What UK SRS S2 requires
UK SRS S2 sets out disclosure requirements for three categories of climate-related matters: physical risks, transition plans, and climate-related opportunities.
Physical risks include both acute (event-driven — storms, floods, drought, heatwaves) and chronic (longer-term shifts — sea-level rise, reduced water availability, biodiversity loss, soil productivity changes).
Transition risks arise from the shift to a lower-carbon economy. These include policy and legal risks, technological risks, market risks (changing demand and supply for products), and reputational risks.
Climate-related opportunities are the potential positive effects of climate change for an entity, including those produced by mitigation and adaptation efforts.
The standard runs to 37 paragraphs across three appendices and must be applied together with UK SRS S1 insofar as S1 requirements relate to climate-related risks and opportunities.
The four-pillar disclosure structure
S2 climate standard follows the four pillars framework established by the TCFD comparison, applied specifically to climate matters.
Governance (paragraphs 5–7)
The body or individual responsible for oversight, how responsibilities are reflected in terms of reference and role descriptions, skills and competencies, briefing frequency, consideration of trade-offs in major transactions, oversight of targets, and whether climate performance is linked to executive remuneration.
Strategy (paragraphs 8–23)
Climate-related risks and opportunities and their time horizons; effects on business model and value chain emissions; effects on strategy and decision-making including any climate transition plans; current and anticipated effects on financial position, financial performance, and cash flows; and climate resilience using scenario analysis.
Risk management (paragraphs 24–26)
Processes and policies for identifying, assessing, prioritising, and monitoring climate-related risks and opportunities; inputs and parameters; use of scenario analysis; nature, likelihood, and magnitude assessment; and integration into the entity's overall risk management process.
Metrics and targets (paragraphs 27–37)
Cross-industry metric categories (covering Scope 3 emissions, transition and physical risk exposure, capital deployment, internal carbon pricing, and remuneration), industry-based metrics, and climate-related targets including greenhouse gas emissions targets.
Climate resilience and scenario analysis
Climate-related scenario analysis is a hard requirement under UK SRS S2 paragraph 22, not a recommendation. An entity must use scenario analysis to assess the resilience of its strategy and business model to climate-related changes, using an approach commensurate with its circumstances.
Scenario analysis must be commensurate with the entity's exposure: entities with greater climate risk exposure should use more technically sophisticated approaches. Common frameworks include NGFS climate scenarios and IEA Net Zero by 2050.
Greenhouse gas emissions — Scope 1, 2, and 3
UK SRS S2 paragraph 29(a) requires disclosure of absolute gross greenhouse gas emissions for the reporting period, expressed in metric tonnes of CO2 equivalent, classified by Scope 1, Scope 2, and Scope 3 emissions.
Scope 1 — direct emissions from sources owned or controlled by the entity. Scope 2 — indirect emissions from purchased electricity, steam, heating, or cooling, disclosed on a location-based basis. Scope 3 reporting — indirect emissions across the supply chain emissions, categorised across the 15 categories of the GHG Protocol Corporate Value Chain Standard.
The entity must disclose which Scope 3 categories are included in its measure. Materiality drives which categories require detailed disclosure.
Cross-industry metric categories
In addition to greenhouse gas emissions, entities must disclose information across six cross-industry metric categories (paragraph 29(b)–(g)):
- Climate-related transition risks — assets or business activities vulnerable to transition risks
- Climate-related physical risks — assets or business activities vulnerable to physical risks
- Climate-related opportunities — assets or business activities aligned with climate opportunities
- Capital deployment — capital expenditure, financing, or investment deployed towards climate matters
- Internal carbon prices — whether and how a carbon price is applied, and the price per tCO2e used
- Remuneration — whether and how climate considerations factor into executive remuneration, including the percentage linked
Industry-based metrics may also be applied, referencing the Industry-based Guidance on Implementing IFRS S2. UK SRS S2 softens this reference from "shall" (in IFRS S2) to "may" — entities are not required to use SASB.
Financed emissions — for financial institutions
UK SRS S2 imposes additional disclosure requirements on entities in asset management, commercial banking, or insurance. These entities must disclose financed emissions — the portion of GHG emissions of investees and counterparties attributed to loans and investments made — as part of Scope 3 Category 15.
Required disclosures include absolute gross financed emissions disaggregated by Scope 1, 2, and 3; total assets under management or gross exposure included; the percentage included; and the methodology used.
A UK-specific mechanism (paragraph B59A) allows financial institutions to disclose financed emissions for a reporting period different from the financial statements where alignment is impracticable, provided the entity discloses the reasons, the measurement approach, and the timeline for alignment.
Climate-related transition plans
UK SRS S2 does not require an entity to have a transition plan or to set climate targets aligned with any particular goal. Where an entity has a transition plan, however, the standard requires disclosure of specific information about it — including key assumptions and dependencies.
Under FCA CP26/5, in-scope listed issuers would be required to state whether and where a transition plan has been published, but not to publish one. The wider question of mandatory transition plan requirements is being considered separately by the Government.
UK-specific amendments
UK SRS S2 is the UK endorsement of IFRS S2 with six categories of UK-specific amendments. These reflect UK regulatory environment and proportionality choices.
| UK amendment | IFRS S2 baseline | What changed |
|---|---|---|
| Effective date | Set by ISSB | Removed — set by FCA / Companies Act |
| Delayed reporting transition relief | Permitted in year 1 | Removed — climate disclosures published with financial statements from year 1 |
| Industry classification | GICS required for financed emissions | Alternative systems permitted (incorporates Dec 2025 ISSB amendment) |
| Financed emissions reporting period | Aligned with financial statements | May use different period where impracticable, with disclosure of reasons (UK paragraph B59A) |
| SASB references | "shall refer to" industry guidance | "may refer to" — softened (with two exceptions: paras 37 and B65(d)) |
| First-year transition reliefs | Multiple | Three reliefs: no comparatives, alternative GHG method, Scope 3 deferral |
Who must apply UK SRS S2, and when
UK SRS S2 is currently available for voluntary use by any UK entity. Mandatory application will be introduced through separate legislation and regulation in three phases.
