Britain’s Financial Conduct Authority (FCA) has scrapped plans to mandate strict climate risk disclosures for listed companies, opting instead to retain its existing “comply or explain” reporting model.
In January, the financial regulator had proposed requiring listed firms to comply with UK SRS S2—a UK-endorsed version of the International Sustainability Standards Board (ISSB) climate standard. The framework would have required mandatory reporting on financially material climate risks, operational impacts, and corporate climate targets.
However, in final rules published on Wednesday, the FCA confirmed that companies will retain the option to explain non-compliance rather than face mandatory reporting requirements.
The regulator noted that feedback from corporate consultations raised concerns over implementation costs, administrative burdens, and the potential impact on the international competitiveness of UK-listed firms.
The decision reflects a broader international shift in corporate reporting policy, following adjustments to the European Union’s corporate climate disclosure regime and the rollback of federal climate disclosure rules in the United States. The FCA first introduced climate disclosure guidelines in 2020, aligning premium-listed requirements with the Task Force on Climate-related Financial Disclosures (TCFD) framework on a “comply or explain” basis. Subsequent FCA reviews of FTSE 350 annual reports found that 92 per cent of covered companies voluntarily complied with the TCFD standards.
