UK SRS for Private Companies — What's Coming and How to Prepare

The Government's Stated Intention

The UK Government has made clear, through its Green Finance Strategy and subsequent policy statements, that it intends to extend mandatory sustainability reporting obligations to large private companies and limited liability partnerships. The mechanism for this extension will be amendments to the Companies Act 2006, which provides the primary legislative framework for corporate reporting in the UK. This mirrors the approach taken with the Task Force on Climate-related Financial Disclosures, where TCFD-aligned reporting was initially required of premium-listed companies before being extended to large private companies through the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022.

The extension to private companies is a deliberate policy choice. The Government's position is that climate-related risks are not confined to publicly traded entities. Large private companies, particularly those with significant workforces, substantial revenue, or material environmental footprints, are equally exposed to transition and physical risks. Moreover, listed companies that are required to disclose Scope 3 emissions under UK SRS will depend on their private company suppliers and customers to provide the underlying data. Extending the regime to private companies supports the integrity of the entire reporting ecosystem.

Mirroring the TCFD Approach

The precedent set by the TCFD extension is instructive. When TCFD was extended to private companies, the Government used a phased approach. The initial regulations applied only to companies that met two of three size thresholds: more than 500 employees, turnover of more than 500 million pounds, and a balance sheet total of more than 500 million pounds. The scope was subsequently broadened through the non-financial reporting review process. The same incremental approach is expected for UK SRS.

The Government has indicated that UK SRS extension will target "economically significant" private companies. This term has not been formally defined in legislation, but the policy intent is to capture private companies whose size and economic impact justify the compliance costs associated with sustainability reporting. The thresholds are expected to be set by reference to employee numbers, turnover, and balance sheet size, consistent with existing Companies Act size classifications. However, the precise thresholds have not yet been confirmed, and they will be the subject of a separate consultation process.

LLPs and Other Entity Types

Limited liability partnerships are explicitly included in the Government's stated scope. LLPs occupy a significant position in the UK economy, particularly in professional services, real estate, and private equity. Under existing non-financial reporting requirements, qualifying LLPs are already subject to strategic report obligations and, where applicable, TCFD-aligned disclosures. The extension of UK SRS to LLPs is a natural progression of this framework.

The position of other entity types — such as unregistered companies, building societies, and mutual organisations — is less clear. The Government's initial focus is on companies registered under the Companies Act and LLPs registered under the Limited Liability Partnerships Act 2000. Sector-specific regulators, such as the Prudential Regulation Authority for banks and insurers, may impose UK SRS or equivalent requirements on regulated entities through their own supervisory frameworks.

Thresholds Not Yet Confirmed

The absence of confirmed thresholds is one of the most significant uncertainties for private companies. The Government has indicated that thresholds will be set through secondary legislation, following a consultation process expected to begin in 2026. Until the consultation is published, companies cannot know with certainty whether they will fall within scope.

However, reasonable assumptions can be drawn from existing frameworks. The TCFD extension applied to companies with more than 500 employees and either turnover or a balance sheet exceeding 500 million pounds. The EU's Corporate Sustainability Reporting Directive applies to companies with more than 250 employees and either turnover exceeding 50 million euros or a balance sheet exceeding 25 million euros. The UK thresholds for UK SRS are likely to fall somewhere in this range, depending on the Government's assessment of the appropriate balance between the policy benefits of wider reporting and the compliance costs for affected companies.

Separate Consultation Expected in 2026

The Department for Business and Trade is expected to launch a separate consultation on the extension of UK SRS to private companies during 2026. This consultation will address the scope of the extension, including the size thresholds, the effective date, any transitional provisions, and the interaction with existing reporting obligations such as SECR and the current TCFD-aligned requirements. The consultation will also consider whether any modifications to the standards are necessary for private companies — for example, whether simplified disclosure requirements are appropriate for companies that are not exposed to capital market scrutiny in the same way as listed entities.

Companies that expect to fall within scope should monitor the consultation process closely and consider responding. The thresholds and transitional provisions that emerge from the consultation will have a direct impact on the cost and timing of compliance.

What Private Companies Should Do Now

Despite the uncertainty about thresholds and timing, private companies that are likely to fall within scope should not wait for the consultation to begin preparing. The experience of listed companies that delayed TCFD preparation demonstrates that retroactive compliance is significantly more expensive and disruptive than proactive readiness. The following steps are recommended.

Gap Analysis Against UK SRS S2

Companies should conduct a structured gap analysis against the requirements of UK SRS S2, which addresses climate-related disclosures. This analysis should identify the specific disclosures required under each of the four pillars — governance, strategy, risk management, and metrics and targets — and assess the company's current capability to produce each disclosure. The gap analysis should distinguish between data gaps (where the required information does not exist), process gaps (where information exists but is not collected or reported in the required format), and governance gaps (where the oversight and decision-making structures required by the standards are not in place).

Scope 1 and Scope 2 Data Quality

Scope 1 and Scope 2 greenhouse gas emissions are the foundation of UK SRS climate disclosures. Private companies that currently report under SECR will already have some capability in this area, but the level of rigour required by UK SRS is higher. Companies should review the completeness and accuracy of their emissions data, ensure that emission factors are current and appropriate, and verify that their organisational and operational boundaries are correctly defined. Activity data should be based on actual measurements where available, with estimates used only where direct measurement is not feasible.

TCFD-to-UK SRS Transition Planning

Companies that currently prepare TCFD-aligned disclosures are better positioned than those starting from scratch, but the transition from TCFD to UK SRS is not a simple relabelling exercise. UK SRS introduces several requirements that go beyond TCFD, including the statement of compliance, mandatory climate scenario analysis with financial quantification, and more granular disclosure of metrics and targets. Companies should map their existing TCFD disclosures to the UK SRS requirements and identify the areas where additional work is needed.

Governance Structures

UK SRS S1 requires detailed disclosure of the governance processes, controls, and procedures that a company uses to monitor, manage, and oversee sustainability-related risks and opportunities. For private companies, this may require establishing or formalising governance arrangements that do not currently exist. Boards should consider whether a dedicated sustainability committee or a clear mandate within an existing committee is appropriate, whether management-level responsibilities for sustainability reporting are clearly defined, and whether the board has access to the skills and expertise needed to oversee climate-related disclosures. Building these structures now, rather than in response to a regulatory deadline, allows companies to embed them into their decision-making processes rather than treating them as a compliance overlay.