The UK-government mandated Transition Plan Taskforce has launched a gold standard for best practice climate transition plans by private sector firms.
Recommendations for companies and financial institutions to develop gold-standard transition plans have been included in TPT’s new disclosure framework, published today a year on from the creation of TPT being announced at COP26.
Alongside the framework, TPT also published an implementation guide to help companies, step by step, develop a transition plan, including when, where and how to disclose their plan.
The taskforce has announced a sandbox has been launched to allow companies and financial institutions to test the framework and guidance as they create their transition plans.
Both the Disclosure Framework and Implementation Guidance are open for public consultation until 28th February 2023.
Net-zero financial centre
The TPT was set up by the UK Treasury to ensure companies develop and publish rigorous and robust transition plans that detail how they will adapt and decarbonise as the UK moves towards a net-zero economy by 2050. This is part of the government’s commitment to become the “world’s first net zero-aligned financial centre”, also announced at COP26 last year.
TPT recommended companies and financial firms use concrete, short-term action and consider all the options available to them to contribute to, and prepare for, an economy-wide transition to net zero. It stated this would help avoid unintentional “paper decarbonisation”.
FCA ESG director, Sacha Sadan, said the regulator would be incorporating TPT’s final guidance documents in its own disclosure requirements.
“Our ESG strategy supports the role of finance in delivering a market-led transition to a more sustainable economy. We strongly welcome today’s publication of the TPT’s Disclosure Framework and Implementation Guidance.
“The FCA has been actively involved in the development and drafting of these initial outputs. We look forward to using the final outputs as we move to strengthen our transition plan disclosure expectations of listed companies and regulated firms,” said Sadan.
Economic secretary to the Treasury and co-chair of the TPT, Andrew Griffith MP, called transition plans “fundamental” to ensuring the financial system supports the transition to net zero. Griffith said TPT’s announcement today was a “significant step” in delivering the UK’s commitment to become the world’s first net zero-aligned financial centre.
Meanwhile, Amanda Blanc (pictured), group CEO of Aviva and co-chair of the TPT commented on the need for high quality plans to back ambitions.
“In recent years, we have seen a wave of private companies announcing their ambitions to contribute to net zero. We now need financial firms and companies to come forward with high quality plans to show how they will meet their targets.
“Transition plans are a key building block for delivering a net-zero future. This is why the work of the TPT is so important. Building on the excellent work from GFANZ and the ISSB, the TPT Disclosure Framework will help ensure that everyone has a consistent understanding of what is needed. I am thrilled to co-chair the Taskforce and urge all those that are preparing 2023 transition plans to sign up for the TPT online sandbox and give feedback directly,” said Blanc.
PRI head of UK policy, Eliette Riera, said PRI welcomed the proposals.
“The proposed framework provides comparable information to support companies’ transition plans to reach net zero by 2050.
“For investors, this new proposal – alongside the recent release of the Sustainability Disclosure Requirement consultation by the FCA – is a positive step towards delivering on the pledge for the UK to be the world’s first net-zero aligned financial centre and provides needed clarity on companies’ proposed actions to the market.
“As the COP baton passes over to Egypt, the swift implementation of concrete policies to support short- and medium-term climate targets remains an area where the UK government has an opportunity to demonstrate strong leadership,” said Riera.