UK Sustainability Reporting Standards (UK SRS): The Ultimate Guide for Businesses

Introduction

On 25 February 2026, the Department for Business and Trade (DBT) published the finalised UK Sustainability Reporting Standards - UK SRS S1 and UK SRS S2. These are the UK's endorsed version of the ISSB's global baseline standards (IFRS S1 and IFRS S2), adapted for the domestic regulatory context.

The UK had been an early mover with TCFD-aligned reporting, but the landscape shifted when the ISSB published IFRS S1 and S2 in June 2023 and the TCFD was formally disbanded. More than 30 jurisdictions have since committed to adopting ISSB-aligned standards. The UK SRS ensures UK disclosures remain globally interoperable. The FCA has now confirmed that listed companies must report against UK SRS from accounting periods starting on or after 1 January 2027, on a comply or explain basis.

What's the Difference Between UK SRS S1 and S2

UK SRS S1: General Sustainability Disclosures

S1 establishes the foundational architecture for the whole framework. It covers all sustainability topics - biodiversity, water, workforce, supply chain - wherever financially material to the reporting entity. It defines materiality, sets principles for connecting sustainability disclosures to financial statements, and establishes general governance, strategy, risk management, and metrics requirements.

UK SRS S2: Climate-Related Disclosures

S2 applies the S1 framework specifically to climate. Key requirements include board-level climate governance, strategy disclosures showing how climate risks affect the business model, quantitative scenario analysis, and full Scope 1, 2, and material Scope 3 GHG emissions. S2 builds directly on TCFD but demands significantly greater depth - particularly around financial quantification and emissions coverage.

Connection to ISSB

The UK SRS are substantively the ISSB's IFRS S1 and S2, with only minor amendments: removal of fixed transitional relief dates (left to regulators to determine) and alignment with the December 2025 revisions to IFRS S2. This deliberate closeness to the ISSB baseline means multinationals can meet both UK and international investor expectations through a single coherent report. UK SRS S2 also constitutes a 'national reporting framework' under s.414CB(6) of the Companies Act 2006, meaning companies already subject to TCFD-aligned statutory requirements can satisfy them by reporting under S2.

Report Structure: The Four Pillars

Like TCFD, the UK SRS organises disclosures around four interconnected pillars that apply to both S1 and S2.

1. Governance

Board and management processes for monitoring and overseeing sustainability-related risks and opportunities, including integration into financial planning.

2. Strategy

How risks and opportunities affect the business model and financial plans over the short, medium, and long term. For S2, includes climate scenario analysis demonstrating resilience under different climate pathways.

3. Risk Management

How sustainability-related risks are identified, assessed, prioritised, and monitored - and how this integrates with overall enterprise risk management.

4. Metrics & Targets

Quantitative performance data, including GHG emissions across Scopes 1, 2, and 3, relevant KPIs, targets, and progress against transition plans.

How Does UK SRS Differ from TCFD and SECR?

UK SRS vs TCFD

TCFD was disbanded in October 2023, its work absorbed by the ISSB. UK SRS S2 preserves the four-pillar structure but raises the bar significantly: more rigorous and financially quantified scenario analysis, full Scope 3 disclosure (subject to transitional reliefs), and explicit linkage to financial statements.

The FCA’s final rules replace its TCFD-aligned rules for accounting periods starting on or after 1 January 2027. Periods starting before then stay on the current rules. Companies with established TCFD processes have a strong foundation but should not underestimate the uplift required.

UK SRS vs SECR

SECR requires large companies to include Scope 1 and 2 emissions and energy consumption data in their directors' reports. It has no strategic, governance, or scenario analysis requirements. The Government has committed to reviewing how SECR interacts with UK SRS to reduce duplication, and SECR is widely expected to be phased out or substantially revised as UK SRS becomes the primary mandatory framework - though no formal timeline has been confirmed.

When will the UK SRS be fully finalised in implementation?

The development of the UK sustainability reporting framework has taken place over several years and is now moving into its implementation phase. The key milestones are set out below.

• November 2021 – The International Sustainability Standards Board (ISSB) is launched at COP26 in Glasgow, establishing a global baseline for sustainability disclosure standards.
• June 2023 – The ISSB publishes its first two standards, IFRS S1 (general sustainability disclosures) and IFRS S2 (climate-related disclosures).
• October 2023 – The TCFD is formally disbanded, with its recommendations effectively incorporated into the ISSB framework.
• 2024 – The UK Government begins the formal process of assessing whether the ISSB standards should be adopted in the UK.
• January 2025 – The PIC concludes that IFRS S1 and S2 are consistent with UK public policy objectives, clearing the way for the development of UK-specific Sustainability Reporting Standards (UK SRS).
• June 2025 – The Department for Business and Trade (DBT) publishes exposure drafts of UK SRS S1 and S2 for consultation, beginning the process of adapting the ISSB standards for UK use.
• December 2025 – The ISSB publishes targeted amendments to IFRS S2. These amendments are incorporated into the UK’s finalisation of the standards.
• 30 January 2026 – The Financial Conduct Authority (FCA) publishes Consultation Paper CP26/5, proposing that listed companies should be required to report in line with the UK Sustainability Reporting Standards from January 2027.
• 25 February 2026 – DBT publishes the final versions of UK SRS S1 and S2. These standards are available for voluntary use immediately, ahead of any mandatory reporting requirements.
• 20 March 2026 – Deadline for responses to the FCA’s consultation on mandatory reporting requirements.
• September 2026: the FCA publishes its final rules (Policy Statement PS26/19). The Board made the instrument on 24 September.

