On 9 October 2023, the Transition Plan Taskforce (TPT) published the final version of its Disclosure Framework.
The TPT was launched by HM Treasury in March 2022 with a mandate to bring together leaders from industry, academia, and regulators to develop good practice for transition plan disclosures for finance and the real economy. In addition, the TPT has been tasked to engage with non-UK governments and regulatory networks to support conversations on how to build common baselines and principles for transition planning.
The TPT Disclosure framework is based on the draft launched for consultation in November 2022, which was updated following extensive engagement and consultation feedback. It is described by the TPT as a sector-neutral disclosure framework for best-practice transition plan disclosures, which has been developed alongside implementation guidance and sector guidance.
- Aims to help organisations set out a credible and robust climate transition plan as part of annual reporting on forward business strategy.
- Recommends disclosure of a company’s strategic climate ambition and how this is reflected in its implementation and engagement approaches, its governance and accountability arrangement, and its financial plans.
- Is designed to be available for voluntary and mandatory use internationally, purposefully supporting regulatory implementation in a manner consistent with reporting under the International Sustainability Standards Board’s (ISSB) standards and accommodating a net zero or other climate ambition. The disclosure framework compliments and builds on the ISSB standards (IFRS S1 and S2).
- Draws on and is aligned with the components identified by the Glasgow Finance Alliance for Net Zero of a good transition plan, to ensure the outputs of both initiatives lock together to form an integrated approach to transition planning.
The TPT notes that transition plans should take a strategic and rounded approach which explains how an organisation will meet climate targets, manage climate-related risks, and contribute to the economy-wide climate transition. It flags that transition planning is an iterative process and companies should get started now.
FCA statement on the TPT Disclosure Framework
The FCA has welcomed the publication of the TPT Disclosure Framework, stating that it provides a set of good practice recommendations to help companies across the economy make high quality, consistent and comparable transition plan disclosures.
The statement notes that the FCA has worked to ensure that the TPT’s recommendations fit with other relevant international initiatives and within the developing global landscape of sustainability-related disclosure standards, and that it is committed to drawing on the TPT framework as it further develops its disclosure expectations for listed companies, asset managers and FCA-regulated asset owners.
The FCA plans to consult next year on rules and guidance for listed companies to disclose in line with the UK-endorsed ISSB standards and the TPT framework as a complementary package. In the meantime, it encourages listed companies and regulated firms to engage early with the framework, and to ‘get started’.
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