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Final guidance completes UK’s transition plan disclosure framework

The UK Transition Plan Taskforce (TPT) has launched its final set of guidance for several business and economic sectors, marking another significant step toward standardising climate-related disclosures among businesses across different sectors.

The latest documents published by the TPT consists of a sector summary (119-page PDF/23.7MB), which provides high-level practical guidance for 30 sectors across financial services and the real economy on how to prepare and communicate net zero transition plans, and seven sets of sector-specific guidance for asset managers (44-page PDF/4.5MB), asset owners (45-page PDF/3.2MB), banks (40-page PDF/3.6MB PDF), electric utilities and power generators (32-page PDF/3.6MB), food and beverage (45-page PDF/7MB), metals and mining (44-page PDF/6.5MB), and oil and gas (42-page PDF/3.2MB).

The TPT guidance is set to help businesses interpret and implement the TPT disclosure framework, which was finalised last October with aims of encouraging businesses to develop plans on how they will transition to “a low greenhouse gas-emissions, climate-resilient economy”, and make a series of disclosures in relation to those plans.

The TPT was established following an announcement by then-UK chancellor Rishi Sunak at COP26 in Glasgow in 2022 to set standards on what a transition plan should look like and related metrics. The body comprises representatives from industry, academia, regulatory authorities and civil society. The publication of the final guidance came six months after the TPT finalised its disclosure framework. The framework is initially voluntary for businesses to adopt, but it is expected to form the basis of legal and regulatory requirements in the UK in due course. 

Euan McVicar, a climate and sustainability adviser at Pinsent Masons, said the latest round of guidance is the final piece in a set of materials which are both holistic in design and practical in approach.

“The TPT’s publication of the final set of transition planning resources adds useful new tools to the armoury of any company seeking to navigate its way through the climate-transition. The new guidance on how to undertake a transition planning cycle, containing several case studies, will be very helpful to those considering embarking on transition planning,” he said.

The utility of the TPT materials, according to McVicar, is also enhanced by the fact that they have been designed to complement or be compatible with corporate reporting frameworks such as the Taskforce for Climate-related Financial Disclosures (TCFD), the International Sustainability Standards Board (ISSB) and the EU Corporate Sustainability Reporting Directive (CSRD). He added: “It will be interesting to see whether their guidance does become mandatory in the UK or perhaps in other jurisdictions looking at the TPT work and keen to steal a march on embedding its approach in their regulatory frameworks.”

Sustainable finance expert James Hay of Pinsent Masons, a member of the TPT asset management working group, said when setting a transition plan firms should seek to set actionable targets which directly link to business strategy rather than aspirational targets which cannot be directly managed.

Hay said that the group worked hard to provide guidance to asset managers on the various strategic initiatives available to firms and how they can support transition planning objectives.

“Guidance on the disclosure of metrics and targets does not just cover financed emissions, but also relevant governance, business and operational metrics to provide a golden thread from strategic ambition through to outcomes,” he said.

Hay also highlighted the TPT’s focus on a “strategic and rounded approach” which expands the boundaries of transition planning to avoid potential ‘paper decarbonisation’ which attracts criticism for greenwashing. By diving deep into a number of different sectors, the TPT has shed light on the impacts and dependencies across sectors.

In particular, the guidance documents for asset managers and asset owners are closely aligned, with a section dedicated to explaining mutual dependencies.

“Firms should focus on how their transition plans are communicated to the market and their clients. This is particularly important for asset managers as they must work closely with institutional asset owners who may have their own transition plans with corresponding net zero and sustainability objectives,” he said.

Transition plans are still voluntary, but the government’s 2023 Green Finance Strategy signalled its intention to make their publication mandatory. “For now, transition plans may be a source of competitive advantage for firms looking to differentiate, to understand how the transition to a low carbon economy is shifting business and to get on the front foot with clients and customers,” he said.

In addition to the sectoral guidance, the TPT has also issued guidance on the disclosure recommendations guidance; updated ‘transition planning cycle’ guidance that includes content on climate adaptation; a paper on the challenges and opportunities of transition plans in emerging markets and developing economies, and independent advisory pieces on adaptation, nature, ‘just transition’ and SMEs.

“The paper on opportunities and challenges in emerging markets and developing economies underlines the international reach and potential of the TPT disclosure framework, and the new advisory pieces reflect the inter-operability which is part of its DNA,” said McVicar.

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