UK SRS Has Landed: The UK’s New Standard for Sustainability Reporting
In February 2026, the UK Government published the first two UK Sustainability Reporting Standards (UK SRS), UK SRS S1 (General Requirements) and UK SRS S2 (Climaterelated Disclosures). These standards are the UK endorsed versions of the ISSB’s IFRS S1 and IFRS S2 and are intended to create a consistent, “global baseline” approach for UK sustainability related financial disclosures.
The key change for many organisations is that UK SRS is not “ESG storytelling” or impact reporting for a broad stakeholder set. It is explicitly designed to provide decision useful information to primary users of financial reports (investors, lenders, and other creditors) about sustainability- and climate related risks and opportunities that could affect an organisation’s cash flow, access to finance, or cost of capital over the short, medium and long term.
Importantly, UK SRS also pulls sustainability much closer to finance. Disclosures sit within financial reports, are expected to be connected to financial statements, and must be prepared with the same discipline around materiality, consistency, comparatives, and estimation uncertainty.
UK SRS S1 Sets the Rules of the Road; S2 Sets the Bar for Climate
UK SRS S1 – General Requirements: the operating system
S1 establishes the overarching framework for sustainability related financial disclosures and applies to all sustainability related risks and opportunities that could affect an organisations prospects. It specifies how entities should identify relevant risks and opportunities, assess materiality, present connected information, and ensure data alignment with financial reporting.
S1’s core content follows a four pillar structure seen across many other ESG disclosure frameworks – Governance, Strategy, Risk Management, Metrics & Targets. However, within S1 there are explicit requirements on usability and connectivity to financial reporting.
UK SRS S2 – Climate related Disclosures: the climate module
S2 applies specifically to climate related physical risks, transition risks, and climate related opportunities. It expands on the same four pillars as S1 but adds detailed requirements on scenario analysis & climate resilience, GHG emissions (Scopes 1–3), and targets & transition planning information.
S2 also requires reporting of cross industry climate metrics (beyond emissions), such as exposure to transition or physical risk, capital deployment aligned with climate objectives, internal carbon pricing, and remuneration linkages to climate considerations.
What Businesses Actually Have to Report (and What Makes UK SRS Different)
UK SRS reporting is not a single “data dump”. It is a structured narrative and quantitative disclosure set designed to explain how sustainability factors flow through governance, strategy, risk management and performance measurement, and how this connects to financial outcomes.
1) Governance: who owns the risks, and how oversight works
Under S1 (and mirrored in S2), organisations must explain board and/or committee oversight and management’s role, including how responsibilities are embedded in mandates, how competency is maintained, how frequently climate and sustainability issues are escalated, and how leadership oversight influences major decisions and tradeoffs.
Governance disclosures are expected to evidence controls and procedures, not just structures. This is particularly relevant where organisations are moving toward assurance and need a clear audit trail from governance to metrics and targets.
2) Strategy: enterprise value impacts, not general impacts
S1 requires disclosure of sustainability related risks and opportunities and their current and anticipated effects on the business model and value chain, including concentration points (geographies, assets, facilities) and defined time horizons.
A critical technical element is the requirement to disclose current financial effects and anticipated financial effects, including where significant risks may lead to a material adjustment to carrying amounts within the next reporting period. If quantitative effects are not separately identifiable, or measurement uncertainty is too high, organisations can use qualitative disclosure, but must explain why, identify likely affected line items, and consider disclosing combined effects.
S2 mirrors this but focuses on climate related drivers, adding explicit requirements to describe transition plans (where applicable) and resourcing of the plan, plus progress against previously stated plans.
3) Risk management: processes, inputs, and integration
Under S1 and S2, entities must describe how they identify, assess, prioritise, and monitor sustainability or climate risks and opportunities, including inputs, scope, use of scenario analysis, thresholds, prioritisation methods, monitoring cadence and changes year on year.
A key SRS expectation is to explain integration with the overall enterprise risk management process, i.e., sustainability risk can’t sit in a separate silo if it is genuinely financially material.
4) Metrics & targets: measurement discipline, definitions, and consistency
S1 requires disclosure of metrics required by applicable UK SRS (where they exist) and entity defined metrics used for monitoring risks and opportunities, including definitions, validation, calculation methods, and key assumptions. Targets must be described with metrics, scope, base period, milestones, performance, and revisions.
