UK SRS S1 and S2: What businesses need to know 

Written by: Cameron Wilson, Solutions Manager Reporting | Last updated: 18.08.2026

The UK Sustainability Reporting Standards (UK SRS) are approaching a decisive point. The Financial Conduct Authority is expected to publish the outcome of its consultation on sustainability disclosures(1) in autumn 2026, and under the proposals, in-scope listed companies would be required to report against UK SRS for financial years beginning on or after 1 January 2027. A framework that has been voluntary since the final standards were published on 25 February 2026(2) is therefore close to becoming a mandatory requirement for listed businesses, and the time available to prepare is shortening. 

The implications extend beyond the listed market. The Government is considering whether the standards should later enter company law for large private companies, and the wider direction is consistent: sustainability information is being brought within financial reporting, connected to strategy, financial planning and long-term prospects. 

A move towards a consolidated reporting baseline 

Over the past decade, sustainability reporting has evolved through a wide range of frameworks, from voluntary standards such as SASB and GRI to mandatory regimes including SECR and TCFD-aligned disclosure. Each development improved transparency, but the result was a fragmented picture that made it difficult for investors to compare performance between companies. 

The International Sustainability Standards Board (ISSB)(3) was established to resolve this fragmentation, publishing a global, investor-focused baseline in IFRS S1 and IFRS S2(4). UK SRS represents the UK’s adoption of that baseline, with limited amendments for the UK context. The framework comprises two standards: 

• UK SRS S1(5): General Requirements for Disclosure of Sustainability-related Financial Information  
• UK SRS S2(6): Climate-related Disclosures 

No organisation is currently required to apply the standards. But the direction of travel is clear: the FCA intends to mandate UK SRS-aligned reporting for in-scope listed issuers, and the Government is considering whether the standards should later enter company law for large private businesses. Together, these moves place sustainability information firmly within financial reporting — connecting sustainability risks with strategy, financial planning and long-term prospects. 

This insight explains what UK SRS S1 and UK SRS S2 are, how they differ, what they require in practice and what the FCA has proposed — so your organisation can judge what readiness means for it. 

What is the difference between UK SRS S1 and S2? 

UK SRS S1 is the overarching standard. It covers sustainability-related risks and opportunities that could affect an organisation’s cash flows, access to finance or cost of capital. Depending on the business, this may include nature, water, workforce or supply-chain issues. 

UK SRS S2 applies the same logic specifically to climate. It retains the familiar TCFD structure but adds more demanding requirements covering physical and transition risks, resilience, scenario analysis, emissions and targets. 

Put simply, S1 asks which sustainability issues could affect the business. S2 asks how climate issues could affect it, and how the organisation is responding. S1 provides the foundation and S2 supplies the climate-specific requirements. 

What the standards require in practice 

Both standards are organised around four connected areas. Governance covers board and management oversight, responsibilities and controls. Strategy addresses the effects on the business model, value chain, financial planning and resilience. Risk management sets out how relevant risks and opportunities are identified, assessed, prioritised and monitored. Metrics and targets cover how performance is measured, including emissions, methodologies and progress over time. 

The structure will be familiar to anyone who has reported against TCFD. The substantive change sits beneath it. Sustainability disclosures must now be prepared for the same reporting entity as the financial statements, and assumptions should align, as far as possible, with budgets, forecasts, asset lives and investment decisions. A polished narrative is insufficient if the evidence is disconnected from how the business is managed. We unpack what this means for finance teams in our companion insight on UK SRS and the finance function. 

Both standards contain application reliefs. Under UK SRS S1, an organisation may report on climate only, although it cannot then claim S1 compliance. It may still claim S2 compliance if the conditions are met. UK SRS S2 covers Scope 1, 2 and 3 emissions but permits Scope 3 omission where use of the relief is disclosed. How these reliefs operate under any mandatory regime will be determined by regulators, and the FCA’s consultation is the first indication of their thinking. 

What has the FCA proposed for listed companies? 

For accounting periods beginning on or after 1 January 2027, CP26/5(7) proposes: 

• mandatory climate reporting against UK SRS S2 from the first reporting period; 
• Scope 3 emissions disclosures subject to a one-year transitional relief, then applying on a ‘comply or explain’ basis; 
• wider sustainability reporting under UK SRS S1 subject to a two-year transitional relief, then applying on a ‘comply or explain’ basis; 
• disclosure of whether and where a climate transition plan has been published, or why one has not been; and 
• disclosure of whether third-party assurance has been obtained and, where it has, its scope and level. 

In practice, this means first-year compliance amounts to S2 climate reporting, which will feel familiar to issuers already reporting under the TCFD-aligned Listing Rules. Two things change, however. Climate reporting would no longer sit on a ‘comply or explain’ footing; it becomes mandatory. And the standard places far greater weight on quantifying the financial effects of climate-related risks and opportunities, both current and anticipated, so that disclosures provide decision-useful information to investors rather than narrative alone. 

Nor is ‘comply or explain’ a neutral position for the phased requirements. When companies choose not to disclose, they must identify what has been omitted, why, and the steps being taken to address the gap. This demands a credible implementation plan. 

The consultation closed on 20 March 2026 and the FCA expects to publish its Policy Statement in autumn 2026. Until then, the final requirements may change. 

What could UK SRS mean for private companies and LLPs? 

Private companies are not in scope of the FCA’s proposals, but climate-disclosure duties are not limited to listed businesses. Large private companies and LLPs already have mandatory TCFD-aligned duties under the 2022 Companies Regulations(8) and LLP Regulations(9). The Government has confirmed(10) that UK SRS S2 qualifies as a national reporting framework under section 414CB(6) of the Companies Act, meaning an in-scope company may use it to meet existing climate duties without duplicating effort. 

Looking further ahead, the Government’s Modernising Corporate Reporting programme will consider mandatory UK SRS reporting for private companies, and both 2022 Regulations require statutory reviews before 6 April 2027. Private businesses should treat UK SRS adoption as a live policy question rather than a distant possibility. 

Preparing for UK SRS S1 and S2? 

Whether listed or private, the preparation logic is the same, and organisations that begin during 2026 will set their own pace on governance, data and financial connectivity rather than having it set for them by the FCA’s final rules. 

In our experience, three early steps make the biggest difference. First, map current disclosures and legal duties against both standards to identify the gaps. Second, build a financially grounded materiality process, testing whether sustainability assumptions align with budgets, forecasts and financial statements. Third, establish clear board ownership of climate and sustainability assumptions, with documented methodologies, and run a dry run before implementation deadlines compress the work. 

We explore how to sequence this in our upcoming webinar, UK SRS: beyond compliance, preparing your business for financially integrated sustainability reporting. Register to join us live. To discuss how Simply Sustainable can help your organisation assess disclosure gaps and prepare for UK SRS S1 and S2, speak with one of our experts or explore our Sustainability Reporting solutions.