A new “Transition Plan Taskforce” (TPT) has been launched by the Treasury to ensure that companies prepare rigorous plans to achieve net zero.
The TPT will establish robust criteria and expectations for science-based transition plans and develop guidance for both generic and sector-specific disclosures and metrics. The work will inform the implementation of the UK’s Sustainability Disclosure Requirements and influence international standard setting.
An increasing number of firms are making public commitments to decarbonise their operations and reach net zero emissions. Yet publicly disclosed climate transition plans are varied in detail and quality, limiting the ability of stakeholders to assess their credibility.
Under the rules announced by the Chancellor at COP26, the UK Government is requiring large companies and certain financial sector firms to publish a climate transition plan from 2023. The UK Government has mandated the TPT to develop a “gold standard” for transition plans, supporting efforts to tackle greenwashing in corporate disclosures.
The TPT has a two-year mandate, and brings together leaders from industry, academia and regulators. It is working with international frameworks which are preparing guidance on transition plan disclosures, including the Glasgow Financial Alliance for Net Zero (GFANZ) and International Sustainability Standards Board (ISSB). The Taskforce will take forward the foundational work from these bodies to develop granular transition planning templates that would be suitable for incorporation into regulatory frameworks in the UK.
The Chancellor announced new Sustainability Disclosure Requirements (SDR) at his Mansion House speech in July 2021. In October 2021, the UK Government published a Roadmap for delivering the UK’s strategy to green the financial system, including further detail on SDR.
At COP26 in November 2021, the Chancellor announced that the government and regulators will move towards making it mandatory for firms to publish their transition plans. As part of this, the Financial Conduct Authority (FCA) is requiring certain financial sector firms and listed companies to publish a climate transition plan from 2023, under the TCFD reporting framework. This will encourage more widespread adoption of published plans and increase the need for standards enabling consistency and comparability.