UK Regulator Makes Climate Reporting Rules More Flexible

The Financial Conduct Authority (FCA), financial regulatory body in the United Kingdom (UK), has decided to make its proposed climate-disclosure requirements more flexible as it finalises the country’s approach to adopting the International Sustainability Standards Board (ISSB) framework.

Under the proposed UK Sustainability Reporting Standards (SRS), listed companies were initially expected to follow a “comply-or-explain” approach for most sustainability disclosures, while climate-related metrics were proposed to be mandatory. The FCA had considered climate data more financially material and relatively mature compared with other sustainability information.

Following consultation with market participants, the FCA has now opted for a proportionate implementation approach, under which all sustainability metrics will be subject to “comply-or-explain” requirements. The regulator said the approach seeks to balance investors’ information needs with the UK’s attractiveness to large companies.

The move has drawn criticism from investor groups. ShareAction warned that greater flexibility could result in less complete and comparable information for investors.

Meanwhile, the Local Authority Pension Fund Forum (LAPFF), along with institutional investors including CCLA, has called for greater shareholder involvement in companies’ climate transition plans. More than 60 investors have written to FTSE 100 companies seeking advisory shareholder votes on transition plans at least once every three years.

The initiative highlights growing investor expectations for greater transparency and Board accountability on climate strategy and capital allocation.