UK regulator declines to strengthen climate disclosures — Cyprus Mail

In the United Kingdom, the Financial Conduct Authority (FCA) has abandoned a plan to require companies whose shares are listed on the stock exchange to disclose climate-risk information to investors. As Cyprus Mail reports, companies raised concerns about the costs of introducing the new requirements and their impact on competitiveness.

The approach will remain flexible

In January, the FCA proposed requiring listed companies to comply with the new UK climate standard, UK SRS S2. It covered financially material climate-related risks and opportunities, climate targets, and the potential impact of climate change on business operations.

However, in the final rules published this week, the regulator allowed companies to retain the “comply or explain” approach. Under this model, issuers may either meet the disclosure requirements or explain why they do not do so.

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Business arguments

The FCA said that responses to the proposal raised the question of whether mandatory application of UK SRS S2 would be a proportionate step and whether it would support the international competitiveness of companies operating in the United Kingdom. UK SRS S2 is the country-approved version of the climate standard of the International Sustainability Standards Board.

The regulator first introduced climate-risk disclosure rules for companies with premium listings in 2020. They required companies to provide information in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), or explain the absence of such disclosure. The rules were subsequently extended to other categories of listed issuers.

An FCA review of the 2025 annual reports of FTSE 350 companies showed that 92% of them complied with the TCFD requirements.