IA response to FCA consultation on aligning listed issuers’ sustainability disclosures

Commenting on the FCA’s consultation on aligning listed issuers’ sustainability disclosures with international standards (CP26/5), Andrew Ninian, Director, Stewardship, Risk and Tax at the Investment Association, said: “We want the UK to be a globally attractive place for companies to list and investors to invest in. Aligning UK listed company disclosures with the International Sustainability Standards Board (ISSB) global baseline will improve the consistency, comparability and usefulness of information that investors need to make investment and stewardship decisions. We support how the FCA’s proposals strike a pragmatic balance between raising disclosure standards and accommodating companies’ readiness through the comply or explain mechanism which is well understood in the UK."

In summary:

• High‑quality sustainability disclosures are essential for accurate risk pricing, informed investment decisions and effective stewardship, particularly given that sustainability risks and opportunities are increasingly rising across global value chains.

• The IA backs the adoption of UK SRS (S1 and S2) to bring the UK in line with international standards, reducing duplicative reporting burdens and focusing on financially material information that supports enterprise value.

• The FCA’s proposed “climate‑first” phased approach – mandatory climate disclosures (S2) with comply‑or‑explain for wider sustainability topics (S1) – reflects a pragmatic approach to allow companies time to develop reporting mechanisms.

• The IA supports the use of  comply‑or‑explain mechanisms for areas such as Scope 3 emissions, sustainability assurance and disclose or explain for transition plans, emphasising the need for practical flexibility while still driving improved disclosures over time.