Reporting · How to write it
UK SRS S2 disclosure: how to write each pillar
A UK SRS S2 disclosure is the climate section of the annual report, written to UK SRS S2, which the Department for Business and Trade published on 25 February 2026.
For listed companies it is disclosed or explained from periods beginning on or after 1 January 2027, under the FCA’s final rules in PS26/19.
This page takes the standard paragraph by paragraph and shows what a good answer to each looks like, with illustrative wording we have written for a fictional company.
The shape
What the disclosure is, and where each part comes from
UK SRS S2 asks for information about climate-related risks and opportunities that could reasonably be expected to affect a company’s cash flows, access to finance or cost of capital (¶2).
It keeps the four-pillar shape of the TCFD recommendations, which the FCA’s rules replace for periods from 1 January 2027.
The pillars are connected: UK SRS S1 ¶21 requires a reader to be able to see the links between governance, strategy, risk management and metrics, and between the disclosures and the financial statements.
The requirement list in full is on UK SRS S2 climate disclosures; this page is about the writing.
Where the section sits in the annual report, and when it is published, is covered in UK SRS reporting guidance.
| Pillar | Paragraphs | The question it answers |
|---|---|---|
| Governance | ¶¶5–7 | Who oversees climate, and how |
| Strategy | ¶¶8–23 | Which risks and opportunities, their effects, and how resilient the strategy is |
| Risk management | ¶¶24–26 | How climate risks are found, weighed and monitored |
| Metrics and targets | ¶¶27–37 | Emissions, the other cross-industry metrics, and targets |
| Application guidance | Appendix B | Scenario analysis, emissions measurement, financed emissions |
| Application and transition | Appendix C | Reliefs, including Scope 3 at ¶C4 |
Pillar 1 · ¶¶5–7
Governance: name the owner, then show the working
UK SRS S2 ¶6(a) starts with identification: the governance body or individual responsible for oversight of climate-related risks and opportunities.
It then asks five things about that body: where the responsibility is written into terms of reference, mandates and role descriptions; how it decides it has the right skills; and how and how often it is informed.
The last two are how it takes climate into account in strategy, major transactions and risk management, “including whether” it considered trade-offs, and how it oversees targets, including whether related metrics are in remuneration policies.
¶6(b) then asks about management: whether the role is delegated to a named position or committee, how the board oversees it, and whether controls and procedures support that oversight.
The commonest weakness is a sentence saying climate “is on the agenda”; the standard asks how often and with what effect, which is answered from minutes, not from policy.
¶7 allows one integrated governance disclosure where sustainability oversight is managed together, to avoid duplication.
The board’s side of this, including its legal duties, is on UK SRS board oversight.
Illustrative wording · governance
“The Board has overall oversight of climate-related risks and opportunities and has delegated their detailed review to the Audit and Risk Committee, whose terms of reference were amended in [month, year] to say so.”
“The Committee receives a climate report at each scheduled meeting, covering the risk register, progress against our emissions targets and the data controls described below.”
“In [year] the Board considered climate-related risk in approving [a named major transaction], and weighed [the trade-off considered].”
“Day-to-day responsibility sits with the Chief Financial Officer, supported by a management committee that meets [frequency].”
Illustrative wording for a fictional company, written by us. Not FCA, DBT or FRC wording, and not a template any regulator endorses.
Pillar 2 · ¶¶8–21
Strategy: risks, effects and the plan
¶10 has four limbs, and most weak disclosures answer only two: describe each risk and opportunity; classify each risk as physical or transition; give the time horizon for each; and explain how the company defines short, medium and long term and how those tie to its planning horizons.
Physical risks are event-driven (acute) or come from longer-term shifts in climate patterns (chronic); transition risks arise from the move to a lower-carbon economy, including policy, legal, technological, market and reputational risks (IFRS S2, Appendix A).
¶13 asks where in the business model and value chain the risks and opportunities are concentrated, for example by region, facility or type of asset.
¶14 asks how the company has responded and plans to respond, including changes to its business model, direct and indirect mitigation and adaptation, and “any climate-related transition plan the entity has”.
