Streamlining Sustainability: UK FCA Moves to “Simplify” Disclosure Requirements
August 13, 2025
The UK Financial Conduct Authority (FCA) has declared its intention to “streamline and enhance” its sustainability reporting framework and “simplify” disclosure requirements following detailed feedback from investors.
The FCA set out plans to “simplify disclosure requirements and ease unnecessary burdens on firms” as part of its findings and next steps following a review of climate reporting by firms in line with its current rules.
The authority sought to discover how its rules function in practice and firms’ views on the regime. To achieve this, the FCA engaged with trade associations and seven firms in-scope of the climate disclosure rules based on the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations introduced in 2021.
The FCA also reviewed a sample of ten TCFD entity reports and 77 TCFD product reports from eight of the same entities.
“This work is a natural progression in sustainability reporting and reflects our priorities to support growth and be a smarter regulator,” said the FCA in a statement. “It also supports our wider work to streamline the regulatory regime for asset managers.”
Asset managers, FCA-regulated pension providers, industry associations, trade bodies and civil society groups and other regulators and policymakers are among the parties that the authority listed as being potentially affected by the changes.
The FCA finalised climate disclosure rules for asset managers, life insurers and FCA-regulated pension providers in 2021 which required the disclosure of climate-related information in line with the TCFD recommendations. The International Sustainability Standards Board (ISSB) Standards later fully incorporated the TCFD recommendations in 2023.
According to the FCA, its rules had heightened firms’ consideration of climate risks and supported their integration into firms’ decision-making, with firms also more transparent with their clients and consumers.
The FCA’s findings for the impact of its rules also included encouraging firms to consider climate change as a material risk, build their capabilities and integrate climate risks and opportunities into their strategies.
However, the authority noted that the availability of data and consistent, well-developed methodologies had created some climate reporting challenges.
There also were several issues with the current state of the FCA’s sustainability reporting requirements highlighted by the firms that the authority had engaged with.
Asset managers particularly pointed out that they are required to report under multiple sustainability disclosure regimes and considered the FCA’s TCFD rules “too granular” and suggested that sustainability disclosures could be “simplified and streamlined”.
The firms also requested clarity from the FCA over the future of its TCFD rules within the broader context of the direction of travel towards the ISSB standards, globally and in the UK.
The authority was urged to consider international consistency while working with industry to develop a future regime which is “practical” for firms.
The UK Sustainable Investment and Finance Association (UKSIF) – which has more than 300 members, including investment managers, pension funds and NGOs collectively representing over £19 trillion (U$25.6 trillion) in AUM – broadly welcomed the review. Minerva Analytics is a member of UKSIF.
“The main findings seem to align with investors’ views on the current climate and sustainability reporting rules and expectations on the UK’s upcoming reporting landscape” said Oscar Warwick Thompson, Head of Policy and Regulatory Affairs at UKSIF. “We are particularly pleased to see the review recognise the need for clarity regarding the future trajectory of these disclosures and the importance of simplification to promote understanding among different client groups.”
Going forward, the FCA intends to “consider sustainability reporting as a whole”. This includes include the UK Sustainability Disclosure Requirements (SDR), the ongoing endorsement of the ISSB standards, also known as UK Sustainability Reporting Standards (SRS), and developments on transition plans.
The authority added that it will continue closely collaborating with the Government and regulatory counterparts to “support consistent outcomes along the investment chain”. It also intends to further engage with industry to guide its next steps.
In addition to simplifying disclosure requirements, the FCA wants to maintain good outcomes for clients and consumers and improve the decision-usefulness of reporting, building on the work of SDR to improve trust and reduce greenwashing.
The authority also detailed its intention to promote international alignment of sustainability reporting and help maintain the UK’s position as a global leader in sustainable finance.
“It’s now crucial that the government moves swiftly ahead with the adoption of the UK SRS,” said UKSIF’s Warwick Thompson. “As part of this, we would like to see confirmation in the coming months of a shift from TCFD-aligned reporting to ISSB aligned reporting across the UK economy, with clear time frames set out for different actors.”
In June, the UK Government launched a public consultation on the SRS which is due to close on September 17, as reported by Minerva Analytics. The consultation was one of a trio released on the same day, with the other two seeking feedback on the buildout of a voluntary registration regime for sustainability reporting assurance providers and how to drive the government’s transition planning commitment forward.
The UK SRS consultation seeks views on an exposure draft of the standards which are based on the ISSB’s IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures.
The government intends to analyse responses to the consultation as part of a final decision on whether to endorse the drafts of UK SRS S1 and UK SRS S2 for use in the UK and make final versions available for any entity to use on a voluntary basis. If endorsed, the government aims to publish the final UK SRS S1 and UK SRS S2 in autumn 2025.
The government has proposed six amendments to the IFRS standards to be applied in a UK context and is seeking feedback on the changes through the consultation.
The FCA said that it welcomed the Government’s consultations on the draft UK SRS. It stated that later this year it intends to consult on how listed companies will adopt these standards, as well as “promoting international alignment and the growth of the UK as a centre for sustainable finance”. This will include the authority’s proposed approach to the disclosure of transition plans.
Reducing regulatory fragmentation and promoting coherence between rules in different jurisdictions is a key priority for investors. Last week, the Institutional Investors Group on Climate Change (IIGCC) called for the creation of an EU-wide stewardship code to enhance coherence and reduce fragmentation between member states’ rules related to stewardship, as reported by Minerva Analytics.
IIGCC, which counts more than 400 asset owner and asset manager members, stated that investor stewardship can play a critical role in fostering sustainable long-term value creation and encouraging behavioural change to support the transition efforts of investee companies in line with the EU’s net zero commitments.
However, the initiative stressed that to achieve this investors require a “coherent, EU-level approach to stewardship that transcends national boundaries”, which an EU-wide stewardship code would offer.
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Last Updated: 13 August 2025