Background information regarding the Transition Plan Taskforce
An increasing number of firms are making public commitments to decarbonise their operations and reach net zero emissions. Yet publicly disclosed 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 transition plan from 2023. The UK Government has mandated the Transition Plan Taskforce (TPT) to develop a gold standard for transition plans. The TPT’s work will help to drive decarbonisation by ensuring that financial institutions and companies prepare rigorous plans to achieve net zero and support efforts to tackle greenwashing.
The TPT 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 UK’s expectations for transition plans will have an impact on companies around the world, given the UK’s standing as a listing location for international companies and a hub for financial services firms managing investments from around the world.
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.