S2 significantly increases specificity for climate metrics. At a minimum, organisations must disclose absolute gross GHG emissions (Scopes 1, 2 and 3) in tCO₂e, measured using the GHG Protocol Corporate Standard, unless another method is required by a jurisdiction or exchange for part of the organisation. Scope 2 must be location based, with information about contractual instruments where relevant. Scope 3 must identify which of the 15 Scope 3 categories are included, aligned to the GHG Protocol Scope 3 Standard categories.
S2 also requires disclosure of climate targets with characteristics such as objective, boundary, time horizon, base year, absolute vs intensity, and how the latest international agreement on climate change informed the target. Where net targets rely on carbon credits, disclosures must explain reliance, scheme verification, credit type (reduction vs removal; nature based vs technological removals) and credibility or integrity factors.
Scenario Analysis Becomes NonNegotiable: Climate Resilience Under S2
One of the most demanding elements of S2 is the requirement to use climate related scenario analysis to assess and disclose climate resilience. Organisations must explain scenarios and sources, whether a diverse range of scenarios was used, the time horizons and scope, and key assumptions (policy, macro trends, energy mix, technology, and regional variables).
Importantly, the application guidance makes it clear that scenario analysis should be commensurate with exposure and capability and may evolve over time, starting more qualitative and becoming more quantitative as skills and resources mature. This is a practical “onramp” for businesses that have previously treated scenario analysis as a TCFD narrative exercise rather than an analytical input into strategy and capital planning.
What Should Companies Do Next?
For most organisations, the immediate priority is not perfect compliance, but understanding relevance and direction of travel.
We recommend that businesses:
- Assess applicability: Identify whether land-sector activities or removals are significant within your operations or value chain, and where they sit within Scope 3.
- Review current data and assumptions: Understand how land-based emissions are currently estimated, where gaps exist, and what level of traceability is realistically achievable in the near term.
- Plan proportionate improvements: The standard allows for different levels of data maturity. The key is transparency, consistency, and a credible improvement pathway.
- Build internal understanding: Sustainability teams, procurement, and strategy functions all need to understand how land-sector accounting affects existing targets and claims, and future decision-making.
Scope 3: The Hardest Part of Compliance (and Why UK SRS Makes It Harder, in a Useful Way)
For most organisations, Scope 3 emissions will remain the single biggest challenge in UK SRS implementation, both due to data constraints and because UK SRS raises expectations on transparency around data quality and estimation.
Why it’s hard
Scope 3 requires considering the entire value chain upstream and downstream, across up to 15 categories, and disclosing which categories are included. Data gaps are common, particularly beyond tier 1 suppliers, and organisations frequently rely on secondary data, spend based factors, or industry averages.
What UK SRS adds (technical nuance that matters)
S2 explicitly recognises that Scope 3 will often be estimated but introduces a structured Scope 3 measurement framework requiring organisations to prioritise inputs by quality characteristics, direct measurement over estimation, primary over secondary data, jurisdiction, or technology representativeness, timeliness, and verification. It also requires disclosure of the measurement approach, inputs and assumptions, including the extent to which Scope 3 uses activity specific data, and the extent to which data is verified.
This means organisations should expect to document (and eventually evidence) the data quality hierarchy behind their Scope 3 inventory – what is primary vs secondary, what is proxy, what is supplierspecific, and where verification exists.
Practical implications
The fastest route to credible Scope 3 under UK SRS is rarely “collect everything from everyone”. Instead, organisations should:
- Focus on material categories (purchased goods and services, transport, use phase, business travel),
- Establish supplier engagement processes in high impact categories
- Progressively replace secondary data with primary activity data, and
- Build internal controls so changes in methods/emission factors are explainable year on year.
Where Do the Disclosures Sit and When Must They Be Published?
S1 requires sustainability related financial disclosures to be provided as part of general-purpose financial reports, and allows flexibility of location (e.g., management commentary or strategic report) if disclosures are clearly identifiable and not obscured. Crucially, S1 requires disclosures to be published at the same time as the financial statements and cover the same reporting period. This “same time, same period” rule is a major driver of earlier internal close processes for sustainability data.
