In a world where businesses are facing increasing pressure to reduce their environmental and social impact, a climate transition plan is essential to achieving net zero and beyond. The Transition Plan Taskforce (TPT) is leading the charge in the UK, providing businesses with the guidance and support they need to make the transition to a net zero future.
What is the Transition Plan Taskforce (TPT)?
The UK Transition Plan Taskforce (TPT) was first introduced at the COP26 Climate Summit which took place in Glasgow in 2021 and was officially launched in March 2022 by the UK Treasury.
The taskforce, which is a collaborative initiative led by the private sector, is aimed at establishing the ‘gold standard’ for private sector climate transition plans.
Several major corporations and financial institutions, including Aviva, Legal & General Investment Management, London Stock Exchange Group, NatWest, and Unilever, have actively contributed to the various tasks undertaken by the Taskforce.
Six months after its inception in October 2022, the TPT released its initial proposal for high-quality transition plans. A year after that, later, it published its finalised and comprehensive ‘Disclosure Framework’ and ‘Implementation Guidance’.
What is the purpose of TPT?
The underlying philosophy of the Transition Plan Taskforce (TPT) propagates that businesses have a vital role to play in addressing climate change, and therefore responsible and ethical practices should be developed and adopted.
Accordingly, the TPT’s primary objective is to develop a world-class standard for private sector net zero transition plans, one which supports businesses in creating credible strategies and helps drive sustainable practices and policies across the UK’s corporate landscape.
What does the TPT do?
In November 2022, the TPT presented its proposal for a ‘gold standard’ for net zero transition plans for industry consultation. The proposal included a framework outlining how companies should structure their plans and the essential components to include, along with an implementation guidance document.
Consultation closed in early 2023 and in October 2023, the taskforce published its final Disclosure Framework and Implementation Guidance.
The new framework both encourages and guides businesses to adopt a strategic approach to decarbonisation, and emphasises clear climate targets, risk management, and contributions to the broader quest for net zero emissions. Additionally, it provides guidance on integrating transition plans into annual reporting processes to ensure consistency, comparability and transparency. This streamlining aims to alleviate the reporting burden for businesses grappling with new climate reporting regulations.
Alignment with other frameworks
With a myriad of different regulations, standards, and frameworks in the sustainability space, it’s important to understand where the TPT fits in.
The TPT Framework is designed to be consistent with, and build upon the final climate-related disclosure standard (IFRS S2) issued by the ISSB in June 2023.
The framework also draws on the Task Force for Climate Related Disclosures (TCFD) recommendations and the Glasgow Financial Alliance for Net Zero’s (GFANZ) framework for credible, comprehensive and comparable net zero transition planning. Both the ISSB and GFANZ are Taskforce members.
The TPT states that its recommendations in creating a Transition Plan should not be seen as separate from what is suggested by the ISSB and the TCFD, but rather “provides additional recommendations on what a good practice climate transition” looks like.
Is the Transition Plan Taskforce’s framework mandatory?
The simple answer is not yet, however, there are several developments in the UK which suggest it may become mandatory in the future.
Currently, only listed issuers and FCA-regulated asset managers and owners are required to make transition plan disclosures; however, this falls under a ‘comply or explain’ basis, which means these businesses can avoid publishing transition plans if they can explain and justify their reasoning why.
However, the UK government has committed to consulting on requirements for the UK’s largest companies to disclose their transition plans if indeed they do have them.
Whether this will also fall under a similar ‘comply or explain’ basis is still unknown.
Next steps for businesses
Currently, the TPT framework remains optional for the majority of businesses. However, companies do have an opportunity to leverage this framework to create and share their transition plans, this approach can offer valuable insights into decarbonising their operations and can help to protect and enhance an entity’s long-term value.
It is worth noting that as things continue to develop and change with the UK’s approach to climate change, businesses who adopt this path sooner rather than later are likely to be in a better and stronger position if and when the TPT framework is made compulsory.
Working with the TFT framework
A great starting point for diving into the TFT Framework is to take a look at its completed framework. This resource will guide you through the high-quality methods for crafting transition plans that encompass ambition, action, and accountability, all while offering practical steps to follow along the journey.
Conclusion
The UK Transition Plan Taskforce is playing a leading role in developing global best practice for climate transition planning. Its work is essential for helping businesses to achieve their net zero targets and manage the risks and opportunities associated with the transition to a low-carbon economy.
