Zoe Alipranti
Senior Policy Programme Manager
The UK has long positioned itself as a leader in green finance, introducing regulations designed to improve climate-related reporting and support sustainable investment. However, recent developments raise questions about whether the UK is moving towards a lighter-touch approach. This Insight considers whether the UK is following the EU in scaling back green finance reporting, and how the regime can be simplified without weakening the information investors rely on.
Why disclosure matters to investors
Investors need consistent, decision-useful sustainability information to assess risk, identify opportunities and allocate capital effectively. Comparable disclosures support effective stewardship and enable the assessment of companies and investment products across markets. Improving transparency around sustainability-related risks and opportunities helps investors deploy capital with confidence, supporting economic competitiveness and the transition to a more sustainable economy.
Investors support reducing duplication in reporting, but not at the expense of a reliable disclosure baseline. In the UK, that baseline has been built through two complementary tools: sustainability-related disclosures, providing information on current performance and risk management, and transition plans, offering a forward-looking view of how companies intend to decarbonise and create value through the transition.
Current state of play
Recent policy developments suggest the UK remains committed to sustainability disclosures, but questions remain about how the framework will be implemented in practice. The government has published UK Sustainability Reporting Standards (SRS) S1 and S2, and the Financial Conduct Authority (FCA) has finalised rules requiring in-scope listed companies to report against them on a comply-or-explain basis. The FCA is also consulting on a technical note to clarify how this approach should operate in practice.
At the same time, the FCA is replacing product-level Task Force on Climate-Related Financial Disclosures (TCFD) reporting requirements with a more targeted, outcomes-based approach, giving firms greater flexibility in how they communicate climate-related information. The government has yet to respond to its consultation on transition plans , which closed in September 2025. This is despite Labour's manifesto commitment to require UK-regulated financial institutions and FTSE 100 companies to develop and implement credible transition plans aligned with the Paris Agreement.
Alongside these developments, a government consultation on modernising corporate reporting points to a broader effort to streamline the UK's reporting framework.
What does this mean in practice?
The UK now faces a familiar policy challenge: how to reduce reporting burdens without weakening the information investors rely on. Simplification can be beneficial where it removes duplication, unnecessary prescription or disclosures that provide limited value to users.
The risk is that streamlining goes too far.
If key climate and sustainability information is lost, investors may face reduced comparability across companies and investment products, as well as greater fragmentation in what firms choose to disclose. Divergence from internationally recognised standards could further reduce comparability for investors operating across multiple jurisdictions.
Maintaining a coherent reporting framework is therefore critical. Weakening the links between corporate, asset manager and asset owner reporting could ultimately increase costs and complexity, forcing investors to recreate previously standardised information through private engagement and third-party data providers rather than public disclosure.
What does good simplification look like?
Simplification should modernise the UK's reporting framework without weakening the crucial information investors need. A more proportionate regime should reduce unnecessary complexity while preserving decision-useful information.
- A consistent baseline through the ISSB standards: UK SRS should provide comparable sustainability information across the market. The FCA's technical note should clarify that use of the "explain" option should be exceptional and time-limited.
- A forward-looking complement: Credible transition plans allow investors to assess how companies intend to navigate and deliver the transition. The government should now respond to its consultation and set out a clear timetable for implementation.
- Clear and credible information for investment products: The SDR regime should continue to provide investors with useful, comparable information on the sustainability characteristics and objectives of investment products.
- Connectivity across the investment chain: Changes to corporate and product-level disclosure requirements should be considered together so information is not lost between issuers, asset managers and asset owners.
Alongside these measures, regulators should monitor reporting quality over time. The FCA should review the quality of disclosures and explanations for opting out against its objective of improving the quantity, quality and comparability of financially material information.
Next steps
Key milestones over the coming months include the outcome of the Department for Business, Innovation, Science and Trade’s (BIST) consultation on modernising corporate reporting, the government's response on transition plans, and the FCA's final technical note on the operation of the UK SRS comply-or-explain regime.
Members can support this work by contributing to IIGCC consultation responses, participating in policy working groups and sharing evidence on how disclosure requirements are used in investment decision-making.
As policymakers consider how to streamline reporting requirements, maintaining a consistent baseline of decision-useful information will be essential to preserving investor confidence and supporting the UK's sustainable finance ambitions.
To find out more about IIGCC’s UK policy work, get in touch with Zoe Alipranti, Senior Policy Programme Manager – UK.
Disclaimer: This Insight is provided for general information only and does not constitute financial, legal, accounting, tax or investment advice or any recommendation. Investors are responsible for their own decisions and must act independently, taking account of their own circumstances, obligations and applicable legal and regulatory requirements.