On 14 July 2025, the UK published its Financial Services Growth and Competitiveness Strategy, reconfirming the importance of meeting its commitment to maintain the UK’s position as global leader in sustainable finance, including attracting business and mobilising capital towards emerging markets and developing economies.
This builds on the previous UK Chancellor’s ambition that the UK would become a global hub for transition finance (there has since been a chance in Prime Minister and Chancellor). The UK has taken a market-based and collaborative approach to sustainability legislation and voluntary initiatives with broad stakeholder consultation and buy-in.
The introduction of a number of initiatives has supported this, including anti-greenwashing rules, climate reporting for FCA-authorised firms, large and listed companies and asset managers and sustainable investment product disclosure and labels. As well as bringing ESG rating providers within the FCA regulatory perimeter and the launch of national funds to finance clean energy and the transition, such as the National Wealth Fund and Great British Energy. The importance of strategy to provide capital to support decarbonization pathways and bolster finance flows to support the UK’s net-zero transition is clear, and the UK’s Transition Finance Market Review sets out a blueprint to achieve this. To summarize the primary drivers in the UK:
- Mandatory Climate Reporting (Task Force on Climate-Related Financial Disclosures (TCFD-) based) – applies to large and listed companies, asset managers, and other FCA-regulated firms. The FCA has confirmed that TCFD-aligned reporting for UK listed companies will be replaced with UK Sustainability Reporting Standards (UK SRS) which are based on IFRS S1 & S2. Companies will need to comply on a “comply or explain” basis. Read more here. The FCA has also confirmed that it is simplifying product-level climate reporting requirements for asset managers, life insurers and FCA-regulated pension providers with more targeted and outcome-based rules, while still meeting the intended policy outcomes. Read more here and here.
- Sustainable Disclosure Requirements (UK SDR) introduces:
- An anti-greenwashing rule for all UK FCA authorized firms, as well as for certain UK investment products
- Naming and marketing rules.
- Consumer-facing disclosure requirements and product- and entity-level disclosures.
- ESG ratings – providers are being brought within the FCA’s regulatory perimeter. The FCA is expected to publish its policy statement on ESG ratings providers in Q4 2026 with rules effective in June 2028. Read more here.
- Transition Finance Market Review (2024) – Provided a blueprint for the UK to take opportunities posed by the net-zero transition and is being implemented by the Transition Finance Council and the Net Zero Council.
- Transition Plans – the UK government is considering whether to make the development and implementation of transition plan mandatory and is also supporting the transition finance market through its consultation on the voluntary carbon and nature markets (response expected Summer 2026).
- UK deforestation regulations are expected with a consultation in 2026. They are likely to cover the same core commodities and underlying information requirements applicable in the EU as the EU Deforestation Regulation will apply in Northern Ireland.
What this means for in-house counsel
Prepare for changes to UK sustainability reporting
Changes are afoot with UK corporate reporting, the UK government has launched a consultation on modernising corporate reporting and this may have ramifications for corporate sustainability reporting. The UK SRS are now finalised and will replace TCFD-aligned reporting for UK listed companies on a “comply or explain” basis. Despite the “comply or explain” basis, in-house counsel should be assessing readiness now and considering what information their investors need. In-house counsel for asset managers and owners should consider how they will comply with the new streamlined product-level reporting for investment products.
Align global reporting strategies
The UK has endorsed ISSB-based standards through the UK SRS, aligning UK disclosure requirements with the international baseline and reducing divergence risks for globally operating entities. However, the EU continues to use a double-materiality approach under the (revised) CSRD, meaning UK and EU requirements remain distinct.
Anticipate greenwashing enforcement
The FCA's anti-greenwashing rule under the UK SDR is in force for all UK FCA-authorised firms. Firms marketing sustainable investments and products must ensure accurate, clear, and substantiated disclosures. The Advertising Standards Authority has also been active in this area. Anticipate more enforcement.