Despite this progress, several important aspects of the framework still need to be finalised.

• Private company requirements – The Government is expected to consult during 2026 on extending mandatory sustainability reporting to large private companies and LLPs, potentially through amendments to the Companies Act.
• Assurance regime – Assurance stays voluntary under the FCA’s final rules, and the FCA is keeping mandatory assurance under review. Listed companies must state whether they have third-party assurance and, if so, who provided it, what it covered, the level and the standards used. The Financial Reporting Council (FRC) has a voluntary sustainability assurance register, and the assurance standard ISSA (UK) 5000 will apply to reporting periods beginning on or after 15 December 2026.
• Transition plans – The Government is considering mandatory climate transition plan requirements, following the Department for Energy Security and Net Zero’s call for views in 2025. The FCA’s final rules do not require a plan. Listed companies must state whether they have one and where it is, or why not.
• Interaction with SECR – The Government has not yet made formal decisions on how the new sustainability reporting framework will interact with or potentially reform the existing Streamlined Energy and Carbon Reporting (SECR) regime.

Who Will the UK SRS Apply To?

FCA-Listed Companies

The rules apply to commercial companies (UKLR 6), international secondary listings (UKLR 14), depositary receipts (UKLR 15), non-equity and non-voting shares (UKLR 16), and the transition category (UKLR 22). They don’t apply to investment funds, shell companies, or debt and debt-like securities. The proposed phased approach:

• All of UK SRS applies on a comply or explain basis from periods starting on or after 1 January 2027.
• Optional one-year relief for Scope 3, so it’s required from periods starting on or after 1 January 2028.
• Optional two-year relief for non-climate (S1) disclosures, so they’re required from periods starting on or after 1 January 2029.
• Companies using a relief must say so in their annual report but don’t need to explain why.

Listed companies must include their disclosures, or their explanations, in the annual financial report. They can cross-refer to other published reports where the standards allow it.

Large Private Companies

The Government has signalled its intention to extend UK SRS requirements to economically significant private companies and LLPs through forthcoming Companies Act amendments, mirroring the approach taken when TCFD reporting was first introduced. Thresholds and timelines are yet to be confirmed.

International Secondary Listings

Rather than full UK SRS compliance, overseas companies with a secondary listing, or listed through depositary receipts, must report against UK SRS on a comply or explain basis. They can rely on home-country reporting where it already meets UK SRS, but must explain any gaps. They don’t have to make the transition plan statement.

How to Comply with UK SRS: Key Steps

1. Gap analysis: Map existing disclosures (TCFD, SECR, GRI, CDP) against the four pillars of UK SRS S1 and S2.
2. Assess financial materiality: Review all sustainability topics through the lens of what could affect cash flows, cost of capital, or access to finance - and document that assessment rigorously.
3. Build Scope 3 capability: Construct your value chain emissions inventory in line with the GHG Protocol with clear audit trails. Scope 3 has an optional one-year relief, so listed companies must report it, or explain, from accounting periods starting on or after 1 January 2028. Even under ‘comply or explain,’ investors will scrutinise quality and coverage.
4. Integrate with finance: Establish clear processes linking sustainability data to financial statements, valuations, and capital planning assumptions.
5. Document board governance: Formally evidence board-level oversight of climate risks, including engagement with scenario analysis outputs.
6. Develop scenario analysis: UK SRS S2 asks for more financial detail than TCFD, including the current and anticipated financial effects of climate risks and opportunities, quantified where possible. Scenarios should cover both physical and transition risks.
7. Address transition planning: The FCA’s rules do not require listed companies to produce a transition plan. They must state whether they have published one and where to find it, or say why they haven’t. If you have a plan, UK SRS S2 sets out what to disclose about it.
8. Prepare for assurance: Assurance is voluntary under the FCA’s rules, but listed companies must say whether they have it and, if so, the provider, scope, level and standards used. Run internal readiness reviews now, ensuring data controls are documented and methodologies are consistent ahead of ISSA (UK) 5000.
9. Consider early voluntary adoption: Reporting voluntarily before 1 January 2027 builds investor confidence and surfaces data gaps early. Early adopters can still use the transitional reliefs when the rules apply.

