Effectively Engaging With The Transition Pathway Taskforce (TPT) Disclosure Framework

Effectively Engaging With The Transition Pathway Taskforce (TPT) Disclosure Framework

The TPT’s newly released Disclosure Framework encourages UK firms to actively engage with their transition pathway in a way that is both achievable and effective.

On October 12^th, the TPT’s Disclosure Framework was finalized, providing recommendations for UK firms and financial institutions disclosing information on their transition plans. A climate transition plan sets out how an organization will pivot its existing assets, operations and business models towards a low carbon economy. The TPT’s objective is to help firms develop ‘gold standard’ climate transition plans and better align with net zero emissions targets.

The TPT has developed a sector- neutral Disclosure Framework that aims to be consistent and build upon existing standards, such as the ISSB and GFANZ. While the Disclosure Framework is only guidance, it is expected to become the de facto standard for climate transition plan disclosure in the UK. Many firms have already committed to using the framework, including Aviva, HSBC and Unilever.

The TPT’s framework offers a template for firms to document how they will meet their climate disclosure targets and thus increase the credibility of their overall climate strategy. To do this, the framework provides comprehensive and prescriptive guidance to steer organizations through this disclosure process. The framework is based on five key elements: foundations, implementation strategy, engagement strategy, metrics and targets, and governance.

To succeed in developing their transition plans, UK firms should:

• Act now. In 2024, the UK’s Financial Conduct Authority plans to update its TCFD disclosure rules to include ISSB sustainability disclosure standards. It is likely that specific disclosure requirements relating to transition plans will be mandated as part of this, meaning many larger firms will be legally required to disclose. Getting a head start on this process now means organizations can adequately prepare for the changing regulation in the coming months.
• Engage in a meaningful way. Firms often view climate-related disclosure as a compliance exercise. The Disclosure Framework invites organizations to look at their transition pathway in a more strategic and rounded way. Decision-makers are encouraged to engage with their supply chains and look to both physical climate risks and opportunities, which can help to inform their business strategy.
• Participate with all five disclosure elements. Historically, firms have been successful with their ambitions but fail to enact meaningful action and accountability. To shift this, organizations must reset their parameters from short-term ambition to long-term meaningful action. They must not only set targets but also implement the actions and metrics needed to quantify meaningful change.

With sector-specific guidance due to be released on November 13^th, there will be even more information available for firms to successfully implement a plan for a just transition towards net zero.