UK SRS compliance pathway

Who this guide is for

This guide is for UK-listed companies2 in scope of FCA CP26/52 — those in UKLR categories 6, 14, 15, 16, and 222 preparing for mandatory climate-related disclosures1 from accounting periods beginning on or after UK SRS deadline2.

The pathway also serves voluntary adoption — any UK entity may apply UK SRS S1 or UK SRS S21 from 25 February 20261 on a voluntary basis9.

Many companies are doing so to build capability before the mandatory cycle begins.

The compliance pathway

Full readiness for mandatory UK SRS S2 reporting1 takes 12 to 18 months of focused work.

Companies that began voluntary preparation in early 20269 are now in months 6 to 12 of the pathway, with first mandatory accounting period beginning 1 January 20272 and first reports publishing in spring 2028 for December 2027 year-ends2.

The seven steps run partly in sequence and partly in parallel. Gap analysis and governance setup come first; data systems run as a long arc through months 3 to 12; materiality assessment depends on industry context but can begin once gap analysis surfaces relevant topics; voluntary pilot in months 9 to 15 surfaces operational issues before mandatory cycle; assurance engagement under ISSA (UK) 50003 overlaps the pilot for trial assurance; then mandatory reporting from 1 January 20272.

The FCA Policy Statement expected autumn 20262 may modify scope or timing from the CP26/5 proposals2, but the underlying work remains the same regardless of final rule amendments.

Step 1 — Gap analysis

Gap analysis maps existing climate disclosures (typically TCFD-aligned under the previous UK Listing Rules2) against the specific S2 requirements requirements1 across all four pillars.

UK SRS S2 expands TCFD substantially: scenario analysis becomes a hard requirement under paragraph 221 rather than a recommendation; supply chain emissions across the 15 GHG Protocol categories6 become required (subject to first-year implementation timeline and a CP26/5 comply-or-explain treatment from 20282).

Quantitative financial-effect disclosure becomes required1 with qualitative-only relief available only where measurement uncertainty is genuinely high; and financed emissions disclosures1 are imposed on financial services.

The gap analysis output is a prioritised remediation plan covering the four pillars: governance (paragraphs 5-71), strategy (paragraphs 8-231), risk management (paragraphs 24-261), metrics and targets (paragraphs 27-371).

Step 2 — Governance setup

Governance disclosures under UK SRS S2 paragraphs 5-71 require explicit identification of the body or individual with oversight responsibility, the controls and processes used, the skills and competencies of those involved, and consideration of trade-offs in major transactions1.

Most companies need to update audit committee or risk committee terms of reference to include sustainability oversight, and to demonstrate how climate performance considerations affect executive remuneration where relevant1.

The board's role under Companies Act 2006 section 414CB7 in approving the strategic report extends to sustainability disclosures.

Section 463 of the Companies Act 20068 provides a safe harbour for honest mistakes in forward-looking statements within the strategic report — relevant because UK SRS S2 requires forward-looking scenario analysis and transition plan disclosures1.

Step 3 — Data systems

UK SRS S2 paragraph 29(a)1 requires absolute gross GHG emissions disclosure in metric tonnes of CO2 equivalent, classified by Scope 1, Scope 2, and Scope 31.

Measurement must follow the GHG Protocol Corporate Standard (2004)5 unless a different method is required by a jurisdictional authority1.

Scope 1 and Scope 2 data systems are typically already in place for SECR7 reporters.

The major build is Scope 3 requirements across the 15 categories of the GHG Protocol Corporate Value Chain Standard6 — purchased goods and services (category 1), capital goods (category 2), upstream and downstream transportation (categories 4 and 9), use of sold products (category 11), and category 15 investments for asset managers6.

The first-year transition relief in UK SRS S21 defers Scope 3 disclosure to the second year, and FCA CP26/52 adds an optional additional one-year deferral2.

This provides breathing space — but the underlying supplier engagement and data infrastructure work takes 12 to 18 months regardless, so it must start now.

Step 4 — Materiality assessment

Materiality under UK SRS12 is single materiality focused on enterprise value: information is material if its omission, misstatement, or obscuring could reasonably be expected to influence decisions made by primary users (investors, lenders, creditors)12.