UK SRS vs CSRD: Overlap and Additional Work

For businesses subject to both, the overlap is meaningful -particularly on climate. ESRS E1 aligns closely with IFRS S2/UK SRS S2, meaning strong CSRD preparation materially supports UK SRS readiness. However, UK SRS places greater emphasis on financial statement connectivity. Companies should not simply cross-reference a CSRD report without verifying that materiality assessments and financial linkages satisfy UK SRS requirements. The UK SRS represents a subset of CSRD's data demands, with a narrower materiality lens.

How will UK SRS Affect SMEs?

Smaller companies not directly subject to UK SRS will still feel its effects - primarily through supply chains and financing.

The Scope 3 Supply Chain Effect

As listed companies will need to report or explain their Scope 3 value chain emissions once the relief ends, demand for high-quality supplier emissions data will intensify significantly. Suppliers unable to provide verified, methodology-consistent data risk exclusion from procurement, lower tender scores, or being displaced by more transparent competitors. This is already visible in construction, professional services, food and retail, and is likely to grow as UK SRS takes effect.

Investor and Lender Pressure

Institutional investors, banks, and private equity funds are developing their own sustainability data requests to meet their own Scope 3 financed emissions obligations. Businesses seeking debt or equity financing will encounter UK SRS-aligned information requests as part of due diligence, regardless of whether they are formally in scope.

What Out-of-Scope Businesses Should Do

• Measure and track Scope 1 and 2 emissions accurately using the GHG Protocol
• Begin building Scope 3 data capability - even at a high level - to handle supply chain information requests
• Familiarise yourself with UK SRS requirements to respond accurately to customer sustainability questionnaires
• Voluntarily align internal reporting with UK SRS principles to build readiness ahead of any future mandatory extension

10 Frequently Asked Questions

1. What are the UK Sustainability Reporting Standards?

The UK SRS are the UK Government's endorsed version of the ISSB's IFRS S1 and S2 standards, published on 25 February 2026 by DBT. UK SRS S1 covers general sustainability disclosures; S2 covers climate. They provide a framework for disclosing material sustainability-related risks and opportunities to investors.

2. Are UK SRS mandatory?

UK SRS is voluntary for most businesses and has been available since February 2026. For listed companies, the FCA’s final rules require a disclosure or an explanation for each requirement, for accounting periods starting on or after 1 January 2027. Optional reliefs give extra time for Scope 3 (one year) and non-climate S1 disclosures (two years).

3. Who will need to comply with UK SRS?

Companies listed in the commercial companies, international secondary listing, depositary receipt, non-equity and non-voting shares, and transition categories. The rules do not apply to investment funds, shell companies, or issuers of debt and similar securities. The Government is expected to separately consult on extending requirements to large private companies and LLPs.

4. How does UK SRS differ from TCFD?

UK SRS S2 builds on TCFD's four-pillar structure but demands more: financially quantified scenario analysis, full Scope 3 disclosure, and explicit linkage between sustainability disclosures and financial statements. TCFD was disbanded in October 2023. The FCA’s final rules replace its TCFD-aligned rules for accounting periods starting on or after 1 January 2027. Periods starting before then stay on the current rules.

5. What is the difference between S1 and S2?

S1 is the general framework - applicable to any material sustainability topic (biodiversity, workforce, governance, etc.). S2 applies that framework specifically to climate risks, emissions, and transition planning. In practice, S1 provides the governance architecture; S2 is the climate lens applied within it.

6. What does 'comply or explain' mean?

Companies can choose not to make a disclosure, but must set out a summary of the requirements they have not met, the reasons, and any steps they are taking or plan to take. Optional reliefs for Scope 3 (one year) and non-climate S1 disclosures (two years) do not need an explanation, but companies must say they are using them.

7. How does UK SRS compare to the EU's CSRD?

UK SRS uses single financial materiality; CSRD uses double materiality (financial plus societal/environmental impact). CSRD's scope is far broader, covering 12 topic standards. For multinationals in scope of both, UK SRS represents a subset of CSRD's data requirements, with greater emphasis on financial statement integration.

8. Will SECR continue alongside UK SRS?

For now, yes. SECR remains in force. The Government has committed to reviewing the interaction with UK SRS to reduce duplication. A phased retirement of SECR is widely anticipated, but no formal timeline has been confirmed.

9. When will assurance be required?

The FRC has a voluntary sustainability assurance register, and ISSA (UK) 5000 applies to periods beginning on or after 15 December 2026. Assurance stays voluntary under the FCA’s rules, and the FCA is keeping mandatory assurance under review. Listed companies must state whether they have third-party assurance and, if so, the provider, scope, level, standards used and where the report can be found. Investor pressure to seek voluntary assurance is likely to be strong.

10. Does UK SRS require a net-zero transition plan?

No. UK SRS S2 does not require a transition plan, but if a company has one it must disclose certain information about it. Under the FCA’s rules, listed companies must also state whether they have published a plan and where to find it, or why they have not (secondary listings and depositary receipts are exempt from this). The Government is considering mandatory transition plan requirements.