COP27: UK Transition Plan Taskforce publishes disclosure framework
The framework encourages the development of standardised, gold standard transition plans to support a net-zero economy.
The UK Transition Plan Taskforce (TPT) has published a disclosure framework aimed at supporting companies and asset owners to set and follow transition plans.
Published at COP27, the disclosure framework builds on work completed by the Glasgow Financial Alliance for Net Zero (GFANZ) and the International Sustainability Standards Board (ISSB). The framework emphasises the need for concrete, short-term action by companies and financial firms across the economy.
The framework also makes recommendations for companies and asset owners to develop standardised, high quality transition plans.
Improved transition plans will allow investors to make better informed decisions about how to allocate capital and enable investors to meet their own net-zero commitments.
Speaking at COP27, Thomas Lingard, global head of sustainability at Unilever, said: “Transition plans provide a way to put all of the key information about not just what you’re aiming to do in terms of net-zero delivery and emission reduction plans, but how you’re going to do it.
“We wrote it [the framework] for investors primarily and it has deepened the conversations we have with our investor relations teams and investors.”
The framework is intended to support investors, governments, and non-governmental organisations (NGOs) hold company boards and management to account.
Current transition plans have proven ineffective because they vary in consistency and often lack sufficient detail on how targets will be achieved. In addition, many are not non-elective. Therefore, at last year’s COP26, then-UK Chancellor Rishi Sunak pledged to make transition plans mandatory.
At COP27, Mark Manning, member of sustainable finance and stewardship team at the Financial Conduct Authority (FCA), said the framework aims to have: “really good governance and accountability mechanisms so that the investors and lenders can really hold the company to account for the commitments they make.”
The TPT also announced it had published an implementation guidance to accompany the disclosure framework.
The TPT implementation guidance provides advice on the steps to develop a transition plan and sets out recommendations for when, where, and how to disclose a plan.
The guidance also covers the four main areas of baselining; current position, setting ambition, developing an action plan, and ensuring accountability for delivery.
Michael Izza, chief executive officer of Institute of Chartered Accountants in England and Wales, said: “The implementation guidance crucially covers how to report consistent, comparable and decision-useful information in transition plans, as well as how often and where to disclose transition plans.”
Alongside the disclosure framework and implementation guidance, TPT has launched a sandbox to test implementation.
The sandbox allows companies and financial institutions to test the framework and guidance to help users create their own transition plans.
The disclosure framework and implementation guidance are open for public consultation until 28 February 2023. TPT will use this consultation and feedback on the sandbox to finalise the framework and guidance.
Following the finalisation, the FCA plans to use the TPT’s framework to strengthen its transition plan disclosure expectations of companies, asset managers, and regulated asset owners.