UK TPT launches final transition plan sectoral guidance

On 9 April, the UK Transition Plan Taskforce (TPT) released its final set of transition plan resources, following the release of draft resources in November 2023. The current release includes the final set of sector-specific guidance documents, guidance on undertaking transition planning cycles and exploring the disclosure recommendations as well as independent advisory pieces from TPT's working groups (see Table 1).

TPT's final Disclosure Framework and accompanying sector-neutral guidance documents were previously published on 9 October 2023 (see our previous blog here) and together with the most recently published documents form a comprehensive suite of resources to support businesses in developing effective transition plans.

Table 1: The suite of newly published guidance documents.

Purpose of the TPT Disclosure Framework

The TPT's press release notes that these transition plan resources aim to support 'the creation of consistent, comparable company reports and reduce the level of disclosure complexity faced by firms'.

The TPT Disclosure Framework is based on three key principles – ambition, action and accountability. It seeks to offer practical support to UK companies already disclosing their transition plans on a voluntary basis or those preparing to do so in accordance with international sustainability standards, in particular, those of the International Sustainability Standards Board (ISSB) (the the TPT Disclosure Framework having been designed to be consistent with, and build on, these standards) and the European Sustainability Reporting Standards (ESRS).

Additionally, the newly published sector-specific guidance documents provide 'deep-dive' guidance for preparers of transition plans operating in the seven sectors specified in Table 1, as well as a high-level summary for preparers operating in a further 30 sectors. The sector-specific guidance is intended to complement the TPT Disclosure Framework and aims to provide further depth and detail to assist preparers with interpreting and applying the TPT Disclosure Framework and developing and implementing their transition plans.

'Deep-dive' sectoral guidance

The seven sectors in respect of which the TPT has published detailed, 'deep-dive' sectoral guidance were chosen by the TPT based on their greenhouse gas emissions, their need for transition finance in the UK and the quality of existing guidance available in the market. The TPT's view was that providing more detailed guidance would be beneficial in 'kickstarting' transition plan disclosures in these sectors. The TPT has also published a sector summary guidance which provides a practical guide to the key information and guidance, including decarbonisation levers and metrics and targets for 30 additional sectors.

Part 1 of the 'deep-dive' guidance for each of the seven specific sectors sets out among other things:

• the context for transition plans in that sector;
• a summary of how the relevant sector guidance fits within the wider suite of TPT guidance; and
• a consideration of three-interrelated channels (decarbonising the entity, responding to the entity's climate-related business risks and opportunities, and contributing to an economy-wide transition) as a part of the relevant sector's strategic approach to transition plans.

Part 2 of each of these guidance documents focuses on the interpretation of the TPT Disclosure Framework for the relevant sector. Those preparing a transition plan for companies operating in one of these seven sectors should consult both the TPT Disclosure Framework and the relevant sector-specific guidance, as the guidance seeks to inform and supplement the requirements set out in the TPT Disclosure Framework.

Additional papers and guidance documents

The additional guidance documents published in relation to the 'Transition Planning Cycle' and 'Exploring the Disclosure Recommendations' further bolster the materials entities can access for support in developing transition plans. Additionally, the independent advisory reports from the TPT's Working Group provide broader perspectives and considerations on transition plans which will assist preparers in developing stronger and more comprehensive transition plans.

Impact for businesses

Preparers of transition plans now have access to the full set of guidance documents from the TPT to facilitate development and implementation of their transition plans in accordance with the TPT Disclosure Framework.

As we previously noted in October 2023, in its Primary Market Bulletin 45, published in August 2023, the UK Financial Conduct Authority intends to consult on guidance that will note its expectations for listed companies' transition plan disclosures by reference to the TPT Disclosure Framework. The TPT Disclosure Framework is also expected to play a role in the forthcoming UK Sustainability Disclosure Standards ("SDS"), which are expected to be based on the sustainability reporting standards published by the International Sustainability Standards Board and to come into force from 2025. Now that the final suite of guidance documents has been published by the TPT, businesses will eagerly await updates both on the FCA's expectations for listed companies' transition plan disclosures and the UK SDS.

Additionally, the TPT has stated that its guidance resources have attracted attention from other jurisdictions, including Australia, Brazil, the European Union, Hong Kong, Japan, Thailand, and the United States. Accordingly, both non-UK companies and UK companies with material businesses in other jurisdictions should be alive to the potential for overseas regulators to draw upon the TPT's Disclosure Framework and accompanying sectoral guidance in formulating their own requirements and guidance for transition plans and climate-related disclosures.

The authors thank Olivia Battcock for her contributions to this blog.