Largest UK firms to publish net zero transition plans in 2023
Published November 12, 2021
The UK government is to require most big firms and financial institutions to begin publishing net zero transition plans by 2023.
Speaking during Finance Day at COP26, UK Chancellor Rishi Sunak announced that UK financial institutions and then listed companies will be required to publish net zero transition plans in 2023 detailing how they will decarbonise in order to meet 2050 net zero targets.
The announcement was part of an overall commitment by the Chancellor to make the UK a “net zero-aligned financial centre.”
A transition plan should set out how an organization will adapt to a low carbon economy. It should set out
- high-level targets the organisation is using to mitigate climate risk, including greenhouse gas reduction targets,
- interim milestones
- actionable steps the organisation plans to take to hit those targets.
There is not yet a commonly agreed standard for what a good quality transition plan looks like. A new Transition Plan Taskforce will set up a set of science-based standard to assess the transition plans. The Taskforce is due to report at the end of 2022.
Once standards are developed, the Government will incorporate them into the UK’s Sustainability Disclosure Requirements and strengthen requirements to encourage consistency in published plans. The Government will expect firms to start publishing transition plans in 2023 and intends to legislate to deliver this.
The UK has committed to make it mandatory to align climate reporting with the Task Force on Climate-Related Financial Disclosures (TCFD). The TCFD has issued guidance recommending firms describe their plans for transitioning to a low carbon economy. The FCA has proposed to reference this in its TCFD-aligned disclosure rules for listed companies, asset managers and FCA-regulated asset owners with effect from 1 January 2022.
Firms will be able to decide how they plan to decarbonise their emissions, including how to set overall targets. A good transition plan will set out these decisions in a comparable way and quantify the interim targets and milestones to meet the overall firm-level goal.
Net Zero 2050
Taskforce on Climate-related Financial Disclosures (TCFD)