRS S2 (Paragraph 29(c)) and CSRD/ESRS E1-2 require companies to identify, assess, and quantify physical climate risk exposure across their operations. Companies building a physical risk data capability for one framework can reuse it across both.
How to Prepare for UK SRS S2 Compliance
The FCA policy statement is expected in autumn 2026, leaving limited runway before the January 2027 mandatory start date. Companies already reporting under TCFD have a foundation to build on, but several areas require material upgrades.
1. Map the gap from TCFD to UK SRS. Review your current TCFD disclosures against UK SRS S2 paragraph requirements. The most common gaps are quantitative physical risk metrics (Paragraph 29(c)), formal scenario analysis with disclosed methodology (Paragraph 22), and cross-industry emissions metrics across all three scopes.
2. Source physical risk data for Paragraph 29(c). The requirement to disclose monetary amounts and percentages of assets vulnerable to physical risks needs location-level hazard assessments under multiple climate scenarios and time horizons. Identify your asset and facility locations, determine which climate hazards are material to each location, and select data providers that can deliver scenario-aligned projections. Read more about how climate risk assessments work in our climate risk methodology documentation.
3. Build Scope 3 readiness. While Scope 3 operates on a comply-or-explain basis from January 2028, data collection and supply chain engagement take time. Starting early avoids a scramble in year two.
4. Integrate climate oversight into governance. UK SRS S2 requires disclosure of how governance bodies oversee climate risks and whether climate considerations factor into remuneration policies. Board-level accountability structures should be formalised before the first reporting period.
5. Plan for assurance. The FCA proposes a disclosure-based approach to assurance rather than mandating third-party verification. However, investor expectations and peer practices are pushing toward external assurance. The FRC has established a voluntary oversight regime for sustainability assurance providers, signalling that mandatory assurance is likely to follow.
Frequently Asked Questions
Is UK SRS S2 mandatory?
Not yet. UK SRS S2 was published on 25 February 2026 and is currently available for voluntary adoption. The FCA is consulting on making it mandatory for UK-listed companies from 1 January 2027. A policy statement confirming the mandatory date is expected in autumn 2026.
What is the difference between UK SRS and IFRS S2?
UK SRS S2 is the UK-endorsed version of IFRS S2 with nine targeted amendments. The most substantive change makes SASB industry guidance optional rather than mandatory. Other amendments remove the first-year timing relief, incorporate December 2025 GHG amendments, and add UK-specific compliance statement provisions. Physical risk disclosure requirements are identical between the two standards.
What is the difference between CSRD and UK SRS?
CSRD uses double materiality, requiring companies to report both the financial impact of climate risks and the company’s impact on the environment. UK SRS uses financial materiality only, focused on investor decision-making. CSRD applies to approximately 50,000 EU companies. UK SRS targets UK-listed companies. CSRD implements ESRS technical standards; UK SRS follows IFRS S2 with nine UK-specific amendments.
Does UK SRS replace TCFD?
Yes. The FCA proposes replacing current TCFD-aligned listing rules (DTR 7.2A and UKLR 9.8.6R(8)) with UK SRS requirements. The TCFD task force was disbanded in October 2023, with its responsibilities transferred to the ISSB and IFRS Foundation. Companies currently reporting under TCFD will need to upgrade to the more granular UK SRS requirements.
What is UK SRS S1 vs S2?
UK SRS S1 covers general sustainability disclosure requirements beyond climate. UK SRS S2 focuses specifically on climate-related risks and opportunities. S2 is proposed to be mandatory from January 2027. S1 follows on a comply-or-explain basis from January 2029. Companies can report under S2 without also reporting under S1 during the transition period.
Who does UK SRS apply to?
UK SRS mandatory reporting applies to UK-listed companies, including commercial companies, secondary listings, depositary receipts, and transition category companies. Closed-ended investment funds, shell companies, and debt securities are excluded. The UK government may extend UK SRS to large private companies through Companies Act amendments, with scope thresholds still to be defined.
What data do I need for UK SRS S2 physical risk disclosure?
Paragraph 29(c) requires the monetary amount and percentage of assets or business activities vulnerable to climate-related physical risks. Meeting this requirement needs location-level hazard data covering acute risks (floods, storms, heatwaves) and chronic risks (temperature rise, sea level rise, water stress) under multiple climate scenarios and time horizons. Paragraph 22 additionally requires scenario analysis assessing climate resilience.
Moving From TCFD to Quantitative Climate Disclosure
The UK sustainability reporting standards mark a structural shift in how UK-listed companies report climate risk. Where TCFD encouraged qualitative discussion of physical and transition risks, UK SRS S2 requires specific monetary values, percentage exposures, and scenario-based resilience assessments backed by disclosed methodologies and data sources.
Companies that have been reporting under TCFD have a head start on governance and strategy disclosures. The areas requiring the most work are quantitative physical risk metrics under Paragraph 29(c), formal scenario analysis with documented inputs and scope, and the removal of first-year timing relief that compresses the implementation window. Starting data sourcing and gap assessment now provides the best chance of a smooth transition when mandatory reporting begins in January 2027.
