UK FCA proposes mandatory climate disclosures for listed companies to align with ISSB standards by 2027

The U.K. financial regulator has launched a consultation proposing new mandatory climate-related disclosures for listed companies and certain regulated firms, aligned with pending U.K. sustainability reporting standards that will adopt recommendations from the International Sustainability Standards Board. According to the Financial Conduct Authority, the package would require firms to provide clearer information on climate risks and opportunities and would oblige entities to state whether they have a climate transition plan and whether their sustainability disclosures have been independently assured.

Recognising practical challenges, the FCA is proposing a “comply or explain” route for some of the most difficult elements of reporting. That approach would apply to Scope 3 emissions data, which covers downstream emissions associated with a company’s activities, and could be extended to broader sustainability metrics beyond climate. “We want to strike the right balance between enhancing transparency and maintaining proportionality by proposing a ‘comply or explain’ approach for some of the more challenging or new aspects of reporting,” the paper said.

The consultation sets a deadline for responses of March 20. The regulator said it aims to issue a policy statement in the autumn, with the new rules scheduled to take effect on Jan. 1, 2027.

The FCA’s move follows a sustained international push to harmonise sustainability reporting. In the U.K., the government is developing the national standards that would incorporate ISSB recommendations, and the FCA’s proposals are intended to implement those expected requirements into regulatory rules. The regulator framed the measures as intended to ensure investors can access consistent, robust information on sustainability risks and opportunities.

Across the Atlantic, Canadian authorities have taken a different path. The Canadian Securities Administrators announced in April 2025 that it would pause work on a new mandatory climate-related disclosure rule and related diversity-related amendments, saying it wanted to allow Canadian markets and issuers time to adapt to regulatory developments in the United States and elsewhere. CSA Chair Stan Magidson cited heightened uncertainty and competitiveness concerns for Canadian issuers as factors in the decision, while stressing that existing securities laws already require disclosure of material climate-related risks.

The pause drew criticism from civil society and legal experts. The Canada Climate Law Initiative described the CSA’s update as disappointing and urged clearer guidance and prompt finalisation of national instruments to align with international standards, warning that delay could leave investors without vital information during the transition to a net-zero economy.

Meanwhile, voluntary frameworks have progressed in Canada. The Canadian Sustainability Standards Board’s final Canadian Sustainability Disclosure Standards became effective on Jan. 1, 2025, providing a non-mandatory template for climate and sustainability reporting that the CSA said it may consider when drafting any future rule.

The FCA itself has prior experience phasing in climate-related rule changes. Industry guidance and disclosure rules for asset managers and certain financial institutions began to be implemented in stages from January 2022, targeting larger firms first and extending requirements to smaller entities over time. The regulator’s latest consultation appears to extend that trajectory by embedding reporting expectations into statutory requirements tied to the forthcoming U.K. standards.

The U.K. proposals stop short of mandating that companies adopt transition plans. “Mandating that companies have transition plans is a matter for government,” the FCA said, noting that its remit covers disclosure requirements rather than prescribing corporate strategy. The consultation also seeks views on when and how independent assurance should be applied to sustainability information, signalling an intention to raise the credibility of corporate reporting without immediately imposing blanket assurance obligations.

Market participants will be closely watching the consultation and the timetable for formal rules, with some firms likely to welcome clearer cross-border alignment and others warning of compliance costs and practical hurdles, particularly in estimating Scope 3 emissions and securing third-party assurance. The consultation period and the promised autumn policy statement will give investors, companies and advisers an opportunity to shape how the U.K. embeds the ISSB-aligned standards into domestic regulation ahead of the planned 2027 implementation date.