UK regulator abandons mandatory climate disclosures for listed companies

UK Regulator Backs Down on Mandatory Climate Disclosures for Listed Companies

Overview of the FCA's Decision on Climate Disclosure Rules

By Phoebe Seers

Background and Initial Proposals

LONDON, Sept 30 (Reuters) - Britain's financial regulator has dropped plans to require listed companies to inform investors about their climate risks after firms raised concerns about implementation costs and competitiveness.

The Financial Conduct Authority proposed in January requiring listed companies to meet a new UK climate standard, which covered financially material, climate-related risks and opportunities, climate targets and the potential impact of climate change on their business.

Final Rules and "Comply or Explain" Approach

But in final rules published on Wednesday, the watchdog said companies would instead be allowed to maintain the "comply or explain" approach.

International Context and Industry Feedback

The move follows steps by the European Union to water down its flagship corporate climate disclosure regime and after the climate-sceptic Trump administration in the United States ditched plans for any rules in the world's biggest economy.

Feedback to the proposal questioned whether mandating UK SRS S2, the UK-endorsed version of the International Sustainability Standards Board's climate standard, would be proportionate and support the international competitiveness of companies operating in the UK, the FCA said.

Previous Disclosure Requirements and Compliance Rates

The FCA first introduced rules in 2020 asking premium-listed companies to disclose climate-related risks to investors in line with the global Task Force on Climate-related Financial Disclosures (TCFD) framework, or explain why they had not done so. The rules were later extended to other categories of listed issuer.

The regulator's review of FTSE 350 companies' 2025 annual reports found that 92% complied with the TCFD.

(Reporting by Phoebe Seers and Simon Jessop, Editing by Kirstin Ridley, Kirsten Donovan)