The UK’s transition plan taskforce (TPF) has released its final disclosure framework which sets out “good practice for robust and credible transition plan disclosures”. The framework was developed as an internationally interoperable “gold standard” for entities to compare their strategic climate ambitions against.
It will be implemented in advance of the UK’s shift to make transition plans mandatory.
The “principle-based” framework centres around three core principles: ambition, action and accountability. Using this structure, it provides guidance on how to navigate existing international disclosure standards and implement them in line with best practices.
The guiding principles of the framework are:
- Ambition – “Strategic and rounded” ambition is needed which reflects the urgency to act on three channels: decarbonising, climate-related risks and opportunities, and economy-wide transition
- Action – Translate ambition into concrete short, intermediate and long term targets that provide a roadmap for meeting strategic ambition throughout the value chain, which including Scope 1, 2 and 3 emissions and transition resourcing plans
- Accountability – Incorporate transition plans into organisational processes for business and financial planning, and governance, with clear roles and responsibilities for delivery and oversight
In the foreword, the co-chairs stress that disclosures are not “merely a compliance exercise”. Transition plans form a “critical component” of business strategies, according to the co-chairs, as the transition will usher in one of the “biggest economic transformations in living memory”.
Additionally, the authors note that widespread disclosure of transition plans will help regulatory authorities understand the trajectory of the economy-wide transition and to assess the sufficiency of an body’s strategies given its exposures.
The framework supports compliance with the International Sustainability Standards Board’s (ISSB) disclosure standards by building on “the ISSB’s definition of a climate-related transition plan”. The framework expands on the ISSB broad definition by adding that plans should clearly articulate an entity’s “strategic ambition”.
Strategic ambition is defined as the entity’s objectives and priorities for contributing to the transition towards a low emissions and climate-resilient economy. It also concerns how these objectives will be pursued to “[capture] opportunities, [avoid] adverse impacts for stakeholders and society, and [safeguard] the natural environment”.
Reporting is organised across five disclosure elements and 19 sub-elements that are designed to be “complete, structured and decision-useful” and consistent with the concepts and structure of the Glasgow Financial Alliance for Net Zero framework.
The five disclosure elements are
- Foundations – Report on strategic ambition and the high-level implications of these ambitions on business models and value chains, as well as the key assumptions, external factors and unintended consequences of these ambitions.
- Implementation strategy – Disclose actions taken and planned within business operations, products, services, and policies to achieve the strategic ambition, as well as the implications for financial planning and performance.
- Engagement strategy – Disclose how value chain, industry peers, government, public sector, communities, and civil society are being engaged to achieve strategic ambitions.
- Metrics and targets – disclose the metrics and targets used to drive and monitor progress towards its strategic ambition.
- Governance – disclose how transition plans are being embedded within governance, organisational, incentives and oversight structures.
Finally, the guidelines stress that transition plans should be dynamic documents that are regularly reviewed and disclosed both as part of annual financial reports and every three years as standalone documents.
This page was last updated October 20, 2023
Share this article