We believe the proposed measures in the consultation have the potential to enhance users of ESG ratings and wider stakeholders’ understanding and trust in these products, though our response sets out various recommendations for consideration from the regulator.

In our view, these recommendations would advance competition and innovation in the UK’s ESG ratings market, the practical operation of the UK’s regulatory regime for different market participants and stakeholders, and support the delivery of positive outcomes for users of ESG ratings, service providers, and financial markets at large.

Executive summary – main points in UKSIF’s response

• Support for the direction of travel of the consultation proposals: Broadly speaking, we are supportive of a number of the consultation’s main proposed measures. This includes the overall balance and details of the criteria set out under the ‘two-layer’ approach to disclosure, as part of the proposed transparency requirements for ESG ratings providers. We also welcome the wider rules highlighted on governance, internal systems, and conflicts of interest, and the application of the baseline standards to ratings providers.
• Maintaining competition and dynamism in the UK’s ESG ratings market: With that said, we recommend that FCA actively considers additional proportionate measures to support the role of smaller ESG ratings providers under the UK’s regulatory regime. This is a particular consideration as the ESG ratings market continues to evolve and mature. We believe this approach would bring tangible benefits to the UK’s ESG ratings market, users of ratings products, and rated entities, and be consistent with the regulator’s existing statutory operational objectives. While we recognise some challenges in adopting tailored measures for smaller, specialist providers, we outline various areas for exploration to support this specific group. This includes in relation to the regulator’s authorisations process and UK presence requirements. Also, we recommend inclusion of a defined ‘review period’ (e.g. after 3-4 years) for the regulator to assess the impacts of requirements on smaller providers and market competition. There may be lessons to be drawn from the European Union’s proportionality measures for smaller firms in time, as its regulatory framework beds in.
• Enhancing comparability in disclosures for users of ESG ratings: In relation to the transparency requirements, we would welcome high-level guidance on the envisaged presentation, length, and format of the minimum public disclosures and additional private disclosures. This would have the objective of supporting comparability and usability across ESG ratings providers’ disclosures. The regulator should consider encouraging industry-wide collaboration to develop a voluntary, ‘fund factsheet-style’ template for the minimum public disclosures. This could enhance the comparability in product-level information, by guiding users in assessing differences between products’ objectives, methodologies, assumptions, weightings, and ESG data coverage. As part of this, it would be useful to consider interoperability with similar template approaches in overseas jurisdictions, such as the EU. On the minimum public disclosures, the disclosure of ESG data estimates (where used) should be incorporated in this specific layer, with a baseline summary of a provider’s approach to data estimates valuable to include.
• Targeted changes to the ‘notification requirements’: We suggest several changes aimed at improving the operation of the notification framework, which we recognise is among the most challenging areas of the consultation. In our view, this includes confirmation that a prolonged period of delay and de-facto ‘veto right’ is not envisaged by rated entities on an ESG ratings provider’s assessment. Also, the FCA should provide indicative examples of what constitutes an ‘appropriate’ notice period from a provider to entities to clarify the rules. We believe refinements in this area of the consultation would minimise the risks of added reporting burden, especially for smaller ratings providers. There will be lessons to be drawn from the EU’s notification framework- one initial reflection is the two working-day window has been too short and led to challenges for market participants, particularly smaller rated entities.
• Treatment of asset managers’ internal ESG ratings: We would welcome clearer confirmation in the final policy statement that asset managers’ internal ESG ratings remain largely outside the scope of the UK’s regime. Further illustrative examples should be set out for when exclusions would apply. One envisaged example is where a fund manager discloses its use of a proprietary, internal ESG rating within product disclosures, or investor communications, for a labelled fund under the FCA’s Sustainability Disclosure Requirements (SDR) regime. Duplicative rules impacting this group, and institutional investors at large, should be minimised as far as possible, given the requirements for example outlined in the SDR and EU Sustainable Finance Disclosure Regulation (SFDR).
• Additional clarification for overseas-based ESG ratings providers: Further clarification would be beneficial for third-country ratings providers in relation to the upcoming authorisations process and long-term market access. This should aim to ensure that investors and other users of ESG ratings can continue to access ratings products and related products from non-UK based providers in a seamless manner, and without adding undue costs in the process for all groups. In relation to smaller ratings providers, it will be especially important to consider the authorisations process, making sure this does not pose a significant barrier to entry.
• Interaction with the voluntary UK Code of Conduct: We would very much welcome consideration by FCA and the International Capital Market Association (ICMA) over the future of the existing voluntary Code of Conduct and how it is envisaged to operate coherently alongside formal regulation. The interaction between the two initiatives will be very important in promoting clear expectations from policymakers to ESG ratings providers, users, and rated entities in the UK market. One option to maintain the voluntary UK Code’s ongoing relevance in the market in the longer-term would be to refocus its existing principles on ESG data products, given the regulation’s primary focus on ratings. As scrutiny of managers’ internal ESG ratings continues to evolve, a voluntary Code-based approach could be explored for this area of the UK’s market.