¶¶15–16 ask for current and anticipated financial effects, quantitatively and qualitatively, and ¶17 allows a single amount or a range.
Under ¶¶19–21 a company may omit a figure where the effect is not separately identifiable or too uncertain to be useful, but it must explain why and name the affected line items of the financial statements.
That fallback is a disclosure in its own right, not an exemption, and it is where the link to the accounts is made visible.
Illustrative wording · strategy
“We have identified three climate-related risks and one opportunity that could reasonably be expected to affect our prospects. We classify [risk A] as a physical risk (acute) and [risk B] as a transition risk (policy and legal).”
“We define short term as up to [x] years, matching our budget cycle; medium term as [x–y] years, matching our strategic plan; and long term as beyond [y] years.”
“[Risk A] is concentrated in [a type of asset or region]. The carrying amount of [line item] is the balance most exposed to it.”
Illustrative wording for a fictional company, written by us. Not FCA, DBT or FRC wording, and not a template any regulator endorses.
Pillar 2 · ¶22
Climate resilience: say how the scenario analysis was done
¶22 says the entity “shall use climate-related scenario analysis to assess its climate resilience using an approach that is commensurate with the entity’s circumstances”.
| UK SRS S2 ¶22 | What to write |
|---|---|
| (a)(i) Implications | What the analysis means for strategy and the business model, and how the company would respond |
| (a)(ii) Uncertainty | The significant areas of uncertainty considered |
| (a)(iii) Capacity to adapt | Financial resources available, ability to redeploy, repurpose, upgrade or decommission assets, and current and planned investment |
| (b)(i) Inputs | Which scenarios and their sources; whether a diverse range; transition or physical; whether one aligns with the latest international agreement on climate change; why they are relevant; horizons; scope of operations |
| (b)(ii) Key assumptions | Policy, macroeconomic trends, national or regional variables, energy usage and mix, technology |
| (b)(iii) When | The reporting period in which the analysis was carried out |
The depth of the analysis scales with the company; the duty to use scenario analysis, and to say how it was done, does not.
A disclosure that names its scenarios but not their source, their horizons or the period in which the work was done falls short of ¶22(b).
Method is covered on climate scenario analysis under UK SRS.
Pillar 3 · ¶¶24–26
Risk management: the process, not the list
The strategy pillar lists the risks; the risk management pillar describes the machinery that found them.
¶25(a) asks for the inputs and parameters used, whether scenario analysis informs identification, how nature, likelihood and magnitude are assessed, how climate risks are prioritised against other risks, how they are monitored, and whether the process changed since last year.
¶25(b) asks the same for opportunities, and ¶25(c) asks how far the climate process is integrated into the company’s overall risk management.
¶26 allows one integrated risk management disclosure where sustainability risks are handled together.
Listed companies should also read the section beside their principal risks: DTR 4.1.8R already requires a description of the principal risks and uncertainties, and a reviewer will read the two together.
Illustrative wording · risk management
“Climate-related risks are identified through the same process as other principal risks, using [data sources] across [scope of operations].”
“We assess likelihood and magnitude against the group risk matrix, with a quantitative threshold of [x] for escalation, and use scenario analysis to test whether any risk has been missed.”
“We changed the process this year by [change], because [reason].”
Illustrative wording for a fictional company, written by us. Not FCA, DBT or FRC wording, and not a template any regulator endorses.
Pillar 4 · ¶¶27–37
Metrics and targets: seven categories and every target
¶28 has three limbs: the cross-industry metric categories in ¶29, industry-based metrics in ¶32, and targets in ¶¶33–37.
