Climate-related financial disclosures

SI 2022/31 is a pure amending instrument: it creates no free-standing duty, and the law a reader needs is the amended text of sections 414CA and 414CB.

Section 414CA says who must prepare a non-financial and sustainability information statement, and section 414CB says what it contains.

Subsection (A1) of section 414CB makes the climate-related financial disclosures part of that statement, and subsection (2A) lists them.

The list follows the architecture of the TCFD framework — governance, strategy, risk management, and metrics and targets — but the statute does not label the eight by pillar, and it uses its own words throughout.

The instruments say “financial year”, while the FCA frames its listing rules by accounting period; both are right in their own text, and quoting one in the other’s language is a common slip.

The government’s guidance for companies and LLPs was published on 21 February 2022, is non-binding and has not been revised since.

The FRC records that the government has said it intends to update that guidance to reflect the UK SRS S2 route described below.

Governance, the risk process, integration and the principal risks with their time periods have no materiality filter, no directors’ belief test and no explanation route: if you are in scope, they are required.

The gate is partial — “the whole or a part” — so a company can omit one element of the scenario analysis rather than all of it.

The test is the directors’ reasonable belief about this business, so a reason that could appear in any company’s report is weak evidence that the belief is reasonable.

The explanation is itself a disclosure with a standard — “clear and reasoned” — and silence does not meet it.

The FCA’s listing rule worked differently: it was comply-or-explain across all eleven TCFD disclosures, which is one reason a listed company in both regimes could not treat them as one test.

The statement sits in the strategic report, which the board approves, so a defective climate section is a defective strategic report.

A traded or banking LLP puts the disclosures in its strategic report on the same footing, while a large LLP puts them in its energy and carbon report under the modified section 416A.

A parent tests the thresholds on the group, and the FRC’s review addressed the case of a parent presenting company-only information.

The NFSIS is also what makes the UK SRS route work, because the designation turns on a reference inside it.

The accounts and reports are then filed at Companies House, where anyone can read them.

On 30 September 2026 the FCA published PS26/19, whose ¶1.10 reads: “These rules will replace the existing TCFD aligned disclosures.”

From accounting periods beginning on or after 1 January 2027, companies in UKLR 6, 14, 15, 16 and 22 report against UK SRS on a comply-or-explain basis, S2 included.

The consultation that preceded it, CP26/5, had proposed mandatory S2 for some categories and a signposting statement for others; the final rules took neither course.

None of that touches the Companies Act: the FCA writes listing rules and cannot amend section 414CB.

A listed company over the CFD thresholds therefore stays in CFD scope after the listing rule changes, and the duplication is handled by the UK SRS S2 route rather than by repeal.

The listing rule, provision by provision, is on TCFD UK requirements, and which rule governs which period is on TCFD reporting requirements.

1. Before 1 Jan 2027
   Listing rule: TCFD statement

   UKLR 6.6.6R(8) and its twins, with TN 802.3 as guidance.

2. From 1 Jan 2027
   Listing rule: UK SRS

   Comply or explain across S1 and S2, for accounting periods beginning on or after this date.

3. Every year
   Companies Act: CFD

   Unchanged by PS26/19; UK SRS S2 can discharge it.

For most companies those KPIs are the SECR figures, and the government’s environmental reporting guidelines are the method most of them follow.

The FRC’s review looked specifically at how the SECR numbers and the climate targets and KPIs fit together, and two sets of emissions figures that do not reconcile in one annual report is the kind of thing a reviewer notices.

Full Scope 3 across the value chain is a UK SRS S2 requirement, with a relief, not a CFD one — the work is set out on Scope 3 under UK SRS.

The detail of the SECR regime is on the SECR reporting guide, and the energy audit scheme that often runs beside both is on energy savings opportunity scheme.

Section 456 lets a court order the revision of a defective strategic report.

Section 463 is a safe harbour, not a sanction: directors are liable to the company only, and only for statements made knowingly, recklessly or with dishonest concealment.

On 21 January 2025 the FRC published its thematic review of CFD by AIM and large private companies, after the first cycle of mandatory reporting.

It found that “while preparers have endeavoured to meet the CFD requirements, there was inconsistent quality among the companies selected”.

It set out examples of good practice and areas where preparers can provide “more consistent, coherent and concise disclosures” — the remedy is quality, not length.

The review is the nearest thing to a marking scheme the regime has, and it was written for exactly the cohort the high turnover route catches; ICAEW’s summary of it is a useful second read, and the FRC keeps its climate material together.

To raise the quality of the statement with outside support, see the guide to sustainability reporting consultancy sets out what a consultant does and whether you need one.