Position Green recently took the opportunity to shine a spotlight on the UK’s Transition Plan Taskforce.
The UK stands out with its legally binding ambitions of becoming a net-zero nation. This was further solidified in 2021 when the country committed to being the first Net Zero-aligned Financial Centre in the world.
The release of the UK’s Transition Plan Taskforce Disclosure Framework serves as an invaluable guide for companies gearing up for upcoming mandatory sustainability disclosure requirements.
Despite the political shifts and some concerning government policy updates, the UK continues to uphold its reputation as a climate frontrunner. The country has witnessed a drop in greenhouse gas emissions by over 48% since 19901, a commendable achievement outpacing all G20 nations. Moreover, the UK was the inaugural nation to adopt the Task Force for Climate Related Financial Disclosures recommendations for listed entities. In 2019, it further marked its leadership by being the first G7 nation to commit to a net zero target by 20502.
However, when compared to its European peers, the UK’s sustainability regulatory framework still seems underdeveloped. Disturbingly, a mere 28% of British firms have established credible transition strategies, as revealed by data from the CDP, an international climate disclosure entity3.
The quest for decarbonisation and achieving net zero demands substantial investments in the upcoming years. This massive transformation mandates credible transition strategies and transparent sustainability data for attracting investors and regulators. This intertwined economic landscape means that obligatory sustainability disclosures become indispensable.
October witnessed the much-anticipated launch of the Transition Plan Taskforce (TPT) Disclosure Framework. Established post the UK’s 2021 COP26 presidency, this cross-sector task force was entrusted by the government to conceive a best-in-class approach for private sector sustainability reports and transition strategising. Harmonising with global standards such as the TCFD and the International Sustainability Standards Board, this framework emerges as an essential instrument for corporations to formulate credible net-zero transition blueprints.
Companies must now take heed of the pressing necessity to elucidate their objectives in addressing the comprehensive economic transition. This particularly pertains to reducing greenhouse gas emissions and responding to climate-linked risks and opportunities. To achieve this, firms need a lucid sustainability disclosure system and an exemplary reporting guideline, both of which the TPT Disclosure Framework offers.
With mandatory sustainability disclosure prerequisites nearing, corporations must gear up. The government, on 2 August 2023, introduced its guidance on the proposed UK Sustainability Disclosure Standards, set to be released by the Department for Business & Trade in July 2024, grounded on the ISSB’s IFRS5 Sustainability Disclosure Standards. For companies yet to embark on their disclosure journey, familiarising with TCFD reporting will smoothen their pathway.
Companies familiar with reporting need to refine their methodologies and align with IFRS S1 and S2 in anticipation of the approval in July 2024. This proactivity is essential to mitigate potential regulatory shocks and evade undue scrutiny from the Financial Conduct Authority.
Actionable Steps for Companies
- Setting Internationally Recognised Goals: As of December 2022, 85% of FTSE100 companies had established net zero targets, a dramatic leap from just 4% in 20186. However, consistency and external verification remain issues. Companies can seek guidance from initiatives like the SBTi and the TPI to ensure alignment with globally recognised goals.
- Emphasis on Accurate Emissions Measurement: It’s paramount for firms to meticulously measure and manage their Scopes 1, 2, and 3 emissions following the GHG Protocol Corporate Standard. For instance, Position Green’s comprehensive GHG Solution offers an organisational-specific platform for emissions data management across all scopes, culminating in actionable strategies.
- Building Internal Capacity: Companies should enhance employee competency concerning sustainability and climate change. Initiatives like Position Green’s Academy can aid in prepping employees for upcoming significant reporting and transition planning challenges.
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