FCA PS26/19 and UK SRS S2: Final Scope, Reliefs and Reporting from 2027

PS26/19 followed the CP26/5 consultation. The main change from the proposal: CP26/5 would have made the UK SRS S2 climate core mandatory, while the final rules apply S1 and S2, Scope 3 included, on a comply or explain basis.

Every implementation document should now cite the final PS26/19 rules rather than CP26/5 assumptions. The FCA's proposed Technical Note 803.1 on explanations and compliance statements is open for comment until 28 October 2026 and is not final guidance, so wording that depends on it should stay provisional.

The FCA's previous climate disclosure rules were aligned with the TCFD recommendations. TCFD was disbanded in 2023, while the ISSB standards have become the international baseline for investor-focused sustainability-related financial disclosure. PS26/19 moves relevant listed issuers from the TCFD architecture to final UK SRS, covering climate and wider sustainability reporting on a comply or explain basis.

The transitional reliefs recognise that Scope 3 and non-climate reporting capabilities are less mature, without turning either into a permanent exemption.

PS26/19 uses listing category, not company size, as the scope determinant.

An issuer should confirm its exact category and instrument structure. Group companies, overseas parents, regulated subsidiaries and asset-management activities may have other disclosure duties outside these listing rules.

Climate disclosures under S2 - comply or explain

For all in-scope categories, UK SRS S2 applies on a comply or explain basis, together with the sections of UK SRS S1 that underpin climate reporting. CP26/5 had proposed making this climate core mandatory; the final rules did not.

S1 supplies foundations that S2 does not repeat, including:

conceptual foundations and qualitative characteristics;

significant judgements, uncertainties and errors;

short-, medium- and long-term horizons;

metrics and target foundations;

location, timing, comparatives and other general requirements; and

defined terms and application guidance.

The practical message is that a complying climate disclosure is not an S2-only checklist.

Scope 3 - comply or explain after a one-year relief

Scope 3 is on the same comply or explain basis. For periods beginning in 2027 an issuer may use a one-year Scope 3 relief instead, stating its use; for periods beginning in 2028 the relief has expired. An issuer that does not meet an S2 requirement must summarise what has not been met, explain why and state any steps planned to enable disclosure.

This recognises data challenges but does not make Scope 3 permanently optional. Investors should receive a precise gap explanation and a credible development plan.

Explanations, reliefs and the compliance statement

A relief is not an explanation: its use is stated, and the relieved matter needs no separate explanation while the relief applies. Neither route automatically entitles the issuer to an explicit and unreserved UK SRS compliance statement, which remains governed by S1 72, 73A and 73B and S2 C3, C4 and C6. The FCA's proposed Technical Note 803.1, open for comment until 28 October 2026, consults on guidance about explanations and compliance statements; it is not final guidance.

Wider non-climate sustainability - comply or explain

For the same categories, wider sustainability-related reporting under UK SRS S1 is also on a comply or explain basis, with a two-year climate-first relief for non-climate information in periods beginning in 2027 and 2028. For S1 explanations, the rule distinguishes an issuer that has identified relevant risks or opportunities but has not fully disclosed them from one that has identified none.

Separately, an issuer that uses the UK SRS S1 climate-only provision cannot assert S1 compliance, and where UK rules require application, S1 73B and E5 make the availability of that provision subject to those rules.

Transition-plan and assurance statements

Relevant issuers must state whether they have published a climate-related transition plan and where it can be found, or why not (this does not apply to categories 14 and 15), and whether third-party sustainability assurance was obtained, with the specified details. These are transparency rules: the FCA does not require a transition plan or an assurance engagement.

Under PS26/19, UK SRS disclosures and any explanations belong in the annual financial report.

Information may be incorporated by cross-reference in the circumstances set out in UK SRS S1 B45-B47. The issuer should identify precisely where in the annual financial report each disclosure and explanation is located.

This means a later stand-alone sustainability report would not ordinarily solve an annual-report gap. Cross-referenced information must be available on the same terms and at the same time, be precisely identified, remain understandable and be subject to the same authorising responsibility.

