The government’s Transition Plan Taskforce (TPT) has published its official guidance for climate transition plans. The TPT Disclosure Framework sets out best practice for how to draw up a net zero transition plan and report on progress. A launch event on 9 October gave the TPT and its partners an opportunity to explain the framework’s context and intended use.
Kate Levick, co-head of the TPT secretariat, said:
“Using the TPT framework can help organisations to build robust and credible transition plans.”
A push for transparency
This has been nearly two years in the making. At COP26 in 2021, then-Chancellor Rishi Sunak announced the ambition for the UK to become “the world’s first net-zero-aligned financial centre”. For finance to flow in the service of our net zero goals, transparency and accurate reporting is absolutely crucial.
April 2022 saw the implementation of compulsory climate-related reporting for certain large businesses and financial institutions. (Full details in our TCFD and SDR explainer.) The TCFD rules already require businesses in scope to consider their own plans for the net zero transition. The new Disclosure Framework now offers more detail on exactly how to do this.
By the end of next year, the scope of mandatory TCFD reporting will have widened, giving more large businesses a legal requirement to draw up transition plans.
Five key elements
The framework sets out five key elements of a good transition plan:
1. Foundations: what are your organisation’s strategic ambitions around the climate transition?
2. Implementation strategy: what exactly are you going to do and how will it affect the business?
3. Engagement strategy: how are you working with your value chain and other stakeholders to achieve the plan?
4. Metrics & targets: what are you using to measure and monitor progress?
5. Governance: how does your transition plan sit within the organisation’s governance structures?
These five elements are then broken down into 19 sub-elements, each with related recommendations for best practice.
“We can’t do it alone”
Amanda Blanc, co-chair of the TPT, pointed out that the proportion of companies that will soon be required by law to disclose net zero transition plans are still a small fraction of the UK business community – and they can’t do it alone. To achieve their net zero goals, Scope 3 will be crucial. “We need to involve everyone we work with. Our supply chains, the companies we lend to…Transition planning only works if it’s widespread.”
“Make the hard decisions now”
Mary Schapiro, vice-chair of the Glasgow Financial Alliance for Net Zero (GFANZ), said businesses need to just get started. “If you don’t start, you’ll never finish. We only have about seven years of carbon budget left at current emissions rates. Mandatory is coming. Need to start now, flow change across the company, make the hard decisions. Now is the moment.”
Many speakers at the launch made the point that transition planning is iterative. You don’t need to come up with a perfect plan from the start; it will change as the business evolves and you gather new information. Harriet Cullum of Diageo explained their approach: “We understood that if we set our targets knowing how we’d reach them, they weren’t ambitious!” For businesses that prefer to see more of the road ahead, the new guidance will offer some much-needed help getting started.
For assistance with your net zero strategy or any energy related queries please contact firstname.lastname@example.org or scan the QR code below