| ¶29 | Category | What to disclose |
|---|---|---|
| (a) | Greenhouse gases | Gross Scope 1, 2 and 3 in tonnes of CO2 equivalent; measured under the GHG Protocol Corporate Standard; approach, inputs, assumptions and changes; Scope 1 and 2 split between the consolidated group and other investees; Scope 2 location-based plus contractual-instrument information; Scope 3 categories included |
| (b) | Transition risks | Amount and percentage of assets or business activities vulnerable |
| (c) | Physical risks | Amount and percentage of assets or business activities vulnerable |
| (d) | Opportunities | Amount and percentage of assets or business activities aligned |
| (e) | Capital deployment | Capital expenditure, financing or investment deployed towards climate-related risks and opportunities |
| (f) | Internal carbon prices | Whether and how a carbon price is used in decision-making, and the price per tonne |
| (g) | Remuneration | Whether and how climate is factored into executive remuneration, and the percentage of executive remuneration linked to it |
Categories (f) and (g) are framed “whether and how”, so a company that uses no internal carbon price, or links no pay to climate, still has something to disclose: that it does not.
Emissions are measured under the GHG Protocol Corporate Standard unless a jurisdictional authority or exchange requires another method (¶29(a)(ii)).
For each greenhouse gas target, ¶36 asks which gases and scopes it covers, whether it is gross or net, whether it was derived using a sectoral decarbonisation approach, and any planned use of carbon credits.
A net target must be shown with its associated gross target, and planned carbon credits need four things: how far the target relies on them, which scheme verifies them, what type they are, and anything else a reader needs to judge their credibility (¶36(c), (e)).
¶35 then asks for performance against each target and an analysis of trends.
UK SRS does not require a target to be validated by any particular body; a company that uses the Science Based Targets initiative describes that as part of how it set the target, and the site’s guide to science-based targets covers what SBTi validation involves.
The emissions inventory itself is covered in Scope 3 emissions reporting and the factors behind it on UK emission factors.
Scope 3
Scope 3: the relief statement, and the explanation after it
In the first period a company may omit Scope 3 and state that it is using the relief; PS26/19 ¶3.20 says no further explanation is required during the relief period.
The statement names both the transitional provision and the paragraph of the standard.
The FCA’s draft Technical Note 803.1 shows a company using the relief and meeting everything else stating compliance with UK SRS S2, with the relief disclosed alongside.
From the next period, Scope 3 is disclosed or explained under UKLR 6.6.6R(7A)(b): a summary of the requirements not met, the reasons, and any steps being taken.
The rule asks for no timeframe; the draft guidance says a known or estimated one “would be helpful”.
An explanation can name paragraphs rather than repeat them, but it has to be specific to the company, and a reason such as “data is not yet available” says less than which categories, and why.
The rules for explaining in general are on UK SRS comply or explain.
Illustrative wording · first period, relief used
“We have not disclosed Scope 3 greenhouse gas emissions for this period. We are relying on the transitional provision in UKLR TP 16.4R(2) and the relief in paragraph C4 of UK SRS S2.”
Illustrative wording for a fictional company, written by us. Not FCA, DBT or FRC wording, and not a template any regulator endorses.
Illustrative wording · second period, explaining
“We have not met UK SRS S2 paragraph 29(a)(vi) for Scope 3 categories [x] and [y]. Supplier data for these categories covers too small a share of spend for an estimate we would regard as faithful.”
“We have begun collecting supplier-specific data through [programme] and expect to disclose both categories for [period], subject to supplier response.”
Illustrative wording for a fictional company, written by us. Not FCA, DBT or FRC wording, and not a template any regulator endorses.
Lessons from TCFD
What the FRC criticised in TCFD reports, and where UK SRS now asks for it
The FRC’s reviews of TCFD reporting named the weaknesses; UK SRS S2 turns several of them into specific paragraphs.
| FRC finding | Review | Where UK SRS S2 now asks |
|---|---|---|
| More granular information on effects by business and geography | TCFD review, 25 larger companies | ¶13(b): where risks and opportunities are concentrated |
| Balance between risks and opportunities | TCFD review | ¶10(a): describe both |
| Link climate disclosures to other risk and governance processes | TCFD review | ¶25(c): integration with overall risk management |
| Explain how the company decided what to disclose | TCFD review | UK SRS S1 ¶¶17–18: the materiality judgement |
| How warming scenarios and net zero commitments affect asset and liability values | TCFD review | ¶¶15–16 and ¶22: financial effects and resilience |
| Concrete actions and milestones to meet targets were sometimes unclear | 2023, 20 companies’ 2022 reports | ¶14(a)(v): how the company plans to achieve its targets |
| Comparability of metrics between companies remains challenging | 2023 | ¶29: seven common cross-industry categories |
| Boilerplate that climate was “considered” | 2023 | ¶¶19–21: quantify, or explain and name the line items |
The 2023 review also found that many companies struggled to explain their transition plans “clearly and concisely” given the volume of information presented.