The final UK SRS removes fixed time limits from the climate-only and Scope 3 reliefs for voluntary users, but S1 73B and E5 and S2 C6 make their availability subject to UK law or regulations where application is required. PS26/19 sets those limits for listed issuers: one year for Scope 3 and two years for non-climate S1 information, with the relief and the corresponding transitional provision stated in the annual financial report.

The timeline depends on the beginning of the accounting period, not the calendar year in which the annual report is published.

Alternative GHG method

UK SRS S2 C3 is a first-year relief under which an entity may continue a GHG measurement method used in the immediately preceding annual period rather than move immediately to the GHG Protocol. It remains time-limited in the standard and should be supported by a transition plan, method disclosure and control record.

Identify the listing category. Is the issuer in UKLR 6, 14, 15, 16, 22 or another category?

Apply current rules first. For periods beginning before 1 January 2027, continue the TCFD-aligned statement and explanations unless the issuer adopts UK SRS early.

Determine the route. UKLR 6, 14, 15, 16 and 22 apply UK SRS S1 and S2 on a comply or explain basis; categories 14 and 15 make no transition-plan statement; other listed categories are outside these rules.

Confirm the first accounting period. Use the accounting-period start date to determine application and relief years.

Build the S2 plus S1 matrix. Include climate-specific requirements and all relevant S1 foundations.

Choose relief positions. Model Scope 3, non-climate S1, alternative GHG method and comparatives separately.

Design report location. Place disclosures and explanations in the annual financial report and test every cross-reference.

Analyse claims. Distinguish compliance with the FCA rule, standard-level compliance, a stated relief, an explanation and the S1 climate-only provision.

Retain change triggers. Update the plan for the outcome of the Technical Note 803.1 consultation, any later FCA guidance and any Companies Act legislation.

1. Build a rule-to-control register

For each PS26/19 provision, record the requirement, affected listing categories, first applicable period, owner, implementation approach and update trigger. This keeps superseded CP26/5 assumptions out of board papers and basis-of-preparation wording.

2. Complete a dry S2 assessment

Test the latest annual report against final UK SRS S2 and climate-related S1 requirements, so that gaps in financial effects, Scope 3, scenario detail, industry metrics or same-time reporting surface well before the first period ends.

3. Prepare two Scope 3 plans

Develop:

a compliance plan capable of producing material Scope 3 information; and

an explanation protocol identifying requirement-level gaps, reasons, planned steps and governance if complete disclosure is not possible.

The existence of an explain route should not weaken the data programme.

4. Integrate finance and annual-report controls

Move climate reporting into the annual financial report timetable. Establish owners for current and anticipated financial effects, planning assumptions, financial-statement connections, late adjustments and board approval.

5. Document industry judgement

UK SRS makes the specific IFRS industry guidance optional, but S2 still requires industry-based metrics. Record industries, business models, guidance and alternative sources considered, metrics selected and reasons.

6. Draft multiple claim outcomes

Prepare controlled wording for:

full UK SRS S2 compliance;

S2 compliance using permitted reliefs;

comply or explain reporting with a Scope 3 explanation but no standard-level claim; and

voluntary early adoption before 2027.

Final wording should follow the completed annual-report matrix and take account of the outcome of the Technical Note 803.1 consultation.

A UKLR 6 issuer has a 30 September year end. Its first accounting period under PS26/19 begins on 1 October 2027, not 1 January 2027, and the related annual financial report will be published in 2028.

The issuer expects to complete most S2 climate content but may need the Scope 3 relief. It should:

continue TCFD-aligned reporting for the period beginning 1 October 2026, unless it chooses to adopt UK SRS early;

use 2026-27 to close governance, scenario, financial-effects and metric gaps;

confirm that the one-year Scope 3 relief is available for the period beginning 1 October 2027;

state use of the relief, and the corresponding transitional provision, in the annual financial report;

plan to disclose Scope 3, or explain any unmet requirement, from the next accounting period; and

follow the Technical Note 803.1 consultation on explanations and compliance statements.

The example shows why 'rules from 2027' is not the same as 'every 2027 annual report'.