UK SRS S2 — Climate-Related Disclosures

What S2 Requires

UK SRS S2 requires climate-specific disclosures across the four-pillar framework: governance over climate-related risks and opportunities, strategy including climate scenario analysis, risk management integrated at the enterprise level, and metrics including Scope 1, Scope 2, and Scope 3 greenhouse gas emissions, climate targets, and transition plan progress.

S2 goes significantly beyond what TCFD required. Scenario analysis is mandatory and must be financially quantified. Scope 3 emissions are explicitly required on a comply-or-explain basis from 2028. Sustainability disclosures must demonstrate their connection to the financial statements. A formal statement of compliance is required — partial alignment is not accepted.

Climate Scenario Analysis

UK SRS S2 requires financially quantified scenario analysis — a material step beyond the qualitative narratives that many companies provided under TCFD. Companies must consider at least two scenarios, one of which should be consistent with a 1.5°C pathway. Physical risks (acute and chronic) and transition risks (policy, technology, market, reputation) must be assessed across short, medium, and long-term time horizons that the company has defined and disclosed.

The financial impact of each scenario must be expressed in quantitative terms where possible. Acceptable scenario frameworks include the NGFS scenarios, the IEA World Energy Outlook scenarios, and IPCC pathways. For a detailed guide, see Climate Scenario Analysis Under UK SRS.

Greenhouse Gas Emissions

Scope 1 and Scope 2 emissions must be disclosed from day one using the GHG Protocol Corporate Standard methodology. Both absolute emissions and intensity metrics are required. Scope 3 emissions benefit from a one-year transitional relief — disclosure is on a comply-or-explain basis from financial years beginning on or after 1 January 2028. When Scope 3 is disclosed, all 15 GHG Protocol categories must be assessed for materiality, and companies must disclose data quality information and the methodologies used.

For the most frequently asked questions about Scope 3, see Scope 3 Under UK SRS.

Transition Plans

Companies are not required to produce a climate transition plan under the current FCA proposals. However, they are required to disclose whether they have published one, where it can be found, or explain why they have not. Where a transition plan exists, companies must disclose their targets, the actions being taken, and progress made. The Transition Plan Taskforce (TPT) Framework provides guidance on what a credible transition plan should contain.

Connection to Financial Statements

S2 requires explicit linkage between sustainability disclosures and financial reporting. Companies must demonstrate how climate risks and opportunities are reflected in the financial statements — including the carrying amounts of assets and liabilities, recognition and measurement of provisions and contingent liabilities, impairment assessments, and the assumptions underlying forward-looking estimates. This connectivity requirement demands close collaboration between sustainability and finance teams and a level of integration that most TCFD reporting programmes did not achieve.

Legal Framework and Liability Protections

UK SRS S2 is confirmed as a national reporting framework under s414CB of the Companies Act 2006. Disclosures must be made within the Strategic Report, which forms part of the Annual Report and Accounts — a statutory filing with Companies House. Disclosures made within the Strategic Report benefit from s463 liability protections, which shield directors from civil liability unless a statement was known to be untrue or misleading, or the director was reckless as to whether it was untrue or misleading.

This legal framework means that UK SRS climate disclosures carry greater weight than standalone sustainability reports or website disclosures, but also provide directors with a defined liability protection that did not exist for TCFD-aligned disclosures made outside the Strategic Report.

Who Must Comply with S2

UK SRS S2 is mandatory from financial years beginning on or after 1 January 2027 for approximately 515 primary-listed companies under FCA regulation. This includes commercial companies (UKLR6), non-equity shares (UKLR16), and transition category (UKLR22). For a full breakdown, see Who Must Comply with UK SRS.