UK green finance · the regulatory stack
Green finance in the UK: the 2026 regulatory guide
Green finance in the UK is a market — green gilts, green bonds and loans, sustainability-linked lending, labelled funds — wrapped in a growing set of rules.
The 2023 green finance strategy sets the policy; the FCA’s product labels and anti-greenwashing rule govern what is sold; and from 2027 listed companies report against UK SRS or explain.
The UK chose not to build a green taxonomy, and providing an ESG rating becomes regulated only in June 2028.
Definitions
What green finance means in the UK
Green finance is lending, investment and insurance that supports environmentally sustainable activity.
It includes use-of-proceeds instruments, where the money goes to specified green projects — green bonds, green loans and the UK’s green gilts.
It includes performance-linked instruments, where the money is general-purpose but the terms move with sustainability targets — sustainability-linked loans and bonds.
And it includes investment products marketed on their sustainability characteristics, which in the UK sit under the FCA’s Sustainability Disclosure Requirements.
Around the market sits a disclosure-led regulatory wrapper: what funds may call themselves, what listed companies must report, how banks manage climate risk, and soon how ESG ratings are produced.
The UK’s distinctive choice is to regulate disclosure and claims rather than define green activity in law: HM Treasury decided on 15 July 2025 not to proceed with a UK taxonomy, as set out on our green taxonomy page.
Many sustainability consultancies advise on green finance frameworks and disclosure; the rules themselves are set out below, at the source.
Policy and the sovereign
The 2023 strategy and the green gilts
The government’s green finance strategy was first published in July 2019 and replaced on 30 March 2023 by “Mobilising green investment: 2023 green finance strategy”.
It sets out a framework for the UK to become the world’s first Net Zero Aligned Financial Centre, and plans for the information and tools market participants need to align with climate and nature goals.
It is policy: it explains what the government intends, and the binding parts arrive through other instruments.
The sovereign’s own contribution is the green gilt programme, run by the UK Debt Management Office.
The UK Government Green Financing Framework, first published on 30 June 2021 and updated on 26 November 2025, sets which government expenditures green gilts and the retail Green Savings Bonds may finance.
It was developed in line with the ICMA Green Bond Principles.
The first green gilt raised £10 billion on 21 September 2021: a 12-year bond maturing on 31 July 2033, financing categories including clean transport, energy efficiency and renewable energy.
A second green gilt, a new 32-year maturity, followed on 21 October 2021, building out a green yield curve.
- 2 Jul 2019First strategy
Green finance strategy published.
- 30 Jun 2021Green Financing Framework
Published by HM Treasury.
- 21 Sep 2021First green gilt
£10bn, 12-year, maturing 31 July 2033.
- 21 Oct 2021Second green gilt
A new 32-year maturity.
- 30 Mar 20232023 strategy
“Mobilising green investment”.
- 26 Nov 2025Framework updated
Green Financing Framework revised.
The market
Green bonds, loans and sustainability-linked debt
Two models run through the market: money for specified green projects, and money for anything on terms that move with sustainability targets.
Both rest on voluntary market principles, not statute.
| Instrument | Where the money goes | What moves the terms | Standard behind it |
|---|---|---|---|
| Green bond | Eligible green projects (use of proceeds) | Standard bond pricing | ICMA Green Bond Principles |
| UK green gilt | Eligible government green expenditure | Sovereign pricing | UK Government Green Financing Framework |
| Green loan | Eligible green projects (use of proceeds) | Standard loan pricing | Market loan principles |
| Sustainability-linked loan | General corporate purposes | Margin tied to sustainability performance targets | Market loan principles |
| Sustainability-linked bond | General corporate purposes | Bond characteristics tied to whether targets are met | ICMA Sustainability-Linked Bond Principles |
| Labelled fund | Assets in line with a sustainability objective | n/a | FCA SDR labels (rules) |
The Green Bond Principles describe themselves as “voluntary process guidelines” and set four core components: use of proceeds, the process for project evaluation and selection, management of proceeds, and reporting.
They recommend a green bond framework and external review before issuance, and annual reporting on allocation until the proceeds are fully allocated.
