Transition Plan Taskforce Disclosure Framework

Taking transition planning to the next level.

The Transition Plan Taskforce (TPT) Disclosure Framework has officially launched!

The framework is designed to guide companies in moving beyond simply disclosing climate-related information. This is achieved by providing a tool through which bold action can be taken to ensure robust and credible transition plans are put in place, supporting Net Zero goals.  With the CDP reporting earlier this year that only 1 in 200 companies submitting climate data to their platform were considered to have a credible climate transition plan, the publication today of that framework and supporting guidance should hopefully drive that number up.

The framework has been developed in collaboration with other global standard setters and considers existing and incoming climate-related disclosure requirements, aiming to maximise interoperability.  It is based on three core principles – ambition, action and accountability, with more detailed disclosures required under each area.

Whilst not yet mandatory for UK firms to disclose transition plans, the FCA have confirmed they will be consulting on this in 2024 for listed businesses. Furthermore, they will use the TPT framework to continue to evolve disclosure expectations for both listed and FCA regulated firms.

To get ahead of the game, here are five initial steps to get you started on your transition plan journey:

1.      Set your ambition levels

Agree on the company’s level of ambition in its decarbonisation journey and goals for emissions reduction. Engage the business early – get the conversation started by preparing workshops with a range of internal and external stakeholders to better understand what is realistic for your company but also what your stakeholders expect and will challenge you on. 

2.      Establish clear actions and targets

Commitments don’t change a business – action does.  Setting specific actions over the short-, medium-, and long-term targeting the firm’s business operations, value chain and portfolio of products can help ensure you are staying focused on your agreed goals, whilst setting targets that can help track progress. Determining specific key performance indicators (KPIs) such as greenhouse gas (GHG) reduction contributions can serve as good reference point KPIs.

3.      Engage with third parties

To achieve results from this process, change mustn’t only occur internally: true transformation comes from value chain engagement. With Scope 3 emissions representing most of any businesses’ GHG emissions, having a strategy on how relationships with these third parties will evolve is crucial for effective decarbonisation, including setting out your expectations of your value chain.

4.      Plan around the financial implications of decarbonisation

Transition plans are long-term processes which will very likely create financial risks and opportunities, which may affect your firm’s financial position over time. Identifying and understanding these potential changes is essential to ensure the risks are adequately mitigated and opportunities taken.  

5.      Establish a monitoring and governance process

Your transition plan will influence your business model, so its key to integrate it across all governance processes within the firm. Ownership should be allocated to implement and oversee the development of the plan across every area of the business. Consideration should be given to whether training is required to ensure all employees and senior management are equipped to support, challenge and provide adequate oversight of delivery of the plan.

Fundamentally, we believe that the launch of TPT presents a great opportunity to rethink your approach to sustainability.  This can be done by moving from merely complying with mandatory reporting requirements to a more impactful strategic initiative, future-proofing your business. The TPT framework can help you kick-start this journey.

If you’d like to discuss transition planning or wider climate-related topics, I would love to hear from you.  You can contact me at Ramon@avyse.co.uk.