Source · Select Committees · Environmental Audit Committee
Recommendation 12
12
Deferred
Paragraph: 89
Set out consistent regulatory expectations and establish independent monitoring for organisations' net zero transition plans.
Recommendation
A plan is only effective if it delivers its contents. The Government should set out simple, consistent regulatory expectations for net zero transition plans and establish an independent mechanism for monitoring and evaluating and verifying organisations’ net zero transition plans, to ensure that they are aligned with Paris Agreement compliant pathways.
Government Response Summary
The government established the Transition Plan Taskforce (TPT) and will hold an upcoming consultation to consider the UK’s approach to transition plans and the role of the TPT’s Disclosure Framework, without committing to specific regulatory expectations or an independent monitoring mechanism.
Paragraph Reference:
89
Government Response
Deferred
HM Government
Deferred
We are supporting organisations in the finance sector as they transition their activity to align with net zero pathways. In April 2022 we launched the Transition Plan Taskforce (TPT) to create the gold standard for private sector climate transition plans. Building on what we set out in the Green Finance Strategy on transition plans, our upcoming consultation will consider the UK’s approach to transition plans. The consultation will consider the role of the TPT’s Disclosure Framework, and help to inform the UK’s assessment and endorsement of the International Sustainability Standards Board (ISSB) standards. In particular, the consultation will help to inform our assessment of the transition plan-related material within International Financial Reporting Standards (IFRS) S2. As acknowledged, transition plan disclosures already form part of the Financial Conduct Authority (FCA)’s TCFD-aligned disclosure rules for listed companies, asset managers and FCA-regulated asset owners. In addition to this, the FCA introduced guidance encouraging listed companies and asset managers/asset owners to make transition plan disclosures where headquartered or operating in a jurisdiction with a net zero commitment, or to explain why not. The FCA have now committed to consult on guidance that will set out their expectations for listed companies’ transition plan disclosures at the same time as consulting on their policy approach in relation to the ISSB standards. They plan to develop their guidance with reference to the final outputs from the TPT.