TPT Launches “Gold Standard” Framework for Climate Transition Plan Disclosure

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 introduction of the new disclosure framework comes at a time when businesses all over the world are increasingly making net zero pledges. However, many of these businesses have not yet articulated and disclosed the strategies they will use to accomplish these goals, and they have lacked a consistent and standardised mechanism to report on these to their stakeholders.

Rishi Sunak, who is now the Prime Minister of the United Kingdom and served as Chancellor of the Exchequer in 2021, announced the foundation of the TPT in 2021 at COP26. The TPT was officially inaugurated in April of 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, which will be 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. Sunak also announced that the UK will introduce requirements for mandatory disclosure of net zero transition plans from UK financial institutions and listed companies.

Reporting of transition plans as part of a company’s sustainability-related disclosures in its financial reports serves a broad range of purposes, including setting a blueprint for action to support organisational transformation, improving information for investors and lenders to enable capital allocation decision making, and supporting policymakers. According to the TPT, the new framework “sets out good practise for robust and credible transition plan disclosures.”In order to prevent “greenwashing,” it is important to set up a taskforce that would define a “gold standard” for transition plans. This taskforce should be made of industry and academic leaders, as well as regulators and civil society groups.

Reporting of transition plans as part of a company’s sustainability-related disclosures in its financial reports serves a broad range of purposes, including setting a blueprint for action to support organisational transformation, improving information for investors and lenders to enable capital allocation decision making, and supporting policymakers. According to the TPT, the new framework “sets out good practise for robust and credible transition plan disclosures.”In order to prevent “greenwashing,” it is important to set up a taskforce that would define a “gold standard” for transition plans. This taskforce should be made of industry and academic leaders, as well as regulators and civil society groups.

The new framework is built around three core “guiding principles,” which include 

1. 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.
2. 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.
3.  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.

For more information on the service please book a free consultation by filling the form or writing to us at  pooja.h@globalpccs.com