Transition Plan Taskforce launches framework to address climate change

The Transition Plan Taskforce (TPT) has launched their ‘best practice’ disclosure framework for climate transition plans to allow companies and financial institutions to play their part in the shift to net zero.

Aiming to help companies and financial institutions create consistent, comparable company reports on climate transition plans, and reduce the level of disclosure complexity faced by firms, the launch comes after a short consultation period in which financial firms and real economy companies were asked for input on the feature.

Created by financial institutions including Aviva, Legal & General Asset Management, LSEG and NatWest, and announced at the London Stock Exchange, the disclosure framework encourages companies to implement a transition plan that takes a strategic and rounded approach in explaining how it will meet climate targets, manage climate-related risks and contribute to net zero, via the principles of ambition, action and accountability.

Five steps:

The framework also provides the basis for companies to set out credible and robust transition plans as part of annual reporting on forward business strategies. Drawing on the transition plan components identified by GFANZ, TPT set out five key elements of a ‘good practice’ transition plan.

Firstly, an entity should disclose the strategic ambition of its plan, comprising objectives and priorities for contributing to the transition towards a low-GHG emissions, climate-resilient economy. This could include disclosure about the implications that the transition plan will have on their business model and value chain, as well as the key assumptions and external factors on which the plan depends.

Recommended disclosures for individual entities also include implementation and engagement strategies within its business operations and value chain; metrics and targets they use to monitor progress toward their strategic ambition; and evidence to show that the transition plan is embedded within governance structures and organisational arrangements.

According to TPT, this provides the ‘gold standard’ for disclosure of transition plans, which can be applied voluntarily but is also ready for application in domestic regulation.

Additional guidance for preparers and users of transition plans have been published alongside the disclosure framework, including guidance on the climate transition planning cycle, technical mappings and comparisons between the disclosure framework and other reporting frameworks, and legal considerations for companies preparing reports using the disclosure framework.

The framework builds on the global baseline of disclosures developed by the International Sustainability Standards Board (ISSB) and draws on the work of the Glasgow Financial Alliance for Net Zero (GFANZ). Both are Taskforce members.

Tanya Steele, chief executive at WWF, said the release of the TPT’s disclosure framework is an important building block in creating that transition.

Meanwhile, Matt Scott, executive director at the UK Centre for Greening Finance and Investment, hailed the publication as a “key inflexion point” in the journey to respond to climate-related risks, capture opportunities and accelerate the transition.

Source: Transition Plan Taskforce launches framework to address climate change – ESG Clarity