While global regulators’ efforts to beef up climate disclosure rules have seemingly stalled amid growing U.S. opposition, the U.K.’s Financial Conduct Authority (FCA) is launching a consultation on proposed rules that would adopt new sustainability reporting standards for issuers.
The FCA published a consultation paper on Friday setting out proposals to replace its existing climate disclosure rules for listed companies with new rules that align with international standards developed by the International Sustainability Standards Board (ISSB). Its current set of rules is based on the recommendations of the now-defunct Task Force on Climate-related Financial Disclosures.
According to the paper, the U.K. government is currently developing sustainability reporting standards that would adopt the ISSB recommendations for use in the U.K. — and so, the FCA is now consulting on changes to its rules to implement those new standards.
Among other things, the regulator is proposing mandatory reporting of certain climate disclosures, but would allow companies to take a “comply or explain” approach to reporting so-called “Scope 3” emissions data — which includes downstream emissions created by a company’s activities. Under the proposed rules, it would also allow companies to use that same approach to wider sustainability reporting that goes 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 noted.
At the same time, the FCA also said that its proposals aim to “make sure investors can access clear, consistent and robust information about sustainability risks and opportunities.”
Additionally, the FCA’s proposing to require companies to disclose whether they have developed a climate transition plan or not, and to disclose whether they have independently validated their disclosures. However, “Mandating that companies have transition plans is a matter for government,” it said.
The deadline for responding to the consultation is March 20.
The FCA said it aims to publish a policy statement on this in the fall, with the rules expected to come into force on Jan. 1, 2027.
Last year, Canadian regulators officially shelved their ongoing work at beefing up climate disclosure.
In April 2025, the Canadian Securities Administrators (CSA) announced that it was, “pausing its work on the development of a new mandatory climate-related disclosure rule and amendments to the existing diversity-related disclosure requirements … to support Canadian markets and issuers as they adapt to the recent developments in the U.S. and globally.”