Who Must Comply with UK SRS

The FCA has deliberately excluded several categories of listed entity from the initial UK SRS scope. These exclusions are not accidental — each reflects a specific policy rationale tied to the nature of the entity or the instrument type.

• Closed-ended investment funds (UKLR11) — Investment trusts and other closed-ended funds are excluded because their sustainability risk profile is determined principally by their underlying portfolio holdings, not by direct operational activities. They are already subject to separate FCA rules on sustainability-related disclosures for asset managers and fund vehicles.
• Shell companies (UKLR13) — Shell companies have no substantive operations and therefore no meaningful sustainability risks or emissions to disclose. Requiring UK SRS compliance would impose cost without producing useful information for investors.
• Debt and debt-like securities — Issuers of debt instruments are excluded from the initial scope. Their regulatory framework operates differently — bondholders have contractual rights rather than equity ownership, and the information needs of debt investors are addressed through prospectus requirements and ongoing issuer obligations rather than annual strategic report disclosures.
• Securitised derivatives — These are structured products where the underlying risk is synthetically created or repackaged. The sustainability profile of the issuing entity is not the primary concern of investors in these instruments. They fall under a different regulatory framework.
• Warrants and options — Derivative instruments that give the holder the right to acquire or sell equity. These are excluded because the sustainability reporting obligation sits with the underlying equity issuer, not with the instrument itself.

The common thread across these exclusions is that the FCA has focused the initial UK SRS scope on entities where direct operational sustainability reporting provides the greatest informational value to equity investors. Entities with different risk profiles, limited or no operations, or instruments governed by separate regulatory frameworks will be addressed through other channels or at a later stage.

The UK Government has signalled clearly that it intends to extend sustainability reporting requirements beyond listed companies. The mechanism will be amendments to the Companies Act, and the target population is economically significant private companies and large limited liability partnerships (LLPs).

This mirrors the approach taken when TCFD-aligned reporting was first introduced. TCFD obligations began with premium-listed companies in 2021, then extended to large private companies and LLPs through the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022. The Government has indicated it will follow the same staged approach with UK SRS — establishing the framework with listed companies first, then expanding the scope once the reporting infrastructure is proven.

The precise thresholds for which private companies will be caught have not yet been confirmed. The expectation is that thresholds will be based on a combination of employee numbers, turnover, and balance sheet total — consistent with the existing large company thresholds used elsewhere in Companies Act reporting. The timelines for private company compliance have also not been confirmed. A separate consultation is expected during 2026, with implementation likely to follow 12 to 18 months after final rules are published.

Private companies that may fall within scope should not wait for final rules before taking action. The practical steps that deliver the greatest value now are:

• Conduct a gap analysis — Assess current sustainability disclosures against the requirements of UK SRS S2. Identify where data, processes, and internal controls are missing or insufficient.
• Improve Scope 1 and Scope 2 data quality — Greenhouse gas emissions data is the foundation of climate disclosure. Companies that cannot produce reliable, auditable Scope 1 and 2 data today will not be ready when obligations arrive. Invest in metering, data management systems, and assurance-ready methodologies now.
• Establish governance structures — UK SRS requires disclosure of how the board oversees sustainability risks and opportunities. Private companies should establish clear governance arrangements — board-level responsibility, management committees, and reporting lines — before they are required to disclose them.

The cost of retrospective compliance is always higher than the cost of preparation. Companies that begin building data infrastructure and governance frameworks now will be in a materially stronger position when the formal requirements are confirmed.