UK regulators give update on timing of ESG regulatory initiatives

On 14 April 2025, the Financial Services Regulatory Initiatives Forum published its new Regulatory Initiatives Grid (the Grid) which sets out upcoming regulatory initiatives for the next 24 months. The Forum is made up of representatives from all the major financial regulators (including the FCA and PRA) and the UK government.

The Grid is usually updated every six months and allows financial services firms and key stakeholders to identify and plan for regulatory changes that may affect them. It typically also includes an update on timings of existing initiatives.

The update on ESG regulatory initiatives from the latest edition of the Grid is as follows:

• SDR and investment labels: In 2024, the FCA consulted on extending the Sustainability Disclosure Requirements (SDR) regime to portfolio managers. That consultation closed in June 2024. In February 2025, the FCA gave an update in which it said that wanted to ensure that an extension of SDR to portfolio management delivers good outcomes for consumers, is practical for firms and supports growth of the sector, and that it wanted more time to ensure this. It abandoned its previous plan to publish a Policy Statement in Q2 2025. The update in the Grid does not add much to this – it simply says that the FCA will consider next steps, including through engagement with firms. No new timeframe has been indicated. The Grid also refers only to the proposal to extend the SDR to portfolio managers and not to any other initiatives that have been suggested in the past, such as the proposed extension of the SDR to include funds under the Overseas Funds Regime.
• UK Green Taxonomy and a Taxonomy Regulation: At the Mansion House speech in 2024, the Government consulted on the value case and use case for a UK Green Taxonomy. The Grid says that the Government is assessing the responses and will publish a formal consultation response “in due course”, which will set out the next steps. It also says that the Government is considering “whether and how” a UK Green Taxonomy could be additional and complementary to existing sustainable finance policies – and that if the evidence suggests a green taxonomy would be helpful, then there will be a further consultation on the detail of the framework. This update comes under the heading of “initiatives completed/stopped”, which suggests that it is possible that no changes will be made. The Grid does not set out a timetable for the next steps.
• Non-financial misconduct and diversity and inclusion across the financial sector: The FCA published Discussion Paper (DP21/1) in June 2021 on changes to its Handbook to tackle non-financial misconduct, as part of a wider consultation to support progress on improving diversity and inclusion across the financial sector (including through Consultation Paper CP23/20). The update in the Grid is that the FCA is taking additional time to consider whether its approach is proportionate and aligned with planned legislation. No firm dates are set for next steps, but the FCA says it will set out next steps by the end of June 2025.
• ESG Ratings: Following a consultation published in 2024, the UK Government announced its intention to introduce secondary legislation bringing ESG ratings providers within the FCA’s regulatory perimeter. The government now says that it intends to make that secondary legislation in H1 2025. Following that, the FCA will consult on proposals for the future regulatory regime. There is no indication of the timetable for that consultation.
• Transition Plans: The UK Government has committed to mandate listed companies and financial institutions to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement. The Grid says that the Government will consult in H1 2025 on how to take this forward and that in Q3 2025, once the Government has consulted on the draft UK Sustainability Reporting Standards, the FCA will consult on strengthening its expectations for listed issuers’ transition plan disclosures, with reference to the TPT Disclosure Framework.
• ISSB Disclosures: The UK Government intends to consult on the endorsement of the UK version of the ISSB standard in H1 2025. Once the UK Government has published its consultation, the FCA intends to consult on ISSB disclosure requirements for UK listed companies in Q3 2025.
• Climate Financial Risk Forum (CFRF): The CFRF is a joint initiative between the FCA and PRA which brings together senior financial sector representatives to share their experience in managing climate risks. The Grid says that the CFRF will develop materials on key themes of Adaptation and Climate Financial Resilience (Nature and Short-Term Scenarios) and publish them in H2 2025.
• Stewardship Code: The FRC’s consultation on the Stewardship Code closed on 19 February 2025. The FRC intends to publish the updated Code during summer of 2025 and the Code will take effect on January 2026. The Grid confirms that this is still the proposed timetable.

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This note is intended to be a general guide to the latest ESG developments. It does not constitute legal advice.

Authored by Rita Hunter, Dominic Hill and Jessica Dhodakia.