February 2026 marked the publishing of the UK government’s Sustainability Reporting Standards S1 and S2 (UK SRS S1 and S2), following consultations held in 2025.
The UK SRSs were developed with the International Sustainability Standards Board (ISSB) and International Financial Reporting Standards IFRS S1 and IFRS S2 in mind. IFRS S1 and S2 are voluntary sustainability reporting standards which cover the disclosure of sustainability information, particularly focussing on climate-related risks and opportunities.
The UK’s SRSs are also voluntary at the moment, but mandatory implementation is anticipated. The Financial Conduct Authority (FCA) consulted in early 2026) on making the UK SRSs mandatory for certain listed companies to replace current Task Force on Climate-related Financial Disclosure (TCFD)-aligned mandatory reporting, following the disbanding of TCFD in 2023*. A response to the consultation is expected in Autumn 2026.
*TCFD-aligned disclosure requirements in annual reports remain in place currently for large UK companies and LLPs under The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 and The Limited Liability Partnerships (Climate-related Financial Disclosure) Regulations 2022.
Mandatory reporting could apply for some listed companies to financial years beginning from 1st January 2027 onwards. It is also expected that the UK government will launch a consultation later this year regarding expanding the mandatory application of the UK SRSs to further companies in the UK.
The core pillars of the UK SRSs are:
- governance,
- strategy,
- risk management; and
- metrics and targets.
This is aligned with IFRS S1 and S2 and TCFD meaning if you have previously reported under TCFD, you will be familiar with the structure. UK SRS S1 includes disclosures around general sustainability issues and related business / financial issues, while UK SRS S2 dives further into climate-specific risks including physical risk* and transition risk**, as well as climate-related opportunities that are available to an organisation.
*Climate-related physical risks are defined as those resulting from climate change. These can be ‘acute physical risks’ which arise from weather-related events like storms, flooding and drought, or ‘chronic physical risks’ which are caused by long-term climatic shifts such as changes in precipitation and temperature patterns which lead to issues including biodiversity loss, soil productivity changes and sea level rise.
**Climate-related transition risks are those which are caused by the transition to a lower-carbon economy including policy, legal, technological, market and reputational risks.
While it remains to be confirmed when mandatory implementation will apply from, it is likely that listed companies will be required to report according to the UK SRSs for reporting years from 1st January 2027 onwards, and that further large companies in the UK will be brought into scope in the future. Given the alignment with the global IFRS S1 and S2 standards and the likely shift of the UK sustainability reporting landscape to the UK SRSs, companies may wish to begin conducting gap analyses or voluntarily applying the standards to their reporting regime now in preparation.