For a company that does describe a transition plan, the TPT Disclosure Framework remains a reference, though neither UK SRS nor the FCA requires it; the TPT’s former site, transitiontaskforce.net, now hosts the International Transition Plan Network.
The statement the FCA does require is whether a plan has been published and where, or why not, under UKLR 6.6.6R(8)(e), and the wider picture is on transition plans in the UK.
How each finding becomes a task with an owner is set out in the UK SRS implementation checklist.
The last line
The compliance statement: make it only if it is true
UK SRS S1 ¶72 says a company whose disclosures comply with all the requirements “shall make an explicit and unreserved statement of compliance”, and shall not describe them as complying otherwise.
A company that explains against any part of UK SRS S2 cannot make the statement for S2, and the FCA’s draft guidance says there is no separate compliance statement under the listing rules.
A company using the climate-first relief cannot assert compliance with UK SRS S1 (¶73A).
So the wording of the final sentence belongs in the same review as the explanations, and the checklist of every statement the report needs is on the UK SRS compliance checklist.
To talk through a draft, get in touch or book a free 15-minute call.
UK SRS S1 ¶72: an explicit and unreserved statement, only if every requirement is met.
UK SRS S1 ¶73A: a company using the Scope 3 relief can still state compliance with UK SRS S2, disclosing the relief alongside.
Frequently asked
Writing a UK SRS S2 disclosure — frequently asked
What does a UK SRS S2 disclosure contain?
Four sections: governance (paragraphs 5 to 7), strategy (8 to 23, including scenario analysis and financial effects), risk management (24 to 26), and metrics and targets (27 to 37, including Scope 1, 2 and 3 emissions and seven cross-industry metric categories). It describes the climate-related risks and opportunities that could reasonably be expected to affect the company’s cash flows, access to finance or cost of capital.
Is UK SRS S2 mandatory?
No. Under the FCA’s final rules (PS26/19, 30 September 2026), listed companies in UKLR 6, 14, 15, 16 and 22 either disclose in accordance with UK SRS S2 or explain what they have not disclosed, why and what they plan to do, for accounting periods beginning on or after 1 January 2027. CP26/5 had proposed making it mandatory; the final rules did not. For everyone else it is voluntary.
How do I write the governance section of a UK SRS S2 disclosure?
Name the body or individual responsible for climate oversight, then answer each limb of paragraph 6: where the responsibility is written down, how the body judges its own skills, how and how often it is briefed, how it weighs climate in strategy, major transactions and risk decisions (including trade-offs), how it oversees targets and whether they feed into pay, and what management does and with which controls. Where sustainability oversight is integrated, one integrated governance disclosure avoids duplication under paragraph 7.
Do I have to quantify the financial effects of climate risks?
Quantify where you can, as a single amount or a range. UK SRS S2 paragraphs 19 and 20 allow a company not to give quantitative information where the effects are not separately identifiable, where measurement uncertainty is too high for the figure to be useful, or, for anticipated effects, where it lacks the skills, capabilities or resources. It must then explain why, give qualitative information including the affected line items, and give combined quantitative effects unless those would not be useful.
What do I write if I use the Scope 3 relief?
A statement that you are relying on the transitional provision in UKLR TP 16.4R(2) and on the relief in paragraph C4 of UK SRS S2. No further explanation is required during the relief period. The FCA’s draft Technical Note 803.1 shows that a company using the relief and meeting everything else can still state that it has complied with UK SRS S2.