Timelines: What’s Known, What’s Proposed, and What’s Still Being Finalised
Formal timelines are still being finalised, but as of the publishing of this article, this is most precise picture available.
Voluntary use: available now
The UK Government has published UK SRS S1 and S2 for voluntary use.
Mandatory application: the standards themselves do not set effective dates
The current version of UK SRS does not include effective dates; timing is intended to be set by the FCA (for listed issuers) and by UK legislation and/or regulation (for other entities).
Listed companies (FCA): proposed start date is the 1st of January 2027 (consultation stage)
The FCA’s sustainability reporting materials indicate it is consulting on adoption of UK SRS for listed companies, with the key proposal widely summarised as mandatory UK SRS S2 climate disclosures for accounting periods beginning on or after the 1st of January 2027, which would be reported on in 2028. According to the FCA consultation, Scope 3 is initially proposed to be treated as “comply or explain”, with phased tightening thereafter.
If the FCA finalises rules in line with the existing proposal, the first reports would be published in 2028 for activities in 2027. This is still subject to consultation outcomes and final rulemaking.
Nonlisted entities (Companies Act and wider regime): still being finalised
Multiple professional briefings note that the Government intends further consultation in 2026 on how UK SRS becomes mandatory under Companies Act reporting and broader corporate reporting reforms (often referenced under “Modernising Corporate Reporting”).
For large private companies and other entities, mandatory scope and dates are not yet confirmed and remain subject to Government consultation and subsequent legislation.
As the UK modernises its corporate sustainability reporting framework, the SRS are set to replace Streamlined Energy and Carbon Reporting (SECR) as the primary mechanism for climate and energy related disclosure. Current expectations suggest that SECR will begin to be phased out from the 2026/27 reporting cycle, with mandatory UK SRS reporting for relevant entities anticipated once government and FCA consultations conclude. While SECR remains legally required for now, the transition to UK SRS is underway, and early preparation will help businesses stay ahead of tightening disclosure expectations.
Transition reliefs: available, but duration may depend on future rules
The standards include transition provisions, such as first year relief from comparatives. For climate, S2 includes reliefs around first year use of non-GHG Protocol methods (where conditions are met) and relief from Scope 3 disclosure in the first year of application.
Time limits for several reliefs were removed from the standards during the consultation period; however, these may be reintroduced through regulation when mandatory regimes are set.
How to Prepare: A Technical Readiness Checklist
Even if your mandatory start date is not yet confirmed, UK SRS readiness work is largely the same and overlaps strongly with investor expectations.
- Run a structured gap assessment against S1 and S2 pillars (governance, strategy, risk management, metrics and targets), prioritising areas that require new processes rather than new narrative.
- Align finance and sustainability teams on consistency of data and assumptions, materiality thresholds, and signoff routes, because S1 expects strong connectivity with financial reporting.
- Build a scenario analysis approach that is commensurate with your exposure, then mature it over time (qualitative to quantitative), documenting assumptions and scope.
- Industrialise emissions data collection so it can meet “same time as financials” reporting cadence, including governance over emission factors, organisational boundaries, and change control.
- Develop a Scope 3 improvement roadmap: category screening, supplier segmentation, primary data strategy, and a documented data quality hierarchy that matches S2’s measurement framework.
- Prepare for assurance style evidence by implementing controls, audit trails, and clear documentation of judgements, uncertainty and estimation choices, which are explicitly required under S1.
How MyCarbon Can Support: From “We Think We’re Close” to UK SRSReady
MyCarbon can support your business through the UK SRS readiness and implementation phases, including:
- SRS S1 and S2 gap assessments and implementation roadmaps aligned to your reporting boundary and governance model.
- End-to-end GHG inventory development, including Scope 3 category mapping, data strategy, and improvement planning in line with S2’s Scope 3 framework.
- Scenario analysis and climate resilience assessment, from lightweight qualitative approaches through to more quantitative modelling aligned to planning cycles.
- Drafting UK SRS aligned disclosure packs that are connected, decision useful, and built for annual report publication timelines.
If you want to understand what UK SRS means for your organisation, and what you need to do first, MyCarbon can run a focused readiness review and turn it into a practical plan for compliance and improved investor grade reporting.