Labels in the debt markets are market conventions, not UK law: no UK statute defines a green bond.
What UK law does reach is the claim made about a product to a UK client, through the FCA’s anti-greenwashing rule.
FCA SDR
Labels, names and the anti-greenwashing rule
The FCA’s Sustainability Disclosure Requirements, made in PS23/16, have four parts.
The anti-greenwashing rule, ESG 4.3.1R, was made on 28 November 2023 and applies from 31 May 2024 to every FCA-authorised firm.
It requires any reference to the sustainability characteristics of a product or service to be consistent with those characteristics and fair, clear and not misleading.
It reaches products and services, not claims a firm makes about itself, which the FCA’s guidance FG24/3 points to the Principles, the Consumer Duty and the CMA and ASA.
The four investment labels — Sustainability Focus, Improvers, Impact and Mixed Goals — are drafted as a prohibition in ESG 4.1.1R, with a carve-out letting qualifying managers use one from 31 July 2024.
A labelled product must invest at least 70% of its gross assets in line with its sustainability objective, against a robust, evidence-based standard (ESG 4.2.4R).
The naming and marketing rules restrict thirteen terms in a retail product’s name or financial promotion, with a longstop of 2 December 2024.
An unlabelled product may still use ten of them, but never “sustainable”, “sustainability” or “impact”; and a Focus, Improvers or Mixed Goals product may not use “impact” in its name.
The checker beside this text applies those naming rules to a name you type.
The entity-level report is the fixed calendar duty — 2 December 2025 for enhanced SM&CR managers and 2 December 2026 for others with £5 billion or more under management — while the product-level report runs from first use of a label or restricted term.
Linklaters’ quick guide is one law firm’s summary; the full rules are on our FCA SDR and anti-greenwashing page.
FCA SDR · fund name check
Type a product name
The check looks for the thirteen terms the FCA restricts in a retail product’s name. It applies to managers of in-scope funds marketed to retail clients.
Rules: FCA Handbook ESG 4.1.1R, 4.2.4R, 4.3.1R, 4.3.2R(2), 4.3.4R(2) and 4.3.5R.
A screen of the words only; the catch-all term and the label criteria need judgement.
Nothing you type leaves your browser.
Listed companies
UK SRS: the disclosure half of the stack
Companies raising capital on UK markets meet green finance through disclosure.
The UK SRS S1 and S2 were published by the Department for Business and Trade on 25 February 2026 for voluntary use.
The FCA’s final rules, PS26/19 of 30 September 2026, require listed companies in UKLR 6, 14, 15, 16 and 22 to report against them on a comply-or-explain basis for accounting periods beginning on or after 1 January 2027, with first reports in 2028.
They finalise CP26/5, which had proposed a mandatory S2; the final rules put all of UK SRS on comply or explain, with a one-year Scope 3 relief and a two-year relief for S1 matters beyond climate.
The new rules replace the TCFD-aligned listing-rule disclosures.
A listed company in UKLR 6, 16 or 22 also says whether it has published a climate transition plan and where — there is no duty to have one; see UK SRS transition plan disclosures.
Where the report was assured, it names the provider, the disclosures covered and the standard used; assurance itself is not required.
The listed-company position in full is on the FCA’s UK SRS rules, and the standards on UK SRS S1 and S2.
Banks, insurers and asset managers
Financed emissions, PCAF and the PRA
For financial institutions the largest emissions are usually those of the companies they lend to, insure and invest in — financed emissions, part of Scope 3 category 15.
UK SRS S2 paragraph 29(a)(vi)(2) asks for additional information about financed emissions where an entity’s activities include asset management, commercial banking or insurance, with application guidance at paragraphs B59 to B63A.
For asset management, B61 asks for absolute gross financed emissions by scope, the assets covered and the share of the total, and the methodology used — without prescribing one.
The UK added one duty the ISSB text does not have: where an entity cannot reliably estimate financed emissions for the same period as its accounts, B59A requires it to say why, how it estimated what it reports, and its plan with a timeline.