What do I write about Scope 3 after the relief ends?
Either disclose Scope 3 in accordance with UK SRS S2, or give the three-part explanation in UKLR 6.6.6R(7A)(b): a summary of the requirements not met, the reasons, and any steps you are taking or plan to take to make the disclosures in future. No timeframe is required, although the FCA’s draft guidance says a known or estimated one would be helpful.
Do I have to disclose an internal carbon price if we do not use one?
You still address the question. Paragraph 29(f) asks for an explanation of whether and how the company applies a carbon price in decision-making, and the price per tonne it uses. A company that applies none says so. The same whether-and-how framing applies to remuneration under paragraph 29(g).
Is climate scenario analysis required for smaller companies?
Yes, but its depth scales. UK SRS S2 paragraph 22 says the entity shall use climate-related scenario analysis to assess its climate resilience, using an approach commensurate with its circumstances, and disclose how and when it was carried out. A listed company that cannot do so explains under the FCA’s comply-or-explain rule.
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.
- Department for Business and TradeUK SRS S2 Climate-related Disclosures (PDF)
¶¶5–7 (governance), ¶¶10, 13–23 (strategy, financial effects, scenario analysis), ¶¶24–26 (risk management), ¶¶28–37 (metrics and targets), ¶C4 (Scope 3 relief).
- Department for Business and TradeUK SRS S1 General Requirements (PDF)
¶¶21–24 (connected information), ¶¶72–73A (statement of compliance).
- Financial Conduct AuthorityPS26/19: Aligning listed issuers' sustainability disclosures with international standards (PDF)
Comply or explain across UK SRS (¶1.7); relief statements (¶3.20); UKLR 6.6.6R(7A) and TP 16.4R(2) as made (Appendix 1).
- Financial Conduct AuthorityPS26/19 landing page
First published 30 September 2026: comply or explain across UK SRS; Technical Note feedback by 28 October 2026; FCA webinar on 19 October 2026; supervisory information in the second half of 2027.
- Financial Conduct AuthorityDraft Technical Note 803.1 — UK SRS sustainability disclosures for listed companies (PDF, for consultation)
Draft guidance: explanations short and proportionate, issuer-specific; a compliance statement where the Scope 3 relief is used.
- FCA HandbookUKLR 6.6 — annual financial report (commercial companies)
UKLR 6.6.6R: today (8) is the TCFD-aligned comply-or-explain rule; from 1 January 2027 PS26/19 inserts (7A) UK SRS S2 and (7B) UK SRS S1 on comply or explain, and recasts (8) as the location, assurance and transition-plan statements.
- FCA HandbookDTR 4.1 — annual financial report
DTR 4.1.8R: the management report describes the principal risks and uncertainties.
- IFRS FoundationIFRS S2 Climate-related Disclosures (December 2025 text, HTML)
The ISSB text UK SRS S2 is based on, and the source of its defined terms (physical and transition risk, internal carbon price).
- Task Force on Climate-related Financial DisclosuresTCFD recommendations
The four-pillar structure UK SRS S2 inherits; the TCFD disbanded in 2023.
- GHG ProtocolA Corporate Accounting and Reporting Standard
The Scope 1 and 2 measurement basis named in UK SRS S2 ¶29(a)(ii).
- Financial Reporting CouncilThematic review of climate-related metrics and targets (26 July 2023)
20 companies’ 2022 annual reports: unclear actions and milestones, limited comparability, weak links to the financial statements, boilerplate.
- Financial Reporting CouncilESG and climate — thematic review of TCFD disclosures and climate in the financial statements
25 larger companies: the five areas where disclosure quality needed to rise.
- Transition Plan TaskforceTPT Disclosure Framework (October 2023, PDF)
A reference for transition-plan content; not required by UK SRS or the FCA.
- Science Based Targets initiativeStandards and guidance
For companies whose targets are SBTi-validated; UK SRS asks about targets, not about who validated them.
- Financial Conduct AuthorityCP26/5 consultation page
The consultation PS26/19 finalises, which had proposed mandatory UK SRS S2.