On November 8, 2022, the U.K. Transition Plan Taskforce (TPT) published its draft Disclosure Framework ("Framework") and accompanying Implementation Guidance ("Guidance") for public consultation. The Framework and Guidance and related efforts are intended to support the TPT's remit to set the "gold standard" for effective climate transition plans in the U.K. private sector. In spring 2023, the TPT also is expected to launch a "Sandbox" to test the Framework and Guidance, which will assist preparers, users and specific sectors in creating their own transition plans.1
The Framework is intended to assist entities to "disclose credible, useful, and consistent transition plans" for companies to contribute to, and align with, the United Kingdom's push to become the world's first net zero aligned financial center, moving toward a net zero economy by 2050.2 The Framework builds on "existing recommendations to disclose transition plans under the TCFD Recommendations3 4 and accompanying guidance5 6 as well as transition plan disclosure recommendations in the ISSB's proposed standards."7
The Guidance accompanies the Framework and is used to assist in both the preparation of "credible, useful and consistent" transition plans,8 as well as outlining why transition plans are useful, encouraging the creation of standardized and comparable disclosures and providing a "standard against which plans can be assessed."
The TPT also is due to develop sector-specific guidance to supplement the Framework and Guidance with recommendations for sector-specific transition plan disclosures. The first set of such guidance is expected to be published in the first half of 2023.
The U.K. Financial Conduct Authority (FCA) has been actively involved in the TPT's work and it is expected that the FCA will use the finalized Framework to strengthen its disclosure rules on transition plans for regulated firms and listed companies.
The Framework and Guidance is open for public consultation until February 28, 2023, with the TPT intending to publish the final Framework and Guidance during summer 2023.
Footnotes
1 Transition Task Force official site. The Sandbox is expected to be live by spring 2023.
2 Gov.uk, Press Release, "UK will be the world's first net zero financial centre."
3 Task Force on Climate-Related Financial Disclosures (TCFD) Recommendations.
4 E.Zahabi, A.Bakic, J.Daghlian et al, "ESG Disclosures: Guiding Principles and Best Practices for Investment Managers," Akin Gump, December 29, 2021.
5 TCFD Recommendations: Implementation Guidance.
6 H.Marshall, E.Zahabi et al, "In Principle: Key things authorised firms need to know for 2022," Akin Gump, 2022.
8 Transition plans are high quality plans, by which companies outline their actionable steps to achieve their net zero sustainability objectives. Transition plans show how companies are aligning with the U.K.'s promise at COP26 to become the world's first net zero financial center by 2050.
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