This contrasts with the double materiality used in the EU CSRD, which adds an outside-in perspective on company impacts regardless of financial effect.

UK SRS follows the S1 standard single materiality approach12.

SASB Standards are referenced as a permissive resource1 — companies "may refer to" industry-based metrics, not "shall refer to" (the UK softens the IFRS S2 reference from "shall" to "may"1).

Materiality assessment under UK SRS S112 drives topic identification for S1 disclosures; for S2 specifically, all climate matters that meet the materiality threshold require disclosure regardless of SASB.

Step 5 — Voluntary pilot

Voluntary application of UK SRS S2 to a current accounting period1 — before mandatory application from 1 January 20272 — surfaces operational issues at low risk.

The pilot draft is internal-use only; nothing requires publication of the pilot disclosure.

Scenario analysis under paragraph 221 typically gets the most operational scrutiny during the pilot. The standard requires rigour commensurate with exposure1 — entities with significant climate exposure cannot rely on qualitative narrative scenarios.

Common frameworks include NGFS scenarios11 and IEA Net Zero by 2050. At least one scenario must be aligned with the latest international agreement on climate change1.

Step 6 — Assurance engagement

The Financial Reporting Council published ISSA (UK) 50003 — the UK sustainability assurance standard — on 12 November 20253.

It becomes effective on 15 December 20263, giving assurance providers time to align with the new framework before UK SRS S2 mandatory disclosures begin.

Initial expectations under FCA CP26/52 are for limited assurance rather than reasonable assurance. The FCA Policy Statement expected autumn 20262 will confirm the assurance level required.

Trial assurance run during the pilot stage surfaces methodology and evidence-gathering issues before they affect the mandatory cycle.

Step 7 — Mandatory reporting

From accounting periods beginning on or after compliance deadline2, in-scope companies report against climate-related disclosures1 within the strategic report under Companies Act 2006 section 414CB7.

First reports publish in spring 2028 for December 2027 year-ends2.

UK SRS S11 applies on a comply-or-explain basis from 1 January 20292 for the broader sustainability topics.

The foundational elements of S1 — materiality definition, value chain scope, financial-statement connectivity — apply from January 2027 alongside S21 because S2 cannot be applied without them.

The hardest implementation areas

Four areas emerge from professional services commentary on early voluntary adoption as the most resource-intensive.

1. Scope 3 emissions data along the value chain

Companies typically report 12-18 months of supplier engagement work before full Scope 3 disclosure is achievable. The CP26/5 comply-or-explain treatment2 plus first-year deferral1 provides breathing space, but data infrastructure work needs to start now.

Each of the 15 GHG Protocol categories6 requires specific methodological approaches6, with category 1 (purchased goods and services) and category 11 (use of sold products) typically generating the largest emissions volumes6.

2. Climate scenario analysis with quantified financial effects

UK SRS S2 paragraph 221 requires scenario analysis with rigour commensurate with exposure. Companies with significant climate exposure can no longer rely on qualitative narrative scenarios — quantified analysis with explicit assumptions is expected1.

At least one scenario must be consistent with the latest international agreement on climate change1, typically interpreted as scenarios limiting warming to 1.5°C in line with the Paris Agreement. NGFS scenarios11 provide a common framework, but entities may use alternative credible scenarios with proper justification1.

3. Connectivity between climate disclosures and financial statements

Connectivity under UK SRS S112 demands coordination between sustainability and finance teams, with data and assumptions consistent across reports. The connectivity principle is core, not optional12.

This includes consistency in scenario assumptions used for both climate disclosure and impairment testing1, alignment of climate risk identification with financial risk management1, and integration of sustainability metrics into financial planning where material12.

4. Financed emissions for financial institutions

Asset managers, banks, and insurers face the most extensive S2 requirements1. UK SRS S2 paragraph B59A1 (a UK-specific addition) allows reporting financed emissions for a different reporting period than the financial statements where alignment is impracticable, with disclosure of reasons.

Industry classification choices and methodology selection materially affect the disclosed figures1. The Partnership for Carbon Accounting Financials (PCAF) methodology is commonly referenced1, though UK SRS does not mandate specific approaches beyond the requirement for methodological transparency1.

Frequently asked questions