Mandatory ISSB-aligned sustainability reporting in the UK has been anticipated for some time. The Financial Conduct Authority (FCA) finalized the UK Sustainability Reporting Standards (UK SRS) back in February and is currently working toward the adoption of those standards for mandatory reporting. However, the FCA Listing Authority Advisory Panel, an independent group that advises the FCA on securities policy, is advising against mandatory adoption. In their feedback letter to the Primary Markets Policy Team, the Advisory Panel states:
“We do not support the scope of the FCA proposal, in particular the mandatory application of UK SRS requirements to all commercial companies listed on the Main Market. This proposal is not, in our view, proportionate and does not reflect the material uplift UK SRS represents relative to current UK climate reporting requirements. Our suggested alternative approach would be to make UK SRS available on an equivalence basis, allowing voluntary adoption to meet existing TCFD aligned requirements. Following a period of voluntary adoption, the FCA could assess voluntary uptake and market feedback and, subject to evidence of net benefits, consider a comply or explain or mandatory approach with appropriate size thresholds and timescales.”
The panel also opposes the UK SRS requirement to report scope 3 emissions on a comply or explain basis. The panel argues in their letter that even the reduced comply or explain requirement would impose an undue burden on companies. It’s unclear whether the FCA will take this advice from the Panel or continue forward with adopting the UK SRS in a mandatory capacity.
Our members can learn more about the UK ESG disclosure framework here.
If you’re not already a member, sign up now and take advantage of our no-risk “100-Day Promise” – during the first 100 days as an activated member, you may cancel for any reason and receive a full refund. But it will probably pay for itself before then. Members also save hours of research and reading time each week by using our filtered and curated library of ESG/sustainability resources covering over 100 sustainability subject areas – updated daily with practical and credible information.
Practical Guidance for Companies, Curated for Clarity.
