• The Government publishes a “Modern Industrial Strategy” for the UK, with proposals to reform certain areas of UK corporate law
• The Government is consulting on the first UK Sustainability Reporting Standards
• The Government is consulting on introducing mandatory climate change transition plan requirements for large businesses
• The IFRS Foundation publishes new guidance on transition plan disclosures under IFRS S2

Government sets out reforms to corporate law in its modern industrial strategy

The Government has published a paper titled “The UK’s Modern Industrial Strategy”, in which it has set out its vision for developing the UK economy and its industries.

Although a mission statement for the economy as a whole, the paper focusses on eight core industries which the Government considers important to the UK’s future: advanced manufacturing, the creative industries, life sciences, clean energy, defence, the digital and technologies economy, professional and business services, and financial services.

The paper sets out a range of proposed reforms, many of which will require new legislation.

You can read more about the proposals for corporate law from the Government’s modern industrial strategy in our separate in-depth piece. We have set out a high-level summary below.

• National security and investment. The Government will consult on updating the scope of the 17 “sensitive sectors” of the economy in which notification is mandatory under the National Security and Investment Act 2021, with the aim of ensuring requirements remain targeted and proportionate. It will also announce new exemptions to the mandatory notification regime.
• Capital markets. The paper promises further reforms to the UK’s capital markets, principally around pension fund investment. This builds on the recent overhaul to the UK’s listing regime (which took effect in July 2024) and the creation of the new PISCES trading sandbox.
• Regulation. The Government intends to streamline regulation to “break down unnecessary barriers” and “open up opportunities for high-potential firms”. This includes merging regulators where it “makes sense to do so”, setting up a new unit to challenge unnecessary regulation, and further simplifying non-financial reporting (NFR) requirements for UK businesses.
• Corporate redomiciliation. The Government will consult on a new corporate redomiciliation regime. “Redomiciliation” refers to the ability for a corporate entity to move its registered office from one legal jurisdiction to another, so as to become governed by a different set of laws. Unlike in some jurisdictions, redomiciliation into or out of the UK is currently not legally possible.
• Payment practice reporting. Under the UK’s payment practices reporting regime, large businesses are required to report, through a government portal, on the proportion of invoices they pay within specific periods of time. The paper proposes to require in-scope businesses to include this information in their annual report and promises “potential legislative measures to go further”.

Read the Government’s Modern Industrial Strategy for the UK (opens PDF)

Government consults on new UK sustainability reporting standards

The Government has published a consultation on two new UK Sustainability Reporting Standards, to be named UK SRS S1 and UK SRS S2.

UK SRS would be based on the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards published by the International Sustainability Standards Board (ISSB).

To date, the ISSB has published two standards: IFRS S1, which contains overarching disclosure requirements for sustainability-related financial information, and IFRS S2, which sets out specific recommended climate-related disclosures.

UK SRS S1 and UK SRS S2 would adopt IFRS S1 and IFRS S2 respectively with modifications. For example, while IFRS S2 requires a reporting entity to use the Global Industry Classification Standard when including classifications, UK SRS 2 would allow any appropriate standard.

Once endorsed, the new standards would be available for voluntary use in the UK.

However, larger and publicly traded companies are already required by the Companies Act 2006 to include climate-related financial disclosures in their strategic report. The Government intends to consult on amending the Act to mandate climate-related disclosures under UK SRS S2.

In addition, companies with a listing in the UK are required to report against the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) or explain the respects in which they have not done so. The Financial Conduct Authority (FCA) intends to consult on replacing this with a new requirement to report under UK SRS (which effectively supersedes and builds on the TCFD’s recommended disclosures).

The consultation closes on 17 September 2025.

Read the consultation on new UK Sustainability Reporting Standards (opens PDF)

Access draft UK Sustainability Reporting Standard S1 (general disclosure requirements) (opens PDF)

Access draft UK Sustainability Reporting Standard S2 (climate-related disclosures) (opens PDF)

Government consults on mandatory transition plan reporting

The Government is consulting on introducing a new requirement for larger companies to develop a climate-related transition plan and to report on that plan.

The Labour Party’s 2024 manifesto contained a commitment to require UK-regulated financial institutions and FTSE 100 companies to develop and implement a transition plan that aligns with the 1.5°C goal of the Paris Agreement. The consultation explores how to implement that commitment.

The paper complements the Government’s parallel consultation on introducing new UK Sustainability Reporting Standards (see previous item). This includes a new UK SRS S2, which would not require an organisation to implement a transition plan but would provide a framework for organisations that have a transition plan in place to report on it.

However, as noted in the previous item, the Government and the Financial Conduct Authority intend to consult on measures to require larger and publicly traded companies to report under UK SRS S2, which would disclosing information relevant to transition plan implementation.

The consultation presents two options.

• Option 1. If an in-scope entity does not publish a transition plan, it would be required to explain why. This is essentially a “comply or explain” approach.
• Option 2. In-scope entities would be required to disclose and develop a transition plan. There would be no option to decline to develop a plan and explain why.

The paper also seeks views on:

• the benefits and use cases of transition-planning and alignment with other jurisdictions;
• the experience of organisations that have already prepared a transition plan voluntarily, or have considered preparing one but decided not to;
• the overarching approach to a new transition plan requirement (with a further consultation in due course on the detail of any new regime), including whether to mandate transition plans or to adopt a “comply or explain” approach;
• whether to apply the requirements beyond financial institutions and FTSE 100 companies to all large business entities (but not to SMEs);
• whether to require transition plans to align with a net zero target by 2050 and/or to integrate nature-related matters within any new regime; and
• the extent to which draft UK SRS S2 addresses disclosures relating to transition plans.

The consultation closes on 17 September 2025.

Read the consultation on introducing a requirement to develop and report on a climate-related transition plan (opens PDF)

IFRS Foundation publishes new guidance on Sustainability Disclosure Standard S2

The IFRS Foundation has published new guidance on transition plans, designed to assist organisations with making disclosures in accordance with IFRS S2.

IFRS S2 sets out specific recommended climate-related disclosures. It complements IFRS S1, which contains overarching disclosure requirements for sustainability-related financial information.

Among other things, IFRS S2 requires an organisation to provide material information on its transition to a net-zero economy (although it does not require an organisation to put a transition plan in place).

The guidance effectively succeeds and supersedes previous guidance published by the Transition Plan Taskforce (TPT), which has ceded responsibility in this area to the IFRS Foundation.

Access the IFRS Foundation’s new guidance on climate-related transition disclosures under IFRS S2 (opens PDF)