These recommendations draw on perspectives from across our membership network, which includes institutional investors as well as ESG data and service providers. We hosted a number of private member roundtables with both these groups to inform our response, though this does not necessarily reflect the views and perspectives of our entire membership, either individually or collectively.

While UKSIF largely welcomes many of the FCA’s consultation proposals, we would encourage the regulator to reconsider certain aspects of the measures to ensure that the UK framework can fully support the ISSB’s role in advancing transparency, comparability, and clarity in international sustainability reporting. Please find below our executive summary from our response.

Executive summary – main points in UKSIF’s response

• Support for evolution in the UK’s sustainability reporting landscape towards the SRS: We broadly welcome the proposed shift outlined by the FCA to replace existing climate-related disclosures for in-scope UK listed companies with requirements referencing the SRS S1 and S2. This represents an important milestone in the continued evolution of the UK’s sustainability reporting framework, which we expect will deliver tangible economic benefits and efficiencies for both in-scope companies and users of reporting (e.g. reduced cost pressures in time for preparers reporting). The SRS will in time deliver greater consistency in reporting and enhanced interoperability with global reporting standards, supporting investors with a global presence to more effectively compare their investments. It is positive to see the SRS S2 requirements as proposed largely applying relatively quickly from 2027 for listed companies.
• Clarity on Scope 3 GHG emissions reporting for in-scope companies: We recommend that the FCA sets out a clear and gradual pathway towards mandatory reporting of Scope 3 emissions for in-scope listed companies. We believe that such an approach would recognise practical challenges some organisations face in measuring and reporting Scope 3 data, while importantly providing forward-looking clarity on this area of reporting to companies, investors, and wider stakeholders. As part of a ‘mandatory pathway’, we would support the regulator setting out specific timeframes for mandatory reporting. For example, from 2030 by which point we would expect many in-scope companies will have built necessary capacity and understanding. Should this approach not be drawn on, our secondary preference would be for the inclusion of a defined ‘review clause’ (for example after 3-4 years) for the regulator to re-assess the approach to Scope 3 reporting.
• Changes to rules for companies with a secondary listing in the UK: A further key recommendation in our response relates to the proposed treatment of companies with a secondary listing in the UK. Our preferred recommendation is for this group to be subject to broadly equivalent disclosure expectations under the SRS as other in-scope entities, which we believe would build on the existing approach taken under the TCFD regime. This should include those secondary listed issuers based in a home jurisdiction where no climate-related reporting standards exist. Our response sets out secondary options for consideration to ensure a proportionate approach, while minimising material disclosure gaps among issuers.
• Reporting under the UK SRS S1: Similarly to our views on Scope 3 emissions reporting, we support confirmation of a clear and gradual pathway towards mandatory reporting under SRS S1 for in-scope listed companies, with specific reporting timeframes outlined. For example, this could be from 2030 onwards for mandatory reporting. This would be an important step particularly where sustainability-related information is financially material for investors. Our secondary preference would, similarly, be confirmation of a ‘review clause’ (for example after 3-4 years) by the regulator to assess the future approach to SRS S1 reporting for issuers, particularly as reporting practices among companies and wider stakeholders continue to evolve over time.
• Clarification on SRS disclosures applying to asset managers and FCA-regulated pension providers: We would welcome further clarification on the envisaged scope of the SRS requirements for these groups, with a view to minimising duplication in sustainability-related reporting at both product and entity-level. Some uncertainty remains around how the proposed ‘cross-referencing’ provisions would operate in practice for our members. Linked to this, we continue to encourage policymakers at large to provide clearer guidance on the practical transition from the current TCFD-aligned disclosure framework to SRS-based reporting for companies in the coming years. As the SRS regime is rolled out across the economy in the coming years, the regulator could consider a single source of information (e.g. on its website) that clearly outlines, in an accessible way, the scope of all companies subject to its disclosure rules. This would be for both listed issuers and institutional investors.
• Support for good-quality, proportionate transition planning across the economy: We look forward to seeing the outcomes shortly of the government’s consultation on climate transition plans, and we recognise that the FCA’s proposals will ultimately need to align with government’s wider policy direction and the conclusion of its process here. More broadly, we restate our support for policymakers to move forward with a ‘pathway approach’ to mandatory transition plan disclosure for large listed and large privately owned companies, building on the scope and foundations of the existing Task Force on Climate-related Financial Disclosures (TCFD) aligned regime.

