The UK has adopted the International Sustainability Standards Board’s first two standards, IFRS S1 and IFRS S2, as UK Sustainability Reporting Standards (UK SRS S1 and UK SRS S2), published on 25 February 2026 for voluntary use. The first mandatory use comes through the FCA: under Policy Statement PS26/19, companies with listed shares in the main commercial categories must report against UK SRS on a comply or explain basis for accounting periods starting on or after 1 January 2027, with first reports in 2028. No equivalent requirement has yet been set for unlisted companies.

What are UK SRS S1 and UK SRS S2?

They are the UK endorsed versions of the ISSB standards, which the ISSB issued on 26 June 2023. UK SRS S1 sets the general requirements for disclosing sustainability related financial information. UK SRS S2 deals specifically with climate.

The focus is investors, not wider stakeholders. Paragraph 1 of IFRS S1 targets information useful to primary users of financial reports deciding whether to provide resources to the entity. A risk or opportunity is in scope if it could reasonably be expected to affect the entity’s cash flows, access to finance or cost of capital over the short, medium or long term.

Paragraph 25 of IFRS S1 organises the disclosures under four headings familiar from TCFD reporting:

  • Governance: the processes, controls and procedures used to monitor and manage sustainability related risks and opportunities.
  • Strategy: how the entity manages those risks and opportunities.
  • Risk management: how it identifies, assesses, prioritises and monitors them.
  • Metrics and targets: how it measures performance, including progress towards targets.

Paragraph 64 of IFRS S1 requires the sustainability disclosures to be reported at the same time as the related financial statements and to cover the same period. Under paragraph 29 of IFRS S2, the climate standard requires absolute gross greenhouse gas emissions in tonnes of CO2 equivalent, split into Scope 1, Scope 2 and Scope 3, measured in accordance with the Greenhouse Gas Protocol Corporate Standard (2004) unless a jurisdictional authority or exchange requires another method.

How did the UK adopt the ISSB standards?

Endorsement sits with the Secretary of State for Business and Trade, advised by a Technical Advisory Committee whose secretariat is provided by the FRC. A Policy and Implementation Committee of regulators and departments, including the FCA and HM Treasury, coordinates implementation.

Date Step
26 June 2023 ISSB publishes IFRS S1 and IFRS S2
December 2024 Technical Advisory Committee recommends endorsement with minor amendments
25 June to 17 September 2025 Government consults on exposure drafts of UK SRS S1 and S2
25 February 2026 Final UK SRS S1 and S2 published with the government response
7 September 2026 Modernising Corporate Reporting consultation opens (closes 30 November 2026)
30 September 2026 FCA publishes final listing rules in PS26/19

The standards themselves create no obligation. They are available for voluntary use by any entity, and any requirement to report has to come from the FCA’s rules, the Companies Act 2006 or another regulator with the power to mandate them.

How do the UK versions differ from IFRS S1 and S2?

The government endorsed IFRS S1 and S2 with a small number of amendments, aiming to stay as close as possible to the ISSB baseline for global consistency. The main changes are:

  • No late first year reporting. IFRS S1 allows an entity in its first year to publish sustainability disclosures after its financial statements. The UK removed that relief, so UK SRS disclosures come out with the accounts.
  • Climate first relief without a fixed end date. IFRS S1 lets a first time reporter cover only climate in year one. The UK removed the specific time limit from this relief and from the Scope 3 relief for voluntary users, leaving the FCA, the Companies Act or another regulator to limit or remove it when they impose a requirement.
  • No effective date. IFRS S1 applies for annual periods beginning on or after 1 January 2024. The UK standards carry no effective date; dates are set by whichever rule makes reporting compulsory.
  • Financed emissions. A new paragraph B59A in UK SRS S2 lets financial institutions that cannot yet meet the financed emissions requirements explain their measurement approach and their plan to comply in full.
  • Industry guidance softened. References to the SASB based industry guidance changed from “shall” to “may”, though industry specific metrics are still required.

The government also confirmed that a voluntary user may state compliance with UK SRS S2 while using reliefs, provided it discloses the reliefs used. A company that uses the climate only relief cannot claim compliance with UK SRS S1.

