On 7 September 2026, the Department for Business, Innovation, Science and Trade (BIST) published the government’s long promisedconsultation on Modernising Corporate Reporting.
The disclosure requirements that apply to UK companies have multiplied over recent decades, with incremental additions leading to duplication and unnecessary complexity. In some cases, the purpose of reporting requirements is unclear, and they are disproportionate to the size and type of company. This “once-in-a generation review” aims to produce a more coherent, proportionate and future-fit set of rules. The new regime would be principles-based with a focus on providing information that is financially material and decision-useful for investors and creditors.
The consultation closes on 30 November 2026. The government intends to publish a consultation outcome by the end of May 2027.
This blog post focuses on the proposed changes that are most relevant to sustainability and climate change reporting.
For a discussion of other aspects of the consultation, see our more detailedclient briefing.
Changes to definitions, thresholds and exemptions
The proposals seek to simplify and rationalise the existing thresholds, categories and exemptions which determine the disclosures which different types and sizes of company need to make.
- removing the distinction between small and medium-sized companies in corporate reporting, so medium-sized companies can access a wider package of exemptions;
- consolidating certain narrative reporting requirements into a new “very large company” category; and
- considering whether the definition of an employee is unnecessarily restrictive for threshold assessments.
Changes to strategic report and narrative reporting
The proposals aim to simplify the current regime for strategic reports. Existing prescriptive content requirements would be replaced by a more principles-based approach. The range of companies required to produce a strategic report would also be reconsidered.
The government announced last year that it would remove the requirement for a separate directors’ report as well as exempting UK subsidiaries with a UK parent from needing to produce a strategic report. It expects to lay legislation to this effect before Parliament “in due course”. The current consultation envisages further radical cuts to shorten the very long strategic reports that are currently being published and to refocus disclosures on material information of value to investors and creditors.
Strategic report content requirements to be simplified (NFSIS non-climate reporting requirements)
The government proposes to replace the prescriptive list of topics in the Companies Act 2006 (covering, for example, information about the environment, employees, human rights, anti-corruption and anti-bribery) with five new “baseline requirements”.
The change is intended to give companies and directors more flexibility, while stimulating more insightful reporting.
The five “baseline” areas for companies to cover are as follows:
- The company’s business model and how it generates value.
- A performance review providing context to the financial statements and describing matters affecting the performance of the company.
- Resources and relationships that are important to the company and how these impact decision making. This would replace the current section 172 statement on how the directors have promoted the success of the company.
- The company’s strategy including its aims, plans and objectives and responses to opportunities and risks.
- A description of risks and uncertainties.
The government believes that the streamlined requirements should still mean that companies disclose key information as required at present, where it is financially material.
While Key Performance Indicators (KPIs) would not be specifically required, companies would be expected to continue to reflect KPIs and metrics in the strategic report. Climate-related disclosures would still be required (see “Sustainability-related financial disclosures” below).
Purpose of the strategic report to be refocussed
The purpose of the strategic report’s disclosures would be expanded. Currently, the strategic report should enable shareholders to assess how the directors have performed their duty to promote the success of the company. The consultation proposes that companies should focus on providing information that is material to the needs of investors and creditors, including present, potential and future investors and creditors.
This purpose, together with the removal of many prescriptive content requirements, is intended to guide and empower directors to focus their narrative disclosures on information that is financially material.
Which companies and subsidiaries should have to report?
The consultation asks which types of companies should be required to produce the new baseline reporting. For example, whether the requirement should apply only to publicly listed companies, or also to large or very large private companies.
Views are also sought on allowing subsidiaries in listed and regulated (“ineligible”) groups not to produce a strategic report, if already covered by a parent’s report.
Sustainability-related financial disclosures
Companies Act climate-related financial disclosures (CFD regime)
The government is still assessing how existing climate change disclosures required by the Companies Act 2006 (known as the “CFD regime”) are being used by companies, investors and other users.
The CFD review is expected to conclude by spring 2027 and feedback from that review, and from this consultation, will inform future statutory changes, including as to how the new UK Sustainability Reporting Standards (UK SRS) should be reflected in the Companies Act framework.
The consultation also seeks views from investors and creditors on the usefulness of CFD disclosures and from private companies on the benefits of making them, for example to attract capital or to develop a climate strategy.
For more information on the CFD regime and the UK SRS, see:
- ESG Quick Guide: UK climate disclosure rules under Companies Act 2006
- ESG Quick Guide: UK Sustainability Reporting Standards (UK SRS)
Updated UK Listing Rules (UKLR) requirements
The consultation confirms that final FCA rules on reporting in line with the UK SRS under the UK Listing Rules will be issued this autumn.
For more information on the FCA’s proposed changes to the Listing Rules and the UK SRS, see:
- UK SRS: FCA proposes mandatory climate disclosures from 2027, except for Scope 3 emissions, for which it is “comply-or-explain” from 2028
- ESG Quick Guide: UK climate disclosure rules under Listing Rules
The Department of Energy Security and Net Zero (DESNZ) will consult later in 2026 on both the Streamlined Energy and Carbon Regime (SECR) and Energy Savings Opportunity Scheme (ESOS). The consultation asks about issues stakeholders would like considered as part of that process.
For more information on the SECR and ESOS, see:
- UK: Government review of SECR suggests retaining regime with targeted amendments
- UK: Preparing for ESOS Phase 4
The government is still considering responses to its separate transition plan consultation but will also have regard to this wider reporting review when making future decisions.
For more information on the transition plan consultation, see:
- UK government consults on transition plans: keeping its options open
- ESG Quick Guide: Transition plans
Overlaps between UK reporting regimes
The government acknowledges that there are “significant interactions and overlaps” between existing Companies Act requirements, the UK SRS and future transition plan requirements.
Disclosures made by UK listed companies under the revised UK Listing Rules obligations will be considered sufficient to meet the Companies Act requirements.
Legal protection for directors
The government believes that existing protections for careful directors who did not know that a statement was untrue or misleading should apply to UK SRS disclosures.
As the safe harbour in section 463 of the Companies Act 2006 is currently limited to the strategic report, the consultation notes that it may be necessary to extend it if sustainability disclosures are located outside the strategic report in the future.
Legal protection for forward-looking and estimated information in transition plans is also being considered as part of the response to the government’s separate consultation on transition plans.
The consultation emphasises that all sustainability-related disclosures should be strategic and financially material but suggests that companies should be able to choose whether to integrate this information within the strategic report or present it in a separate sustainability section.
The government is not proposing additional requirements for assuring strategic or sustainability information. The preferred approach is to allow reporting entities to decide on whether to seek assurance, whilst exploring how to support investor and creditor trust and confidence in strategic reporting.
The government had previously confirmed plans for a new oversight regime for sustainability-related financial disclosures. A voluntary registry is intended to be in place for the 2027 reporting year – see Developing an oversight regime for assurance of sustainability-related financial disclosures: government response to consultation – GOV.UK.
It is also worth noting that the FCA in its proposals for changes to the Listing Rules to reflect the UK SRS (seeFCA consultation paper) include a requirement for listed companies to specify in their annual report whether or not they have obtained third-party sustainability assurance over their UK SRS disclosures, and, among other matters, the assurance standards used.
asset managers & funds, banks & insurers, climate change & environment, corporates, disclosure & reporting, uk, blog posts
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