UK taskforce launches 'gold standard' for net zero transition planning to coincide with COP27

Wed 9 Nov 2022
Posted by: William Barns-Graham
Trade News

Green trade - COP 27 and Gold Standard

A new ‘gold standard’ proposal for corporate net zero transition plans has been launched this week, to coincide with COP27, by the Transition Plan Taskforce (TPT) that was set up by the Treasury in April.

According to environmental news website, the TPT had been established to draw up a standard that ensures companies’ transition plans are “meaningful, unified, and would deliver the emissions reductions they tout”.

ESG Clarity reports that the TPT has published a new ‘disclosure framework’, an implementation guide to help companies with their planning, a sandbox to allow firms to test the framework and guidance, as well as a public consultation on the framework and guidance that will run till 28 February 2023.

New framework

Key recommendations from the TPT include:

  • Proposal for companies to publish a transition plan in 2023 and 2026, with information material related to these plans included in financial reporting in 2024 and 2025
  • Organisations should state high-level ambitions for mitigating emissions and top-line climate adaptation plans
  • These plans should be action oriented with short, medium and long-term financing
  • Firms should set out their governance for the transition
  • They should also assess material risks of business activity on the natural environment and communities as well as opportunities to mitigate or eliminate these

The new gold standard follows the enshrining in law of the requirement for Britain’s largest companies to disclose climate-related risks, opportunities and financial information that was announced at last year’s COP26.

This was a recommendation of the Taskforce on Climate-related Financial Disclosures (TCFD) which had been set up by then-Chancellor Rishi Sunak.

Significant step

Andrew Griffith MP, the co-chair and economic secretary of TTP, said the new standard 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.”

Industry has also welcomed the new framework, with NatWest’s chief executive, Alison Rose, telling  FT Adviser: “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. The framework crucially also gives space for organisations to set out the action needed from governments to implement a successful, economy-wide transition.”

Greenwashing claims

The new framework comes amid questioning from UN climate experts about the integrity of existing transition plans, amid fears that industry and government are only conducting ‘greenwashing’ practices.

The Guardian reports that the high level group of experts, established by UN secretary general Antonio Guterres, had called for the prioritisation of immediate cuts in absolute emissions, with the use of carbon offsets to be reduced and used only sparingly in later years of the transition, if at all.

New UKEF climate clauses

On finance day at COP27, UK Export Finance – the UK government’s export credit agency – announced it would begin to offer ‘Climate Resilient Debt Clauses (CRDC)’ in its direct sovereign lending.

The government announcement says that “the clauses will offer low-income countries and small island developing states the ability to defer debt repayments in the event of a severe climate shock or natural disaster.”

Tim Reid, UK Export Finance’s Director of Business Group, speaking at COP27 in Egypt, said:

“Some countries are now facing tough choices between protecting their citizens as they respond to climate shocks or paying down their debts. UKEF can play an important role in helping governments navigate these decisions.

“By suspending the debt service payments, UKEF will enable borrowing countries to focus on responding to and recovering from a crisis. We encourage other official creditors to consider including similar provisions in their own lending to countries most vulnerable to climate change.”