UK SRS comply or explain: why large companies still need their climate data ready for 2027
The FCA made UK Sustainability Reporting Standards comply or explain for listed companies. The data work behind a credible explanation is the same as complying.
UK SRS, the UK Sustainability Reporting Standards, apply to listed companies for accounting periods starting on or after 1 January 2027, with first reports in 2028. The FCA made every requirement comply or explain, Scope 3 included. That sounds like a reprieve. For most large companies it changes the wording of the report and very little of the data work.
What the FCA actually decided
The government published UK SRS S1 and UK SRS S2 in February 2026. They are the UK-endorsed versions of the ISSB's IFRS S1 and IFRS S2, and any organisation can use them voluntarily today. On 30 September 2026 the FCA published Policy Statement PS26/19, which replaces the TCFD-aligned Listing Rules that have applied since 2021 with reporting against UK SRS.
The headline points from PS26/19 and the commentary from law firms that have read it closely:
- Timing: accounting periods starting on or after 1 January 2027, with the first reports published in 2028.
- Basis: comply or explain across all of UK SRS. The January 2026 consultation (CP26/5) had proposed mandatory climate disclosures under S2, so this is softer than expected.
- Transitional relief: one year for Scope 3 emissions and two years for the wider, non-climate disclosures under S1.
- Transition plans: commercial company issuers must say whether they have published a climate transition plan, though they are not required to produce one.
- Overseas issuers: secondary listings and depositary receipt issuers also report against UK SRS on a comply or explain basis.
The FCA also consulted on a Technical Note on how to explain proportionately, which closed on 28 October 2026, and says it will publish more on its supervisory approach in the second half of 2027.
Why comply or explain is less of a let-off than it looks
A&O Shearman's summary of PS26/19 notes that the FCA itself expects more than a third of domestic issuers to explain against most of UK SRS. That is a lot of companies standing up in an annual report and saying, in effect, we do not have this yet. Investors will read those explanations side by side. So will the procurement teams who already send you CDP requests and EcoVadis invitations.
An explanation that holds up has to say what is missing, why, and when it will be fixed. You cannot write that paragraph honestly without knowing the state of your data. Which brings you back to the same job you would have done to comply: find out where every energy bill, fuel card, flight booking and supplier spend line lives, and who owns it.
There is also a step up from TCFD that catches people. Under TCFD, Scope 3 was disclosed "if appropriate". Under S2 it is expected in all cases once the relief ends, and S2 adds industry-based metrics. A company that has reported Scope 1 and 2 for years under TCFD now has a gap with a date on it.
Private companies: not in scope yet, still in the frame
PS26/19 only covers listed issuers. For large private companies, the route runs through the Companies Act. The government's Modernising Corporate Reporting consultation, published on 7 September 2026, closes on 30 November 2026 with an outcome promised by the end of May 2027. A review of the existing Companies Act climate disclosure regime is due to finish by spring 2027 and will inform how UK SRS is reflected in company law. The same consultation says the Department for Energy Security and Net Zero will consult on SECR and ESOS later this year.
None of that is a requirement yet. But if you supply a listed company, you will feel UK SRS through their Scope 3 work long before any rule names you. Their category 1 purchased goods and services number is partly your emissions.
What we hear on calls: the deadline is really a year earlier
On a call this week, the sustainability lead at a large, privately owned services group described his plan for a different set of climate rules in exactly the terms that apply here. Work back from the first reporting year. The data has to be in good shape the year before, because that is the year being reported on. Right now it lives in spreadsheets, with a calculation tool on top.
Two details from that conversation are worth borrowing. First, a single consolidated footprint stopped being good enough once the group needed figures by legal entity, and a lot of the business runs on shared services that nobody had split. Second, Scope 3 covered four categories, mostly estimated from spend, and he was candid that the robustness was anybody's guess. Neither problem is unusual. Both take months to fix, and neither is fixed by choosing to explain.
For a calendar-year company, the first UK SRS reporting period starts on 1 January 2027. That is eight weeks away.
What to do before January
- Set your boundary by entity. Decide how shared sites, fleets and services are allocated, and write it down. This also feeds your ESOS Phase 4 assessment, which uses a 31 December 2026 qualification date.
- Name a data owner for every source. Energy, fuel, travel, waste and procurement spend each need a person who will be asked for data on a schedule, and chased when it does not arrive.
- Pick your Scope 3 categories and data tiers. Our guide to the 15 Scope 3 categories shows which are usually material and where spend-based estimates are acceptable as a starting point.
- Reuse what you already report. Your SECR energy and Scope 1 and 2 figures are the foundation of S2 metrics. Collect them once and use them everywhere.
- Cut the metric list. Most frameworks overlap. Our view on which ESG metrics actually matter applies directly to what S1 and S2 ask for.
- Draft your explanation now. If you will explain on anything in 2028, write the paragraph today. If you cannot say when the gap closes, that is your project plan.
Where software earns its keep
The disclosure itself is a few pages of an annual report. The work is the twelve months of data collection underneath it, across dozens of people who do not report to the sustainability team. That is the part we built Ella for. Ella is AI-native ESG reporting software, built as an agent: it sends collect links to data owners, chases them, tracks what is missing, reads the bills and spend exports people drag in, and keeps the source on every number so the assurance conversation is short.
Comply or explain gives listed companies room to be honest about gaps in 2028. The companies that use that room well will be the ones that started collecting properly in January 2027.