Which listed companies have to report, and from when?

PS26/19 replaces the FCA’s existing TCFD aligned climate rules, which were introduced for premium listed companies in 2020 and extended to other listed issuers in 2021. The new rules apply to companies with shares in the commercial companies category, the transition category, the non equity shares and non voting equity shares category, and the secondary listing and depositary receipts categories.

The rules apply to accounting periods beginning on or after 1 January 2027, with first reporting in 2028. The FCA originally proposed making UK SRS S2 climate reporting mandatory but moved to a comply or explain approach across the whole framework in the final rules. Two transitional reliefs apply, during which an explanation is not required for not reporting: one year for Scope 3 emissions and two years for the wider UK SRS S1 disclosures.

Closed ended investment funds (UKLR 11), open ended investment companies (UKLR 12), shell companies (UKLR 13) and issuers of debt and similar securities are outside the scope. The FCA is not requiring transition plans. Instead, issuers outside the secondary listing and depositary receipts categories must say whether they have published a climate transition plan and where it can be found, or state why not. Listed companies must also say whether they have obtained third party assurance over their UK SRS disclosures and, if so, from whom, over which disclosures, to what level and under which standards; no explanation is required where assurance has not been sought.

The FCA is consulting until 28 October 2026 on Technical Note 803.1 on applying comply or explain proportionately. For listed groups that use IFRS for their accounts, our page on when UK companies use IFRS covers the financial reporting side.

What does this mean in practice for a listed company?

Illustration only. A listed company with a 31 December year end has its first in scope period from 1 January 2027 to 31 December 2027 and reports in its 2027 annual financial report, published in 2028. A company with a 31 March year end has its first in scope period from 1 April 2027 to 31 March 2028, because that is the first period beginning on or after 1 January 2027.

In each case the company applies UK SRS S2 on a comply or explain basis from the first period. In year one it can omit Scope 3 emissions without explanation, and for two years it can confine itself to climate without explaining the omission of wider UK SRS S1 topics. After that, anything not disclosed needs a proportionate explanation.

Do unlisted companies and LLPs have to use UK SRS?

Not yet. Large unlisted companies already have climate reporting duties under the Companies Act 2006, which pre date UK SRS. Section 414CA requires a non financial and sustainability information statement in the strategic report of companies with more than 500 employees that are traded, banking, insurance or AIM companies, and of other companies with more than 500 employees and turnover above £500 million. Companies subject to the small companies regime or qualifying as medium sized are excluded. Equivalent rules for large LLPs apply, and these duties began with accounting periods starting on or after 6 April 2022.

The government has confirmed that UK SRS S2 is a national reporting framework for section 414CB(6), so a company can use its UK SRS S2 disclosures to meet the Companies Act climate requirements rather than reporting twice. A post implementation review of the 2022 climate disclosure regulations is due by spring 2027, and the Modernising Corporate Reporting consultation says the government will consider how UK SRS should be reflected in the Companies Act. Directors should note that the section 463 protection for statements in the strategic report only covers UK SRS disclosures placed within the strategic report.

What does it mean for small and medium sized businesses?

There is no direct requirement, and the government has said it has no plans at this stage to require assurance over UK SRS reporting. Smaller businesses can still be affected indirectly: a listed customer reporting Scope 3 emissions may ask suppliers for energy or emissions data, and lenders may ask similar questions. Voluntary use, in whole or in part, is allowed.

Sustainability reporting is separate from the accounting framework itself; see our explainer on FRS 102 and the comparison of IFRS and FRS 102.

What mistakes do people make about UK SRS?

  • Treating it as the EU regime. UK SRS is not the European Sustainability Reporting Standards.
  • Assuming comply or explain means optional. An explanation has to be given where a disclosure is omitted once the reliefs end, the FCA’s rules require that explanation to include certain information, and its draft technical note covers how to make it proportionate.
  • Claiming full compliance while using reliefs. A voluntary user must disclose any reliefs used, and climate only reporting cannot be described as compliance with UK SRS S1.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.