Government to mandate net zero transition plans

Businesses will be required to publish credible net zero transition plans under new green finance rules set out by the government.

On Monday, Chancellor Rishi Sunak published a roadmap setting out details on new Sustainability Disclosure Requirements, which will include expectations for certain firms to publish transition plans in the context of the UK’s net zero commitment.

The aim of the package of measures is to encourage a shift of investment into the sustainable projects and green technologies that are critical to the UK becoming a net zero economy by 2050.

There has been a recent surge in businesses, including those in the foodservice and hospitality sector, committing to achieve net zero emissions in the lead up to the COP26 climate summit in Glasgow, however many businesses have failed to flesh out their commitments with detailed plans for how they will achieve them.

Under the new plans, certain firms will initially be required to publish transition plans that align with the government’s net zero commitment or provide an explanation if they have not done so. As a clearer set of standards for transition plans emerges, the government intends to incorporate these into UK regulation and strengthen disclosure requirements.

The government ultimately expects to see the publication of transition plans become the norm across the economy.

Environmental campaigners welcomed the news and urged the government to adopt the measures quickly. “Legislating firms to publish credible transition plans that align with net zero is a big step forward, but there is no time to waste,” said Katie White, executive director of advocacy and campaigns at WWF. “We need to see a clear timeframe set for mandatory implementation by all large firms by 2023 at the very latest.”

The new regime will also bring together existing climate reporting requirements, including a commitment for disclosure of a company’s climate risk to become mandatory by 2025 in line with the Task Force on Climate-Related Financial Disclosures (TCFD).

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