A disclosure framework for companies and financial institutions to develop ‘gold standard’ transition plans to net-zero has been unveiled for consultation.
The UK Transition Plan Taskforce (TPT) was first announced at COP26 in Glasgow last November. One year on, it has published The Transition Plan Taskforce Disclosure Framework for private sector climate transition plans, as well The Transition Plan Taskforce Implementation Guidance. This sets out the steps to develop a transition plan, and when, where and how to disclose such plans. It has also unveiled The Transition Plan Taskforce Implementation Guidance: Technical Annex, which links its recommendations to wider corporate reporting and to those provided by the Task Force on Climate-related Financial Disclosures and the International Sustainability Standards’ Board.
The TPT says that high-quality transition plans are crucial for the transition to net zero as they will create transparency and accountability for companies and financial institutions in meeting their targets. They will also enable investors to make better-informed capital allocation decisions.
The framework stresses the need for companies and financial firms to take “concrete, short-term action”, which should consider “the full range of levers at their disposal to contribute to, and prepare for, an economy-wide transition to net-zero”. This will help avoid any potential unintended consequences of “paper decarbonisation”, it said.
Net-zero transition plans should support long-term corporate emissions targets with interim milestones and outline the necessary steps to change business models and investment. The plans should also include how companies will support their staff by tackling any up-skilling and re-skilling challenges. The TPT wants companies to publish a transition plan next year and then update it in 2026. It recommends that any information crucial to the plan should be included in financial reporting in 2024 and 2025.
The TPT will use the consultation, which ends at the end of next February, to finalise the Disclosure Framework and Implementation Guidance. The Financial Conduct Authority will then draw on the TPT’s conclusions to strengthen its transition plan disclosure expectations for listed companies, asset managers and regulated asset owners.
“In recent years, we have seen a wave of private companies announcing their ambitions to contribute to net zero,” said TPT co-chair and Aviva Group chief executive Amanda Blanc. “We now need financial firms and companies to come forward with high-quality plans to show how they will meet their targets.”
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