Is a climate transition plan mandatory for UK businesses?

For the past eighteen months it has looked as though climate transition planning might become mandatory. In June 2025 the government consulted on mandating UK-regulated financial institutions and FTSE 100 companies to develop and implement credible transition plans ¹ and released the exposure drafts for new UK Sustainability Reporting Standards (UK SRS) based on the global IFRS S1 and S2 framework ² . In January 2026 the FCA announced plans, and a final consultation, to replace TCFD-aligned listing rules with mandatory reporting against UK SRS S2 ³ . In February 2026 the final UK SRS were published ⁴ . Each time the drafting firmed up, the requirement for a transition plan stayed out of it. 

So, the short answer is no. No UK business is currently required to have a climate transition plan, and nothing currently in the pipeline looks likely to change that in the near term. The nearest thing to an exception is PRA-regulated banks and insurers. The PRA’s Supervisory Statement SS5/25, issued in December 2025 ⁵ , sets an expectation that a firm with a net zero target has at least an internal plan for meeting it. 

The longer answer for banks, insurers and every other business, however, is that compliance is fundamentally the wrong lens for deciding whether a transition plan is needed. 

What UK SRS requires, and of whom 

UK SRS S1 and S2 were published on 25 February 2026 for voluntary use, substantively the same as the ISSB's IFRS S1 and S2. Under the FCA's January proposals, around 600 listed companies would report against S2 on a mandatory basis for accounting periods beginning on or after 1 January 2027. The policy statement is expected autumn 2026. 

S2 requires a company that has published a transition plan to disclose where the plan can be found, the key assumptions behind it, the dependencies it relies on and the progress made against it. Under the FCA proposals, a company without a plan should give its reasons for not having one, but nothing in the standard requires a company to produce a plan in the first place. 

Whether that changes now sits with the UK government. The 2025 consultation put two routes on the table: a disclose-or-explain step carrying no obligation to prepare a plan, or a duty to develop and publish one, potentially as a standalone document every three years. No response has yet been published. If that response were to propose a transition planning obligation, a further consultation on the detail and a limitation of scope, possibly to "economically significant" entities, would be likely.  

The transition is not waiting for the rules 

Waiting for legislation ignores the real point for CEOs and Boards, which is whether a transition plan is necessary for the sustainability of their own business model. 

That requires an understanding of the forces at play.  

Perigon's Low-Carbon Transition Index measures the real pace of the transition, and the lead article in this month’s Business in Command bulletin compares that to the varying degrees of hype and slander that proliferate in the media. Overall, the transition is heading in the right direction and running at a bit over half the pace net zero requires. 

The UK, and the 36 other jurisdictions tracked by the Oxford Climate Policy Monitor, covering more than 85% of global emissions, have raised climate policy ambition since 2020, and the United States is the only one to have recorded a formal rollback ⁶ . Any business betting that global ambition retreats far enough for the question of transition planning to recede currently takes it comfort from the actions ofon a single jurisdiction. The UK’s legally binding 2050 net zero target remains in place, although politically contested. 

A legislated destination and a pace of transition that currently falls well short are exactly the signals of a delayed or disorderly transition: where policy tightens late and hard, with severe ramifications across the economy. Under every NGFS short-term scenario the weighted average carbon price passes $100 per tonne by 2030 ⁷ , roughly five times today's level.  

A business that cannot say how a disorderly transition would reach its revenue, cost base and supply chain has a blind spot which is widening with every year that a stronger policy response is deferred.

The other half of a transition plan 

The better transition frameworks also prompt a business to set out how it responds and adapts to an increasingly volatile climate. The TPT Disclosure Framework ⁸ , now held by the IFRS Foundation and drawn on in the S2 guidance, incorporates this, and last year's consultation asked specifically what role adaptation should play in any UK requirement. S2 already expects disclosure of adaptation efforts in a company's own operations and value chain. 

This summer has made that case better than any framework does. Western Europe has recorded its hottest June and July, 2.79°C above average, with early estimates pointing to around 10,000 excess deaths in the June heatwave alone. Wildfires have burned close to 630,000 hectares, mainly in Spain and France, and displaced hundreds of thousands of people. England and Wales had their driest July in nearly 200 years, with all of Wales and half of England in drought. In the last week of August, flash flooding on the Nepal-China border left hundreds dead and hundreds more missing. 

Set against all of that, insured catastrophe losses for the first half of 2026 were $42 billion, well below the long-term trend. ⁹ However, this figure gives false reassurance: Swiss Re Institute estimated the global natural catastrophe insurance protection gap in 2025 at $424 billion. ¹⁰

So, no. Not mandatory. A Board can decide not to build or publish a transition plan, give its reasons in a sentence if it’s listed, or not at all if it’s not, and stay compliant for the foreseeable future. 

What it cannot ignore are the strategic implications of a transition that is happening at the same time as a climate that is becoming rapidly more volatile and extreme. A strategy that assumes carbon stays priced where it is, that the fleet, the premises and the suppliers are somebody else's decarbonisation problem, and that this summer was weather leaves a business exposed now and more exposed every year. If they were written down as assumptions to the core plan, would the Board really sign them off?