We welcome the opportunity to respond to the Department for Work and Pensions (DWP) consultation on ‘Trust-based pension schemes: Trustees and governance, building a stronger future.’ Given the ongoing challenging geo-political environment, increasingly complex environmental and social context in which UK pension scheme trustees operate, and expansion in trustees’ responsibilities in recent years, the consultation from DWP is timely and very welcome.

Our response below draws on our ‘Unlocking UK pension capital for sustainable growth- Recommendations from UKSIF’s pensions review’ published in April 2025, as well as our previous response to the DWP’s call for evidence. UKSIF’s ‘pensions review’ outlined a series of policy recommendations on behalf of our asset owner network, aimed at putting the UK’s pension assets to work more effectively in the wider economy to drive positive outcomes for pension savers, while also providing benefits for the environment and society.

We focus on a subset of the consultation questions most directly relevant to UK trustees’ capabilities and understanding of sustainability-related risks and opportunities, such as climate change and other systemic risks. We express our broad support for the recent direction of travel of policymaking aimed at strengthening trustee governance, including in relation to financially material sustainability issues.

Summary- main points in UKSIF’s response

• The role of policy in addressing barriers to good trusteeship: We note a number of barriers in our response in relation to consideration of systemic risks, such as practical understanding and capacity, complexity in the reporting landscape, and uncertainty over fiduciary duty. With expectations on trustees continuing to quickly evolve, we would like to see regulators, including TPR, continue to evolve existing guidance over time to support trustees fulfil their legal duties and consider climate risk as part of this.
• Future guidance and support for trustees: Future iterative guidance for trustees- for example through updates to TPR’s existing Trustee Toolkits and other materials- should more directly incorporate a range of systemic risks beyond climate change, such as nature loss, human rights issues, and artificial intelligence. These pillars could be extended over time to include other systemic risks, with the overall objective to promote a good-quality ‘minimum baseline’ of awareness and understanding on these risks among trustee boards.
• Clarifying fiduciary duty in regard to systemic risks: We continue to identify issues relating to trustees’ interpretation of fiduciary duty in the context of growing recognition of the financial materiality of climate change and other systemic risks. We hope to see government’s upcoming statutory guidance provide further certainty and confidence for schemes, including those considering a range of sustainable and responsible investment approaches and more broadly investments in private markets in the UK.

Our report has surveyed 20 UKSIF members with £4.5 trillion in combined global AUM to gauge the investment community’s experience and use of sustainability data.

Report Headlines

• It found respondents overwhelmingly consider ESG information to be vital for decision-making, with sustainability factors viewed as central to their investment analysis, particularly regarding climate risk and governance. However, they felt the quality of the ESG data that they receive could be improved, with two-thirds rating it “moderate” and none rating it “very high”.
• When asked to describe their ‘biggest challenges’ with ESG data, 85% of respondents cited the accuracy of company disclosures, 70% highlighted their difficulty verifying or validating ESG data, and 70% pointed to gaps in ESG data coverage.
• These findings show the current state of company sustainability reporting is “fragmented and needs to evolve to help investors navigate the sustainability transition,” the report said.
• Lower standards of ESG data could result in material issues, such as funds being “misallocated due to hidden sustainability risks,” it further added.
• The report concludes there is a need for “a shift towards mandatory, standardised disclosures aligned with ISSB standards”, coupled with the introduction of climate transition plans. It says these measures could “directly address the data challenges and improve the consistency, completeness, and forward-looking nature of sustainability information.”

We have strongly welcomed the UK government’s decision to re-launch the Pensions Commission to consider the critical question of adequacy in pensions in the UK today and how, moving forward, we can deliver improved long-term outcomes for pension savers across the country.

In our letter, we welcome the opportunity to contribute to the Commission’s work programme and highlight a number of areas for exploration. This includes consideration of climate change and the global transition towards a net-zero economy, which we believe will be important for the Commission to explore and note that, at present, are not directly referenced in the Commission’s formal terms of reference from government. This also includes – as many different groups in the UK’s pensions and investment industries, as well as wider stakeholders, have highlighted – long-lasting reforms to automatic enrolment (AE) in the UK that can build on the success of AE to date in helping normalise pension saving.