The method most used is the PCAF standard, published in three parts: financed emissions, facilitated emissions and insurance-associated emissions.
It is named in no UK instrument, and its data-quality scale runs the opposite way to CDP’s scores: 1 is the best, 5 the worst.
PCAF itself says its later additions have not been reviewed by the GHG Protocol, whose review service has closed; the GHG Protocol’s own standards are covered on the GHG Protocol.
The category 15 detail is on UK SRS Scope 3 reporting, and the ISSB’s December 2025 amendments on IFRS S2.
For banks and insurers the prudential expectation is the PRA’s SS5/25, which replaced SS3/19 in its entirety on 3 December 2025 and covers governance, risk management, climate scenario analysis, data and disclosures.
A supervisory statement sets expectations, not rules.
Asset managers and asset owners in the FCA’s scope keep their entity-level TCFD report, but the product-level TCFD metrics rule was removed on 25 September 2026; clients can still request Scope 1, 2 and 3 data for a product.
Our sister site covers financed emissions reporting and the PCAF standard in the UK in depth.
ESG ratings
ESG ratings: made law, not yet biting
The FSMA 2000 (Regulated Activities) (ESG Ratings) Order 2025, SI 2025/1349, was made on 15 December 2025.
Providing an ESG rating becomes a regulated activity on 29 June 2028; until then its substantive provisions are in force only for the FCA’s rule-making.
Needing authorisation is the consequence of that, not the Order’s own words.
The FCA consulted in CP25/34, which closed on 31 March 2026, and plans to publish final rules in a Q4 2026 policy statement.
Today the ratings that investors and lenders use are unregulated private opinions in the UK.
The EU’s regime is already live: Regulation (EU) 2024/3005 has applied since 2 July 2026, existing providers had to notify ESMA by 2 August 2026, and they must apply for authorisation by 2 November 2026.
The two are not parallel: the EU’s is a standalone regulation supervised by ESMA directly, the UK’s works through the FCA’s FSMA perimeter, and they bite two years apart.
Paul Hastings’ client alert summarised the UK Order when it was made.
The whole stack
Every instrument, by status
Filter to see what is law today, what is made but not yet applying, and what is a market standard or policy.
Show
Showing 15 of 15
| Instrument | What it does, and from when | Owner |
|---|---|---|
| 2023 green finance strategy | Government policy framework; published 30 March 2023 | HM Government |
| Green gilts | Sovereign green bonds under the Green Financing Framework; first issued 21 September 2021 | HM Treasury / DMO |
| Green bonds and loans | Use of proceeds for eligible green projects; ICMA Green Bond Principles, four core components | ICMA (voluntary) |
| Sustainability-linked loans and bonds | Terms tied to sustainability performance targets; general-purpose proceeds | Market principles (voluntary) |
| Anti-greenwashing rule (ESG 4.3.1R) | All FCA-authorised firms; applies from 31 May 2024 | FCA |
| SDR investment labels (ESG 4.1.1R) | Prohibition with a carve-out for qualifying managers from 31 July 2024 | FCA |
| SDR naming and marketing (ESG 4.3.2R) | Thirteen restricted terms for retail products; longstop 2 December 2024 | FCA |
| SDR entity-level report (ESG 5.4.3R(2)) | 2 December 2025 (enhanced SM&CR managers); 2 December 2026 (others with £5bn or more under management) | FCA |
| TCFD entity report for asset managers and owners (ESG 2.2.1R) | Continues; product-level TCFD metrics removed on 25 September 2026 | FCA |
| UK SRS for listed companies (PS26/19) | Comply or explain for accounting periods beginning on or after 1 January 2027 | FCA |
| ESG ratings (SI 2025/1349) | Regulated activity from 29 June 2028; FCA rules due Q4 2026 | HM Treasury / FCA |
| PRA SS5/25 | Climate risk expectations for banks and insurers, from 3 December 2025 | PRA |
| PCAF standard | Financed-emissions method; named in no UK instrument | PCAF |
| UK Green Taxonomy | Work “should not proceed”, 15 July 2025 | HM Treasury |
| EU ESG Ratings Regulation (2024/3005) | Applies from 2 July 2026; ESMA authorisation | EU |
Each row is sourced in the sections above.
