Background information regarding the Transition Plan Taskforce
Developing a gold standard
Net zero and transition plans have become new norms in private sector ambition. An increasing number of organisations are making public commitments to reach net zero. Yet existing transition plans vary in detail and quality, limiting the ability of stakeholders to assess their credibility.
There is significant demand from the private sector for standardised, high quality plans to make better-informed decisions about how to allocate capital. This will support the UK’s transition to net zero.
Informing future UK regulation
In October 2021, the UK Government published the Greening Finance Roadmap, committing to take action to help align UK financial flows with a net zero economy.
At COP26 in November 2021, the Chancellor announced the establishment of the TPT as part of the UK’s plans to become the world’s first net zero financial centre, ensuring financial flows shift towards supporting net zero.
In January 2022, the FCA introduced rules for listed companies and large regulated asset owners and asset managers to disclose transition plans as part of their Task Force on Climate-Related Financial Disclosures (TCFD)-aligned disclosures, initially on a comply or explain basis. The first disclosures under these rules will be made in 2023. The TPT’s outputs will support UK firms and companies to publish high quality plans under existing rules.
Over the next two years, the FCA will draw on the TPT’s outputs to strengthen future disclosure rules for listed companies and financial firms. The FCA sits on the TPT Steering Group and Delivery Group and participates in its workstreams.
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 plan recommendations suitable for incorporation into regulatory frameworks in the UK. Both the ISSB and GFANZ sit on the TPT Steering Group.
Along with the UK, many countries are expected to adopt the ISSB’s global baseline and build on it. The TPT should be viewed as a UK jurisdictional initiative to apply and build on the ISSB’s baseline.
We hope the TPT Framework will influence the development and convergence of transition plan disclosures in other jurisdictions. To that end, we are engaging with the ISSB, IOSCO and financial regulators in other jurisdictions.
The TPT is also engaging with other countries that are developing disclosure and transition plan frameworks. Transition plan disclosures are a key part of net zero financial architecture: they support the shifting of capital and the implementation of Nationally Determined Contributions.
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 global investments.