Climate change cannot be divorced from the main focus areas highlighted in the Commission’s terms of reference. We suggest the Commission at a minimum highlight the need for the government’s pensions review to consider climate change and the global transition to net-zero. Specifically, a number of areas could be identified at a high-level for exploratory work for HM Treasury and the Department for Work and Pensions to consider, aligned to the Commission’s objectives.

This includes: clarification to fiduciary duty for occupational pension schemes in regards to system-level risks building on last year’s report from the Financial Markets Law Committee (FMLC); capturing investment opportunities for pension savers in the UK’s sustainable private markets landscape (such as clean energy infrastructure) including through a well-designed Value for Money (VFM) framework; the role of UK pension funds in advancing our international leadership position on transition finance; and the importance of a whole of economy transition for the pensions system’s long-term sustainability, including through supportive real economy incentives for schemes such as clear sector decarbonisation pathways.

Our thought leadership report on the FCA’s SDR regime- in collaboration with PwC UK- highlights a series of reflections on the experience of our asset manager members during SDR’s initial implementation phase, and sets out recommendations for our members to consider for effective implementation.

This covers labelling, disclosure preparation, governance, and communication, emphasising that, when applied well, the SDR regime can deliver clear benefits to firms. We have copied directly below some of the report’s main findings.

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Main findings

Our report highlights ten key findings:

1. Whilst there have been challenges in finalising the language in disclosures updated for SDR, many asset management firms highlighted the benefits of revisiting their approach to fund communications and disclosure over the course of the applications process with the FCA. Many asset managers stressed the value of the consumer-facing disclosures (CFDs) for more clearly explaining a fund’s sustainability objectives and approach.
2. The majority of labelled funds fall within the “Sustainability Focus” category, with more limited uptake of the “Improver,” “Impact,” and “Mixed Goals” labels.
3. While the SDR was designed as a principles-based regime, many asset managers found the FCA’s review process more detailed and prescriptive than expected.
4. Linked to this, asset managers said the prescriptive nature of the regulator’s approach to the regime led their firms to commit significant time and resources to its implementation.
5. The SDR’s ‘naming and marketing’ rules have become a significant feature of the regime, with higher-than-expected use by firms and this category being viewed by some as a “de facto fifth label”.
6. Many firms had completed comprehensive firm-wide ‘anti-greenwashing’ reviews and made targeted enhancements to align with the new regulatory expectations. Despite initial challenges, most asset managers noted that they have been able to adapt effectively to the new rule.
7. Most firms are planning to take a pragmatic approach to the upcoming SDR disclosures by evolving previous reports, such as their entity and product level Taskforce on Climate-related Financial Disclosures (TCFD) reports.
8. A consistent theme (mirroring last year’s SDR report) is a desire among market participants for greater international coherence in sustainability disclosures across different countries.
9. Asset managers observed a relatively limited appetite from distributors for labelled funds, yet firms thought distributor engagement would be important for the future market success of SDR labelling.
10. Firms also agreed that clarity from the FCA on the SDR’s trajectory, in particular its future extension to overseas funds, was as important as resolving near-term implementation challenges.

You can read the full report here.

This consumer guide, produced in partnership with Rathbones, as part of UKSIF’s annual Good Money Week, provides information on the new sustainable fund labels and how they work.

Please remember that this guide is not financial advice. It’s always best to speak to a financial adviser before making any investment decisions. A list of financial advisers that have signed up to UKSIF’s Financial Advisers’ and Wealth Managers’ Code of Conduct is available on our website here.

Read the full guide here. We hope you find this useful and informative.

Key takeaways for consumers include:

1. You don’t need to be an expert to start thinking about sustainable investment
2. Don’t be afraid to ask questions
3. Your views and values are unique
4. Remember no one label is ‘better’ or ‘worse’
5. The labels reflect a diverse range of approaches to sustainability

We welcome the opportunity to respond on behalf of our members to the government’s important consultation on the draft UK Sustainability Reporting Standards (SRS), based on the International Sustainability Standards Board (ISSB) disclosure standards.

As an internationally-leading financial centre and as a country that has played a vital role in recent years in shaping the priorities of the ISSB and its disclosure standards, we strongly believe that the close alignment of the UK’s upcoming SRS with the ISSB’s standards would mark an important moment in global efforts to promote a common, decision-useful baseline of sustainability and climate-related financial disclosures that can help advance long-term economic growth and the net-zero transition.

We largely agree with government’s amendments to the ISSB’s IFRS S1 and S2 standards and we very much welcome the consultation’s proposals that should assist with maximising opportunities for interoperability with the ISSB’s common baseline of sustainability and climate-related financial disclosures.