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The FCA’s climate change and sustainable finance hub collects its own material; note that it cites the anti-greenwashing guidance as FG24/2, which is mortgage guidance — the correct reference is FG24/3.
The Treasury’s taxonomy decision named UK SRS, assurance and transition plans as its priorities; Macfarlanes’ note on the decision summarises it from the market’s side.
What comes next
Green finance dates still ahead
Three moves dominate the next two years.
First, listed companies prepare their first UK SRS reports, for accounting periods beginning on or after 1 January 2027.
Second, the FCA finalises its ESG ratings rules, with the regime biting on 29 June 2028.
Third, the remaining SDR entity-level reports fall due on 2 December 2026.
None of these creates a UK green taxonomy, and none requires a company to have a transition plan.
The data you ask companies for is shaped by what they must report.
From 2027, listed borrowers and investees report against UK SRS or explain — so ask for their UK SRS disclosures, not a bespoke questionnaire, where they exist.
For a specific institution’s position, book a free 15-minute call.
- 2 Nov 2026EU ratings authorisation
Existing providers apply to ESMA.
- Q4 2026FCA ESG ratings rules
Policy statement planned after CP25/34.
- 2 Dec 2026SDR entity reports
Managers with £5bn or more under management, not enhanced SM&CR.
- FY2027UK SRS comply or explain
Listed companies, first reports in 2028.
- 29 Jun 2028ESG ratings regulated
Providing an ESG rating becomes a regulated activity.
Frequently asked
Questions people ask
What is green finance?
Green finance is lending, investment and insurance that supports environmentally sustainable activity: green bonds and loans, sustainability-linked loans and bonds, sovereign green gilts, and funds with sustainability objectives.
In the UK it also means the rules around it: the FCA’s product labels and anti-greenwashing rule, listed-company disclosure against UK SRS, and the coming regulation of ESG ratings.
What is the UK Green Finance Strategy?
The government’s policy framework for green finance.
The first strategy was published in July 2019; the current one, “Mobilising green investment: 2023 green finance strategy”, was published on 30 March 2023 and sets out a framework for the UK to become the world’s first Net Zero Aligned Financial Centre. It is policy, not law.
What are UK green gilts?
Sovereign bonds whose proceeds are allocated to eligible green government spending under the UK Government Green Financing Framework, first published on 30 June 2021 and updated on 26 November 2025.
The first green gilt, a 12-year bond maturing on 31 July 2033, raised £10 billion on 21 September 2021; a second, 32-year green gilt followed on 21 October 2021.
Is there a UK Green Taxonomy?
No. HM Treasury decided on 15 July 2025 that work on a UK Taxonomy should not proceed, naming UK SRS, assurance of sustainability reporting and transition plans as its priorities instead.
The EU Taxonomy still reaches UK groups through EU entities and EU finance.
What is the FCA SDR?
The FCA’s Sustainability Disclosure Requirements: four voluntary investment labels for qualifying funds from 31 July 2024, naming and marketing rules restricting thirteen terms for retail products, product and entity-level disclosures, and the anti-greenwashing rule.
The anti-greenwashing rule applies to every FCA-authorised firm from 31 May 2024.
What is the anti-greenwashing rule?
ESG 4.3.1R.
Made on 28 November 2023 and applying from 31 May 2024, it requires any reference to the sustainability characteristics of a product or service to be consistent with those characteristics and fair, clear and not misleading.
It binds all FCA-authorised firms, for products and services; claims a firm makes about itself fall under other rules and the CMA and ASA.
The FCA’s guidance on it is FG24/3.
What is the UK ESG ratings regulation?
The FSMA 2000 (Regulated Activities) (ESG Ratings) Order 2025, SI 2025/1349, made on 15 December 2025.
Providing an ESG rating becomes a regulated activity on 29 June 2028; until then the provisions are in force only for FCA rule-making.
The FCA consulted in CP25/34, which closed on 31 March 2026, and plans final rules in Q4 2026.
What is PCAF and is it required in the UK?
