The Financial Conduct Authority (FCA) is currently proposing a new set of rules – the UK Sustainability Reporting Standards (UK SRS) – that seeks to improve the quality, consistency and comparability of sustainability disclosures whilst aligning the UK framework with international standards developed by the ISSB. These rules could significantly change how listed companies report on their environmental and social impact and are set for implementation, subject to exemptions and bedding-in periods, in January 2027.
At the QCA, we have been working closely with both our members and the FCA to ensure that these changes support, rather than stifle, the UK’s growth markets and the companies that are listed on them.
We recently submitted our formal response to the FCA’s consultation (CP26/5). Here is why it matters to our members.
Our call for Proportionality
“One size fits all” rarely works in financial regulation and whilst the new standards are currently aimed at the Main Market, we are sounding the alarm on “regulatory creep”.
UK SRS1 and SRS2 sit within the FCA Listings Rules framework and therefore do not apply to companies on AIM, however, there is a serious risk that advisers and investors will start treating them as a mandatory benchmark, leading to AIM companies being expected to comply in substance, if not in law. This would undermine the distinct purpose of the AIM market as a proportionate, growth-focused environment tailored to the needs of smaller companies.
In our response, we have been clear: for the UK SRS to be a success, it must be proportionate.
We are pushing the FCA to:
- Focus on competitiveness The FCA should carefully assess how the UK’s approach compares not only in terms of technical alignment with ISSB, but also in terms of timing, scope, and overall burden. Consideration of this will help the UK remain internationally recognised as an attractive place for growth companies to list and stay.
- Implement targeted exemptions for smaller issuers where limited investor demand for such detailed data, in practice means smaller issuers may incur significant additional costs to produce disclosures that are of limited relevance to their core investor base.
- Comply or Explain the FCA should provide more explicit guidance on the operation of this mechanism, including clear examples of acceptable explanations and confirmation that cost and practicality are legitimate considerations, particularly for smaller issuers.
- Provide clearer implementation timelines so businesses have the time to invest in the right data and governance systems without breaking the bank.
Why This Matters Now
The FCA has a secondary objective to support the international competitiveness of the UK economy. We believe that forcing smaller companies into a reporting regime designed for global giants sits “uneasily” with that mission.
Our markets thrive when they are accessible. We will continue to champion a framework that promotes transparency while protecting the agility of the 1,000+ small and mid-sized quoted companies we represent.
Click here to view our response to FCA CP26/5: Aligning listed issuers’ sustainability disclosures with international standards.
We are also closely monitoring related moves in fund liquidity (CP25/38), ensuring that new rules on “anti-dilution tools” and “liquidity risk management” don’t inadvertently discourage investment in smaller, less liquid stocks.
Click here to view our response to CP25/38: Enhancing fund liquidity risk management.
Get Involved
Stay tuned for further updates as we continue to lobby for a fairer, more competitive financial market policy.
