United Kingdom - FCA & BEIS (Financial Conduct Authority & Department for Business, Energy & Industrial Strategy)
- Countries: United Kingdom
- Function: TCFD-aligned disclosures for large companies and asset managers; includes SECR
The United Kingdom has established a mandatory framework for climate-related and broader sustainability disclosures, coordinated across financial regulators and corporate governance bodies. Central to this architecture are the Financial Conduct Authority (FCA), which governs financial sector participants, and the Department for Business, Energy & Industrial Strategy (BEIS), which historically oversaw corporate disclosure reforms before its functions were redistributed into the Department for Business and Trade (DBT) and the Department for Energy Security and Net Zero (DESNZ) in 2023. Despite this reorganization, BEIS-era frameworks continue to define the UK's sustainability reporting landscape.
The United Kingdom was the first G20 country to move decisively toward mandatory TCFD-aligned climate disclosure. Beginning in 2021, the FCA required premium-listed companies to disclose against TCFD recommendations on a comply-or-explain basis, extending requirements to standard-listed issuers and asset managers in 2022.
The framework applies to:
- Publicly listed companies (premium and standard segments)
- Asset managers and life insurers above certain thresholds
- Private companies with significant size thresholds (for certain disclosures)
The disclosures must address four TCFD thematic pillars:
- Governance: Board and management oversight of climate-related risks and opportunities
- Strategy: Actual and potential climate impacts on business models and financial planning
- Risk management: Processes for identifying, assessing, and managing climate-related risks
- Metrics and targets: Emissions reporting (Scope 1, 2, and, where material, Scope 3), and progress against climate-related targets
The United Kingdom’s approach to mandatory climate disclosure is closely linked to its broader Greening Finance Strategy, which aims to embed environmental considerations across the financial system. Climate-related disclosures are seen not only as investor protection tools but as critical mechanisms for driving capital reallocation toward net-zero transition goals.
The UK mandates energy and carbon reporting through the Streamlined Energy and Carbon Reporting (SECR) framework.
Effective since 2019, SECR requires large companies, LLPs, and quoted firms to disclose:
- Energy consumption
- Greenhouse gas emissions
- Energy efficiency actions taken
- Intensity ratios normalized to operational metrics (such as revenue or production output)
SECR operates alongside corporate financial reporting obligations, embedding carbon and energy metrics into annual reports filed with Companies House. It applies to over 11,000 UK-registered organizations and is designed to improve consistency and transparency in environmental performance disclosure.
Looking forward, the UK is preparing to move beyond TCFD-aligned climate reporting toward broader sustainability reporting frameworks. In 2023, the UK government announced plans to develop disclosure standards based on the International Sustainability Standards Board (ISSB) IFRS S1 and S2 standards, subject to a UK-specific endorsement and consultation process. The goal is to maintain international comparability while tailoring application to domestic market needs.
The UK's regulatory approach to sustainability disclosure is characterized by:
- Early adoption of climate disclosure mandates compared to G20 peers
- Reliance on international standards (TCFD, now ISSB) rather than creating standalone domestic frameworks
- Incremental expansion from climate-specific to broader ESG reporting through phased regulatory initiatives
- Integration of sustainability disclosure into mainstream corporate reporting, rather than through standalone ESG reports
Challenges remain, particularly around Scope 3 emissions measurement, SME disclosure proportionality, and ensuring alignment across overlapping frameworks (SECR, TCFD, ISSB). Nonetheless, the United Kingdom remains a global leader in mainstreaming climate risk into financial reporting and governance practices.