2022 TPT_The Transition Plan Taskforce Disclosure Framework

Briefing Document: Transition Plan Taskforce Disclosure Framework

Preface

The Transition Plan Taskforce (TPT) was established to create a 'gold standard' for private sector transition plans as part of the UK’s commitment to achieving net zero greenhouse gas (GHG) emissions by 2050. The TPT aims to ensure that organizations can provide high-quality transition plans that are transparent and allow for informed decision-making by investors and other stakeholders. This document outlines the TPT Disclosure Framework and its guiding principles.

1. Introduction

The TPT Disclosure Framework aims to assist entities in disclosing credible and consistent transition plans, building upon existing recommendations from the Task Force on Climate-related Financial Disclosures (TCFD) and the International Sustainability Standards Board (ISSB). The framework promotes transparency and accountability, which are essential for achieving net zero targets.

2. Guiding Principles: Ambition, Action, and Accountability

The TPT Framework is grounded in three principles:

• Ambition: Transition plans should outline ambitious objectives and strategies for achieving a rapid economy-wide net zero transition. This includes a focus on all scopes of emissions (1, 2, and 3) and prioritizing direct emissions reductions over carbon credits.

• Action: Plans must translate strategic objectives into concrete, short- and medium-term actions that are integrated with business planning and financial strategies. Entities should assess risks and uncertainties while developing their plans.

• Accountability: Effective governance structures must be in place to oversee the delivery of transition plans, supported by clear reporting mechanisms to track progress against defined targets.

3. A Strategic and Rounded Approach to Transition Planning

Entities are encouraged to adopt a holistic approach to transition planning, focusing on three interrelated channels:

1. Decarbonisation: Actions to reduce GHG emissions across all scopes.
2. Responding to Climate-related Risks and Opportunities: Identifying and addressing both physical and transition risks while leveraging new opportunities.
3. Contributing to Economy-wide Transition: Aligning organizational strategies with broader economic transitions and minimizing risks.

This approach seeks to mitigate unintended consequences associated with a narrow focus on net zero targets, ensuring that all economic actors contribute effectively to the transition.

4. The TPT Disclosure Framework

The TPT Disclosure Framework consists of five key elements designed to guide organizations in developing their transition plans:

1. Foundation: Establish objectives, priorities, and interim targets for the transition plan.
2. Implementation Strategy: Outline the roadmap of actions necessary to achieve the stated objectives, including changes to business strategy and resource allocation.
3. Engagement Strategy: Describe how the organization will engage with stakeholders, including the value chain, industry, and government, to support the transition.
4. Metrics & Targets: Define governance, operational, and financial metrics to monitor progress toward objectives and targets.
5. Governance: Detail the governance structures that oversee the execution of the transition plan.

5. Summary Recommendations for Transition Plan Disclosure

To align with the TPT’s Framework, entities should:

• Publish a standalone transition plan alongside general purpose financial reporting.
• Update the transition plan periodically, at least every three years.
• Report on progress against the plan annually, including material information relevant to stakeholders.
• Ensure that disclosures reflect the principles of ambition, action, and accountability.

6. Engagement with Stakeholders

Effective stakeholder engagement is vital. Entities should disclose their strategies for engaging with:

• Value Chain: Activities to influence suppliers and customers.
• Industry: Collaborative efforts to address common challenges.
• Government and Civil Society: Engagement with policymakers to shape supportive regulatory environments.

7. Metrics and Targets

Entities must establish and disclose metrics to assess progress towards their transition objectives. Important aspects include:

• GHG emissions metrics and targets across all scopes.
• Financial metrics that reflect the impact of the transition plan on financial performance.
• Governance metrics to monitor accountability and oversight.

8. Governance and Accountability Structures

Clear governance structures should be established, ensuring:

• Board-level oversight of the transition plan.
• Defined roles and responsibilities for senior management.
• Integration of transition-related objectives into remuneration structures to align incentives with long-term goals.

9. Conclusion

The TPT Disclosure Framework provides a comprehensive approach for organizations to develop credible and actionable transition plans. By adhering to the principles of ambition, action, and accountability, entities can effectively contribute to the UK’s net zero goals while fostering transparency and trust among stakeholders. The successful implementation of the TPT Framework will support the broader economic transition towards sustainability and climate resilience.

This briefing document summarizes the key aspects of the Transition Plan Taskforce Disclosure Framework, emphasizing the importance of structured and transparent transition planning for organizations aiming to meet their climate goals.