PCAF is the Partnership for Carbon Accounting Financials, whose standard measures financed emissions — the emissions attributable to a financial institution’s loans and investments.
It is required nowhere in UK law: UK SRS S2 asks banks, asset managers and insurers for financed emissions and the method used, without naming PCAF.
PCAF’s data-quality scale runs from 1, the best, to 5.
What is a sustainability-linked loan?
A loan whose terms, typically the margin, move with whether the borrower meets agreed sustainability performance targets.
The proceeds can be used for general corporate purposes.
A green loan or green bond is different: its proceeds go to specific eligible green projects, the use-of-proceeds model in the ICMA Green Bond Principles.
What guides UK banks’ climate approach?
For risk management, the PRA’s Supervisory Statement SS5/25, which replaced SS3/19 in its entirety on 3 December 2025 and sets expectations on governance, risk management, scenario analysis, data and disclosures.
For disclosure, a listed bank reports against UK SRS on a comply-or-explain basis from 2027, including financed emissions under UK SRS S2.
What did the FCA publish in September 2026?
PS26/19, on 30 September 2026: final rules requiring listed companies in UKLR 6, 14, 15, 16 and 22 to report against UK SRS on a comply-or-explain basis for accounting periods beginning on or after 1 January 2027, with first reports in 2028.
Separately, FCA 2026/59 removed the product-level TCFD metrics rule for asset managers on 25 September 2026.
Sources
Primary sources
Every figure, date and status on this page traces to the instrument’s owner.
Secondary commentary is never the source for a number.
- HM Government (GOV.UK)Mobilising green investment: 2023 green finance strategy
Published 30 March 2023; the framework for a Net Zero Aligned Financial Centre.
- UK Debt Management OfficeGreen gilts
Green Financing Framework (30 June 2021, updated 26 November 2025) and the green gilt syndications.
- HM Treasury (GOV.UK)UK’s first Green Gilt raises £10 billion for green projects, 21 September 2021
The inaugural 12-year green gilt, maturing 31 July 2033.
- HM TreasuryUK Government Green Financing Framework (June 2021)
Use of proceeds for green gilts and Green Savings Bonds; aligned with the ICMA Green Bond Principles.
- ICMAGreen Bond Principles (June 2025)
Voluntary process guidelines; four core components.
- Financial Conduct AuthorityFCA Handbook, ESG 4 — labels, naming and marketing, anti-greenwashing
ESG 4.1.1R, 4.2.4R, 4.3.1R, 4.3.2R, 4.3.4R, 4.3.5R.
- Financial Conduct AuthorityPS23/16: Sustainability Disclosure Requirements and investment labels
The SDR rules as made, including ESG 5.4.3R and ESG TP 1.
- legislation.gov.ukFSMA 2000 (Regulated Activities) (ESG Ratings) Order 2025, SI 2025/1349
Made 15 December 2025; providing an ESG rating becomes a regulated activity on 29 June 2028.
- Financial Conduct AuthorityCP25/34: ESG ratings — proposed approach to regulation
Closed 31 March 2026; final rules planned in a Q4 2026 policy statement.
- EUR-LexRegulation (EU) 2024/3005 on ESG rating activities
Applies from 2 July 2026; supervised by ESMA.
- Financial Conduct AuthorityPS26/19: Aligning listed issuers’ sustainability disclosures with international standards
Comply or explain against UK SRS for listed companies from 2027.
- Department for Business and TradeUK SRS S2 — ¶29(a)(vi)(2), ¶¶B59–B61, B59A
Financed emissions for asset management, commercial banking and insurance.
- PCAFThe Global GHG Accounting and Reporting Standard for the Financial Industry
Parts A, B and C; the data-quality scale runs 1 (best) to 5.
- Bank of England (PRA)SS5/25 — Enhancing banks’ and insurers’ approaches to managing climate-related risks
Replaced SS3/19 in its entirety on 3 December 2025; expectations, not rules.
- HM Treasury (GOV.UK)UK Green Taxonomy: consultation response, 15 July 2025
Work on a UK Taxonomy “should not proceed”.