UK taskforce launches consultation on corporate climate transition plans

The UK government-mandated Transition Plan Taskforce (TPT) is seeking feedback from market participants on a sector-neutral framework for “credible” climate transition plans.

TPT, which was launched last month with a two-year mandate, aims to tackle greenwashing by supporting British companies in preparing and adhering to decarbonisation pledges.

“There is huge variability in the quality and robustness of these [net-zero] plans, if they are published at all,” TPT said in a statement, adding that “credible and appropriately detailed transition plans will be essential for changing this”.

The UK is set to be the first country to introduce mandatory disclosure requirements for corporate transition plans. A factsheet published in November said the mandatory transition plans will initially cover asset managers, regulated asset owners and listed companies.

As part of its mandate, TPT is establishing three workstreams, of which the first – “a sector-neutral framework for private sector transition plans” – is out for consultation. The other two workstreams will come in subsequent phases and will look at sector-specific guidance for finance and real economy participants, as well as recommendations for corporates preparing transition plans and stakeholders using them.

The sector-neutral framework consists of three key principles that incorporate how companies across the economy should disclose information on their strategies and action plans for achieving declared commitments. The key principles are: alignment with an economy-wide net-zero transition; near-term concrete actions backed up by clear governance mechanisms; and periodic reporting with transparency verification.

According to the TPT, a principles-based approach without detailed disclosure formats would provide flexibility for firms disclosing their transition plans. However, a more prescriptive template with specific metrics and information that must be disclosed would help comparability of transition plans, the TPT said. In its feedback questionnaire, the TPT specifically asks which approach is preferred by market participants.

The TPT also acknowledges that there may be conflicting views as to whether transition plans should be integrated into existing annual financial disclosures, form part of standalone sustainability reports, or be disclosed as standalone strategy documents.

Market comments are due by 13 July, after which a draft of the framework will be developed. By the end of the year, a further consultation on the draft should be launched, with a view to finalising the framework in early 2023.