The Role and Impact of the Transition Plan Taskforce in UK Net Zero Disclosures

The TPT Disclosure Framework

The Transition Plan Taskforce - Who are they, what have they done, and why does it matter?

WHO ARE THEY?

Here's a quick timeline.

Rewind the clocks to November 2021. The then-Chancellor and now Prime Minister, Rishi Sunak, announced the formation of the transition taskforce at the UN's climate conference in Glasgow, COP 26.

In April the following year, the Treasury officially launched the Transition Plan Taskforce (TPT). They have the task of defining a standard that UK financial institutions and listed companies should use when they disclose their transition to Net Zero ambition. 

The taskforce is made up by industry and academic leaders, regulators, and civil society groups. Their ambition is that the standard is a “gold standard”, needed to help address the risks of greenwashing.

WHAT HAVE THEY DONE?
Last week they announced the release of their final disclosure framework as well as guidance on how to implement. Which is a major milestone on the pathway to greater transparency.

WHY DOES IT MATTER?
In support of the framework, the Financial Conduct Authority (FCA) has announced it will start a consultation on the standards, to determine if they should follow suit with the Taskforce for Climate-related financial Disclosures (TCFD). If you're not aware, the UK government was the first government to mandate climate-related emissions reporting under the TCFD guidelines for companies that meet certain criteria, (e.g. large companies and financial institutions.) The TCFD legislation came into effect in April 2022.

So far the TFT guidance is not mandatory but just as the FCA states, “In the meantime, we encourage listed companies and regulated firms to engage early with the Framework - and get started.”

WHAT IS OUR TAKE?
In the past we have talked about the need for greater harmonisation between corporate reporting standard setters so that investors are able to make informed decisions on like for like information. And the sector has come a long way since then.

Corporate transparency is absolutely critical for a number of reasons 1) accountability, 2) avoidance of greenwashing, and 3) to be able to inform investors that pathways to a lower carbon / net zero economy can be achieved in a responsible way.

It is true that reporting can be a significant undertaking, but at the same time, this is a nascent, rapidly growing and innovating industry. Instead of focusing on the current drawback of reporting requirements, we are looking to the future where technological advancements greatly reduce the reporting burden and the sincere risks of greenwashing or backsliding on net zero commitments are mitigated. Crucially, this reporting approach is bringing together a fragmented system and, rather than businesses needing to fill out multiple forms for different ESG providers, this should make it less onerous on business as well as boost transparency. A win-win.