However, we note our preference for government’s approach not to amend the references to consideration of the SASB’s standards as currently proposed. Given, that this deviation from our view could facilitate the likelihood of less comparability and standardisation in disclosures among companies, and consequently in the wider economy, that could reduce the economic benefits of the UK’s SRS for investors and non-financial companies

UKSIF is pleased to respond to this important consultation on the introduction of climate transition plan requirements for certain companies in the UK. Should we see delivery of these requirements across the wider economy in the UK, implemented through an efficient and proportionate policy approach, we expect a number of tangible economic benefits over time for companies and investors and more broadly critical progress made towards government’s stated ambition for the UK to be a ‘world leader in sustainable finance.’

A summary of the main points in our consultation response are the following.

Summary- Main points in UKSIF’s response:

• Disclosure of transition plans: We recommend a ‘pathway approach’ towards mandatory disclosure (‘Option 2’) for in-scope companies to maximise the benefits of transition plans for users and preparers, while promoting proportionality in government’s rules. An initial ‘comply or explain’ period (‘Option 1’) would apply at first for entities and the length of this period would vary depending on the type of company in question.
• Scope of requirements: The UK’s Task Force on Climate-related Financial Disclosures (TCFD) regime offers a positive, familiar starting point for government to consider with transition plans initially rolled out to large listed and large private companies before extending to wider groups (e.g. ‘economically significant’ entities).
• Role of the TPT’s Disclosure Framework: For companies within scope, requirements should encourage companies to actively consider the TPT’s Framework and to report against its components as far as is possible. Expectations could be strengthened here over time.
• Frequency and location of transition plan reporting: We support publication of corporate transition plans on a triennial basis, in line with the TPT Framework’s recommendation, and would like to see these published through a standalone report. To provide necessary flexibility for preparers, we suggest the inclusion of cross-referencing and signposting provisions in the final rules which could help reduce duplication across some corporate reporting.
• Climate alignment targets: There should be an emphasis on in-scope companies disclosing plans that are based on science-based pathways aligned with the Paris Agreement goals, rather than a specified temperature alignment objective. Linked to this, policymakers should focus on supporting companies to engage in high-quality transition plan disclosure versus considering provisions on the implementation of plans by corporates.
• Transition plan dependencies: Requirements should very clearly provide necessary flexibility for preparers to disclose a full range of transition plan dependencies, which we expect will carry much value for preparers, users of plans, policymakers, and other groups.
• Role of UK’s SMEs: There are opportunities for government to actively support UK SMEs, which continue to receive climate-related data requests from different parties, sometimes relating to these groups’ own transition plans. Government, alongside wider stakeholders, should encourage SMEs to adopt the upcoming UK SME Voluntary Emissions Standard which we hope can support this group respond to sustainability information requests.
• The UK’s wider reporting landscape: Transition plans can be effectively integrated within the UK’s upcoming sustainability reporting landscape and wider financial reporting. This process can be facilitated by simplification to existing reporting, alongside wider steps such as a smooth transition in the coming years from TCFD-aligned rules to the UK’s Sustainability Reporting Standards (SRS) which will over time assist with reporting pressures for companies.

We welcome the opportunity to provide feedback on the recently published draft guidance for the UK Stewardship Code 2026. It is broadly positive to see the Financial Reporting Council (FRC) opt to produce this very helpful guidance, which we hope can be valuable in supporting UKSIF’s members to report on their stewardship-related policies, activities, and outcomes over the coming months during the transition to the new Code.

We hope that the Stewardship Code guidance, which in its current draft form has generally been well-received by our members, can help meaningfully reduce the potential reporting burden incurred in the short-term for signatories and the additional costs associated with the new reporting requirements.

We would highlight upfront our broad overall support for the FRC’s draft Code guidance as currently published, which contains a number of important points and strengths. These include the following: the relatively flexible language it has adopted that complements the new Code’s principles, the direct references to systemic risks (e.g. guidance that signatories describe efforts to mitigate these risks to deliver good client outcomes), the inclusion of dedicated guidance on stewardship ‘case studies’, the recognition of the role of stewardship played across different asset classes beyond listed equities, among other areas.

We would like to see the finalised guidance help reinforce the Code’s expectations to signatories and prospective signatories that a high-quality standard for investor stewardship practice and stewardship reporting under the revised Code remains in place in the UK’s market. This will be a very important message to convey to our industry, given the perception from some of our members that the revised Code has, in some respects, experienced some dilution in terms of its overall ambition and role as an effective accountability mechanism for good stewardship among investors.