UK: Corporate Reporting Consultation Signals Future Sustainability Reporting Direction

Why should I read this?

On 7 September 2026, the UK Government published a consultation on modernising the UK's corporate reporting framework. The consultation does not create legal obligations. However, it includes several proposals that could affect how UK companies report on sustainability. The Government has said its aim is a more coherent framework with less duplication, including alignment with ongoing Financial Conduct Authority (FCA) sustainability disclosure initiatives.

Overall, the proposals point to a more principles-based, materiality-led approach to sustainability reporting within the annual report, while some significant areas, including climate-related financial disclosures (CFD), remain under separate review.

This briefing covers the sustainability-related parts of the consultation and what they may mean for boards and reporting teams. We discuss the wider proposals set out in the consultation in a separate briefing: UK: Modernising corporate reporting: Key proposals and next steps.

The consultation will close on 30 November 2026. The Government intends to publish a feedback statement within six months of that date, which would be by spring 2027.

On 30 September 2026, the Financial Conduct Authority published Policy Statement PS26/19, setting out final rules for sustainability-related disclosures by UK-listed companies. We discuss these rules in a separate briefing: FCA finalises sustainability disclosure rules for listed companies.

Key sustainability-related points

Climate-related Financial Disclosure (CFD) requirements under review

What is being consulted?

The Government is undertaking a post-implementation review of the UK's CFD regime introduced in 2022. While no immediate changes are proposed, the findings, expected in spring 2027, will help shape future policy.

What does this mean?

Businesses should not expect immediate changes, but climate reporting remains an active area of regulatory development and future reforms are likely to focus on improving the usefulness of disclosures for investors.

Any changes in this area would be subject to a further consultation.

Potential reform of Streamlined Energy and Carbon Reporting (SECR)

What is being consulted?

A separate consultation on SECR and the Energy Savings Opportunity Scheme (ESOS) is expected before the end of 2026. The Government is also proposing greater flexibility over where SECR disclosures are located within annual reports.

What does this mean?

Energy-intensive businesses should monitor future developments closely, as further reforms could change existing reporting obligations.

UK SRS

What is being consulted?

UK SRS are based on the International Sustainability Standards Board’s (ISSB) IFRS S1 and S2, with limited UK-specific amendments. The consultation reaffirms the Government’s support for the ISSB framework and confirms that the Government is considering how UK SRS reporting requirements should be incorporated into the Companies Act 2006.

It also highlights the FCA proposals to align listed company disclosures with UK SRS.

What does this mean?

This indicates a broader move towards aligning UK reporting standards with global practices.

The IFRS Foundation reports that 37 jurisdictions (as at 1 October 2026) are using, or taking steps to adopt, ISSB Standards. If UK SRS are mandated, the UK would be among them.

The Government has indicated that alignment could reduce reporting complexity for internationally active businesses.

Alignment between UK SRS, climate disclosures and transition plans

What is being consulted?

The Government acknowledges that there are significant overlaps between UK SRS, existing CFD requirements and transition plan expectations. The consultation states that policymakers are seeking to ensure these regimes develop coherently and minimise duplication.

What does this mean?

Many large organisations are currently navigating multiple sustainability reporting frameworks. The Government's recognition of these overlaps suggests future reforms may focus on changes to existing requirements rather than creating new requirements.

Directors’ Responsibilities and the Presentation of Sustainability Reporting

What is being consulted?

The Government proposes businesses should have flexibility to present sustainability information within strategic reports.

The consultation also proposes removing several prescribed sustainability disclosure requirements from the Companies Act 2006. These include disclosures relating to environmental matters, employees, social and community matters, human rights, and anti-corruption. Under the proposals, businesses would instead report on sustainability matters they determine to be material.

Director liability protections under section 463 of the Companies Act 2006 would continue to apply to sustainability information in the strategic report and could be extended if disclosures are permitted elsewhere in the annual report.

What does this mean?

Businesses may gain greater flexibility in presenting sustainability information across corporate reporting. This could enable disclosures to better reflect business strategy, operations and material risks.

The proposals also increase board responsibility for determining material sustainability information. Directors will need to exercise greater judgment over how disclosures are reported. The liability position is relevant to companies preparing disclosures containing estimates and forward-looking statements. At the same time, directors remain accountable for reporting accuracy and integrity.

What does this mean for the wider sustainability landscape in the UK?

The consultation signals a potential shift towards a more integrated and principles-based approach to sustainability reporting within the UK corporate reporting framework. Rather than introducing significant new reporting requirements, the Government is seeking to simplify existing obligations, reduce duplication between overlapping regimes and support greater alignment with internationally recognised standards.

For businesses, the proposals could provide greater flexibility in how sustainability information is presented within annual reports, allowing disclosures to be more closely connected to business strategy, risks and long-term value creation. At the same time, sustainability-related matters that are material to a company's performance and prospects are expected to remain an important part of corporate reporting, requiring robust governance, oversight and reporting processes.

The consultation also reinforces the direction of travel towards a more coherent reporting landscape, with policymakers considering how UK SRS, climate-related financial disclosures, transition plan expectations and energy and carbon reporting requirements can operate together in a more streamlined way. For many organisations, the focus is therefore likely to be less on preparing for entirely new reporting regimes and more on understanding how existing and emerging requirements fit together.

As a result, while the detail of several sustainability-related frameworks remains subject to separate policy processes, the consultation provides a useful indication of how the UK reporting framework may evolve over the coming years: towards greater consistency, comparability and alignment with global sustainability reporting developments.

Co-authored by Nathan Handoll (Knowledge)