Industry welcomes emission disclosure framework in move to net-zero

Industry welcomes emission disclosure framework in move to net-zero

A disclosure framework and guide has been published today by the Treasury and the UK transition plan taskforce to help firms move to net-zero greenhouse gas emissions.

The publication comes one year on from the announcement by the chancellor of the development of a “gold standard” for private sector climate transition plans at COP26 in Scotland.

In addition to the framework and guide, the transition plan taskforce also launched a sandbox for companies and financial institutions to test implementation.

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The UK has set itself ambitious and legally binding targets to cut greenhouse gas emissions to net zero by 2050, with binding interim targets. 

It has also pledged at UN climate negotiations to cut emissions by at least 68 per cent by 2030, and to reach net zero around the middle of the century under the Paris Agreement.

Transition plan taskforce co-chair and economic secretary to the treasury, Andrew Griffith said transition plans are fundamental to ensure the financial system reaches net zero.

“Today’s announcement is a significant step in delivering on our commitment made at COP26 last year – to become the world’s first net zero-aligned financial centre,” he said.

The framework makes a number of recommendations for companies and financial institutions to assist them in disclosing consistent transition plans, with the taskforce urging firms to “consider the full range of levers at their disposal”.

It emphasises the need for concrete, short-term action by companies and financial firms across the economy. 

The taskforce said: “Credible transition plans create transparency and accountability for companies and financial institutions to meet their net zero targets, and will enable investors to make better informed capital allocation decisions”.

The framework has been welcomed by those in the industry. 

Bank of England executive director, Sarah Breeden said climate change poses risks to the financial system and individual firms and engagement is crucial because of this.

“Actions taken by the private sector today will determine the size of future risks,” she said. 

“The TPT’s guidance will be key in building out the transition infrastructure necessary for supporting the financial sector to allocate capital efficiently, enabling the real economy transition to net zero.”

Likewise, Natwest chief executive, Alison Rose agreed that transition plans are a crucial tool for firms in achieving net zero commitments. 

“The TPT’s ‘whole of economy’ approach to transition planning recognises the contribution all companies, including those in the service sector with relatively low emissions, can play in enabling and accelerating the transition,” Rose said.

She added: “The framework crucially also gives space for organisations to set out the action needed from governments to implement a successful, economy-wide transition.”

The Financial Conduct Authority’s ESG director, Sacha Sadan said the regulator was actively involved in the initial drafting of the taskforce’s outputs and she looks forward to using the final outputs.

The Disclosure Framework and Implementation Guidance are open for public consultation until February 2023.