The UK’s Transition Plan Taskforce (TPT) announced the release of the final version of the TPT Disclosure Framework, aimed at providing a “gold standard” for companies to develop and report on their climate transition plans.
The launch of the new disclosure framework comes as companies globally are increasingly announcing net zero commitments, but many have yet to articulate and disclose their strategies to achieve these goals, and have been lacking a consistent, standardized way to report on these to stakeholders.
Amanda Blanc, Group CEO Aviva Group, Co-Chair, Transition Plan Taskforce, said,
“It’s great to see more and more companies announcing their net zero ambitions, but these are of little use if there’s no action or accountability.
“Backing up net zero ambitions with high quality and clear transition plans is crucial if we are to collectively deliver net zero. The TPT Disclosure Framework will help businesses understand just what makes a climate transition plan robust and credible.”
The formation of the TPT was announced in 2021 by then-Chancellor of the Exchequer, and now UK Prime Minister, Rishi Sunak, at COP26, and officially launched in April 2022. At COP26, Sunak announced that the UK will introduce requirements for mandatory disclosure of net zero transition plans from UK financial institutions and listed companies, and HM Treasury unveiled plans to establish the taskforce, composed of industry and academic leaders, regulators, and civil society groups, to develop a “gold standard” for transition plans, in order to guard against greenwashing.
According to the TPT, the new framework “sets out good practice for robust and credible transition plan disclosures,” with reporting of transition plans as part of a company’s sustainability-related disclosures in its financial reports serving a broad range of purposes, including setting a blueprint for action to support organizational transformation, improving information for investors and lenders to enable capital allocation decision making, and supporting policymakers and regulators in understanding and managing the direction of the economy-wide transition.
The new framework is built around three core “guiding principles,” which include Ambition, encompassing disclosure on the entity’s strategic ambition to decarbonize its own operations and value chain, respond to climate-related risks and opportunities, and contribute to an economy-wide transition; Action, which includes elements related to the company’s implementation plan across business operations, products and services, policies and financial planning, as well as its engagement strategy with its value chain, industry, government and society, and; Accountability, which covers the range of metrics and targets used to drive and monitor progress towards its strategic ambition, as well as how the company embeds its transition plan within its governance structure, in order to achieve its strategic ambition.
The TPT added that the new framework was designed to be aligned with international standards, including being consistent with, and building on, the recently released IFRS Foundation’s climate-related disclosure standard, as well as drawing on the Glasgow Financial Alliance for Net Zero (GFANZ) framework and guidance for net zero transition planning. The IFRS’ International Sustainability Standards Board (ISSB) and GFANZ are both members of the TPT.
Baroness Penn, Treasury Lords Minister and Co-Chair of the Transition Plan Taskforce, said:
“Launched only in April 2022, the Transition Plan Taskforce has now delivered on its core mandate to develop a framework for private sector climate transition plans.
“As we move towards meeting net zero in a pragmatic and proportionate way, we recognise the value of the transparency and accountability offered by transition plans which help firms in their own journey.”
Click here to access the TPT Disclosure Framework.