Phase 1 — Voluntary adoption (open now)
Any UK entity may apply UK SRS S2 from 25 February 2026, in full or in part, on a voluntary basis.
Phase 2 — Mandatory listed-issuer application (proposed from 1 January 2027)
FCA CP26/5 proposes mandatory UK SRS S2 reporting for listed companies in five UKLR categories: UKLR 6 (Commercial), 14 (Secondary), 15 (Depositary receipts), 16 (Non-equity), and 22 (Transition).
Reports against UK SRS S2 for accounting periods beginning on or after 1 January 2027.
First reports published in spring 2028 for December 2027 year-ends.
Phase 3 — Private companies (expected later in 2026)
The Government has confirmed that mandatory UK SRS for private companies will be addressed through the Modernising Corporate Reporting programme via amendments to the Companies Act 2006. A consultation is expected later in 2026.
Transition reliefs
UK SRS S2 includes three transition reliefs for the first year of application:
- No comparative information required in the first annual reporting period
- Alternative GHG measurement method permitted in the first year if the entity used a method other than the GHG Protocol in the prior year
- Scope 3 deferral — Scope 3 GHG emissions disclosure (including financed emissions) is not required in the first annual reporting period
FCA CP26/5 proposals add an optional additional one-year deferral on Scope 3 beyond the first-year transition relief, providing more time for Scope 3 data infrastructure to be built.
How UK SRS S2 builds on TCFD
The Task Force on Climate-related Financial Disclosures was formally disbanded in October 2023 following the ISSB's publication of IFRS S1 and S2. UK SRS S2 is the regulatory successor to TCFD-aligned UK Listing Rules — but it expands requirements substantially in five areas.
| Area | TCFD (recommended) | UK SRS S2 (required) |
|---|---|---|
| Quantitative financial effects | Encouraged, not mandated | Required — qualitative relief only where measurement uncertainty is genuinely high |
| Connectivity with financial statements | Not required | Required — read with UK SRS S1 |
| Scenario analysis | Recommended | Required (paragraph 22), with rigour scaled to exposure |
| Scope 3 emissions | Recommended where material | Required (subject to transition reliefs) |
| Financed emissions | Not specified | Detailed disclosure required for FIs (paragraph B59 + UK B59A) |
For detailed comparison, see UK SRS vs TCFD.
Implementation — the hardest areas
Based on professional services commentary on early voluntary adoption, four implementation areas emerge as 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 treatment plus first-year deferral provides breathing space, but data infrastructure work needs to start now.
2. Climate scenario analysis with quantified financial effects
UK SRS S2 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 expected.
3. Connectivity between climate disclosures and financial statements
This demands close coordination between sustainability and finance teams, with data and assumptions consistent across reports.
4. Financed emissions for financial institutions
Asset managers, banks, and insurers face the most extensive S2 requirements. Industry classification choices and methodology selection materially affect the disclosed figures.
Frequently asked questions
Who has to comply with UK SRS S2?
Currently no one is mandatorily required — UK SRS S2 is available for voluntary use.<br /><br />The FCA's CP26/5 proposes mandatory application from 1 January 2027 for listed companies in UKLR categories 6 (Commercial), 14 (Secondary), 15 (Depositary receipts), 16 (Non-equity), and 22 (Transition).<br /><br />Subject to the FCA's final Policy Statement expected autumn 2026.
How is UK SRS S2 different from TCFD?
UK SRS S2 inherits the four-pillar structure from TCFD but expands requirements substantially.<br /><br />Scenario analysis becomes required (not recommended) under paragraph 22.<br /><br />Scope 3 emissions become required across all 15 GHG Protocol categories.<br /><br />Quantitative financial-effect disclosure is required with qualitative-only relief available only where measurement uncertainty is high.<br /><br />Financed emissions disclosures are imposed on financial institutions.
What does scenario analysis require?
Paragraph 22 requires entities to assess the resilience of their strategy and business model to climate-related changes using scenario analysis.<br /><br />The approach must be commensurate with circumstances — entities with greater climate exposure must use more technically sophisticated methods.<br /><br />Common frameworks include NGFS scenarios and IEA Net Zero by 2050.<br /><br />The analysis must include at least one scenario aligned with the latest international agreement on climate change.
When does Scope 3 become required?
UK SRS S2 includes a first-year transition relief allowing Scope 3 to be deferred.<br /><br />The FCA's CP26/5 adds an optional additional one-year deferral.<br /><br />The practical effect: Scope 3 disclosure becomes required on a comply-or-explain basis for accounting periods beginning on or after 1 January 2028, across all 15 GHG Protocol categories where material.
What are financed emissions?
For financial institutions in asset management, commercial banking, or insurance, UK SRS S2 requires disclosure of the portion of GHG emissions of investees and counterparties attributed to loans and investments made — disclosed as part of Scope 3 Category 15 (Investments).<br /><br />Required disclosures include absolute gross financed emissions disaggregated by Scope 1, 2, 3, gross exposure, percentage included, and methodology.
Does UK SRS S2 require a transition plan?
No.<br /><br />UK SRS S2 does not require an entity to have a climate-related transition plan or to set climate targets aligned with any particular goal.<br /><br />However, where an entity has a transition plan, the standard requires disclosure of specific information about it.<br /><br />Under FCA CP26/5, in-scope listed issuers would be required to state whether and where a transition plan has been published — but not to publish one.
