The UK just moved a step closer to requiring companies to provide detailed statements on future carbon emissions reductions that will include both their operations and supply chains.
The Transition Plan Taskforce, an initiative started by the UK Treasury and supported by companies including Aviva Plc, London Stock Exchange Group Plc and Unilever Plc, published its final framework for corporate transition plans on Monday.
The goal is to have consistent and comparable company disclosures, as the UK government moves toward making publication of transition plans mandatory. Regulators will use the new framework to strengthen existing requirements, the taskforce’s co-chairs, Aviva CEO Amanda Blanc and Treasury Lords Minister Baroness Penn, said in a document published on Monday.
Setting a 2050 net zero goal was the easy part. Now, investors, regulators and activists want to know whether companies actually have credible plans to achieve that target.
“It’s great to see more and more companies announcing their net zero ambitions, but these are of little use if there’s no action or accountability,” said Aviva’s Blanc. “Backing up net zero ambitions with high quality and clear transition plans is crucial if we are to collectively deliver net zero.”
Michelle Scrimgeour, chief executive of Legal & General Investment Management, said while companies are developing their transition plans investors lack the information needed to assess “credible progress.” The TPT framework helps fill the gap, she said.
“For LGIM, this is critical to delivering on our own net zero commitment as agents; to supporting clients transitioning their portfolios to net zero, and to making more informed decisions about how we allocate capital,” Scrimgeour said.
The new disclosure framework is being promoted as “an example of UK climate leadership.” The initial idea for a standard was announced at the United Nations climate summit in Glasgow in 2021 as part of UK efforts to create the the world’s first net zero aligned financial center.
Britain’s credibility in setting green standards has suffered a number of setbacks since then.
The Climate Change Committee, an independent advisory panel set up by the government, said in June the UK has lost its climate leadership position by moving too slowly to cut greenhouse gas emissions by the end of the decade. And just last month Prime Minister Rishi Sunak softened key parts of the UK’s green agenda.
The TPT framework provides the basis for companies to set out credible and robust transition plans as part of annual reporting on their business strategy, according to the statement. The framework builds on “the global baseline of disclosures” developed by the International Sustainability Standards Board and draws on the work of the Glasgow Financial Alliance for Net Zero.
GFANZ is co-chaired by Mark Carney, who has been named chairman of Bloomberg Inc.’s board and is a former Bank of England governor, and Michael R. Bloomberg, the founder of Bloomberg News parent Bloomberg LP.
(Adds LGIM comment in sixth paragraph.)
