UK Financial Conduct Authority scales back climate reporting mandates

The UK’s Financial Conduct Authority (FCA) has adjusted its approach to corporate climate reporting, moving away from mandatory sustainability disclosures toward a more flexible ‘comply or explain’ framework. This shift follows industry feedback expressing concerns that rigid mandates could increase implementation costs and negatively impact the international competitiveness of UK-listed companies.

The regulator had previously proposed requiring companies to meet a specific UK climate standard covering material risks, opportunities, and targets. Under the new rules, firms can instead choose to follow the standards or provide an explanation for why they have not done so. This decision follows similar trends in the United States and the European Union regarding the scaling back or tightening of climate disclosure regimes.

Prior to this change, the FCA had already introduced rules in 2020 requiring premium-listed companies to disclose climate-related risks in line with the Task Force on Climate-related Financial Disclosures (TCFD) framework. A review of FTSE 350 companies’ 2025 annual reports indicated that 92 per cent of those firms complied with the TCFD requirements.