UK’s TPT launches climate disclosure framework

The UK’s Transition Plan Taskforce (TPT) has released its final disclosure framework which claims to set the “gold standard” for companies to develop and report climate transition plans. 

According to the TPT, the framework “helps organisations set out a credible and robust climate transition plan as part of annual reporting on forward business strategy”. 

The voluntary framework is grounded in three guiding principles; ambition, action and accountability, which emphasises concrete short-term action through transparent reporting. Driven by these three principles, the framework is broken into five disclosure elements:

• foundations of the company including its strategic ambition
• implementation strategy
• engagement strategy
• metrics and targets
• and the governance of the entity. 

It is designed to align with the disclosure recommendations set out in the international sustainability standards board’s proposed standards as well as the Glasgow financial alliance for net zero framework for transition planning. Both GFANZ and the ISSB are members of the TPT. 

The financial conduct authority (FCA) welcomed the publication, saying the framework “provides a set of good practice recommendations to help companies across the economy make high quality, consistent and comparable transition plan disclosures”. 

Currently only listed issuers and FCA-regulated asset managers and owners are required to draw up transition plan disclosures. This falls under a comply or explain basis meaning businesses don’t need to provide transition plans if explained and justified. 

“Mandatory transition plans must be just that: mandatory. Yet the government still fails to say whether there will be consequences for firms that fail to report and offers loopholes to let them out of reporting,” said Fran Boait, executive director of Positive Money. 

“This halfhearted measure, coupled with the government’s licensing of new oil and gas fields, sends a message internationally that the UK is not serious about tackling the climate crisis with the urgency required to avoid the worst effects of it,” she said.

While the ISSB’s climate-related standard requires companies to disclose information regarding any climate-related transition plans a company has, it does not require companies to put transition plans into place. The TPT framework is therefore viewed as a “useful component” for companies developing their transition plans and fulfilling the ISSB requirements. 

Additionally, the taskforce released a report comparing the European sustainability reporting standards (ESRS). One of the key distinctions between the two is in the scope of the ESRS, which, in contrast to the TPT’s sole focus on transition plans, is based on a double materiality assessment. Nevertheless, the frameworks share commonalities in various areas including scope 3 emissions, science-based emissions reduction targets and whether executive pay is linked to emissions reductions. 

The TPT plans to initiate in-depth consultations on industry-specific guidance in November 2023, which it intends to publish in February 2024.