Transition plan Taskforce publishes its finalised Disclosure Framework and supporting guidance
11 Oct, 2023
The Transition Plan Taskforce (TPT) was established by the UK government in April 2022 with a two-year mandate to develop the ‘gold standard’ for climate transition plans. On 9 October, the TPT published its finalised sector neutral Disclosure Framework and supporting guidance.
The package of publications is designed to ensure that entities take a ‘strategic and rounded approach’ in developing a transition plan that explains how climate-related targets will be met, how climate-related risks are managed, and how it contributes to achieving net zero. The outputs include:
A Disclosure Framework
A sector neutral Disclosure Framework which sets out good practice for robust and credible transition plan disclosures as part of a company’s annual reporting.
The framework is structured around five disclosure elements that are designed to be consistent with, and build on, IFRS S2 Climate-Related Disclosures, issued by the International Sustainability Standards Board (ISSB). The TPT summarises the five elements as follows:
- Foundations: An entity shall disclose the Strategic Ambition of its plan. This shall comprise the entity's objectives and priorities for responding and contributing to the transition towards a low GHG emissions, climate-resilient economy, and set out whether and how the entity is pursuing these objectives and priorities in a manner that captures opportunities, avoids adverse impacts for stakeholders and society, and safeguards the natural environment. Under this element, an entity should also disclose the high-level implications that this transition plan will have on its business model and value chain, as well as the key assumptions and external factors on which the plan depends.
- Implementation Strategy: An entity shall disclose the actions it is taking within its business operations, products and services, and policies and conditions to achieve its Strategic Ambition, as well as the resulting implications for its financial position, financial performance, and cash flows.
- Engagement Strategy: An entity shall disclose how it is engaging with its value chain, industry peers, government, public sector, communities, and civil society in order to achieve its Strategic Ambition.
- Metrics & Targets: An entity shall disclose the metrics and targes that it is using to drive and monitor progress towards its Strategic Ambition.
- Governance: An entity shall disclose how it is embedding its transition plan within its governance structures and organisational arrangements in order to achieve the Strategic Ambition of its transition plan.
These five elements are further divided into 19 sub-elements.
Implementation guidance
The TPT has also published a range of supporting implementation guidance including:
- Guidance on how to interpret the TPT disclosure recommendations, including why each sub-element is included, additional disclosure considerations, as well as examples.
- Guidance on the practicalities of developing and implementing a transition plan, including references to useful resources and case studies.
- Guidance on legal considerations related to reporting in line with the TPT Disclosure Framework.
- A sector summary that outlines decarbonisation levers and metrics and targets for 40 sectors. This publication is open for comment.
- Technical mappings and comparisons between the TPT Disclosure Framework the TCFD recommendations, IFRS 2 Climate-related Disclosures and the European Sustainability Reporting Standards (ESRS).
The TPT’s Sector Summary is open for comments until Friday 24 November.
In November, the TPT will publish Sector Deep Dive guidance for consultation. The sectors will include Asset Managers, Asset Owners, Food and Beverage, Electric Utilities and Power Generators, Metals and Mining, and Oil and Gas.
The Financial Conduct Financial Conduct Authority (FCA) has stated that it will consult on the introduction of guidance for Listed Companies’ transition plan disclosures, with specific reference to the TPT publications, at the same time that is consults on proposals for mandatory sustainability disclosure requirements, based on anticipated UK-endorsed IFRS Sustainability Disclosure Standards. The intention is for these new requirements to be effective for accounting periods on or after 1 January 2025 and reporting in 2026.
The UK Government has also set out its intention to consult on transition plan disclosures for the UK’s largest public and private companies, drawing on the output of the TPT.
Please click to access to all the TPT publications on the TPT website. Our related Need to know publication is available here.