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Regulation

TPT publishes disclosure framework as corporates fret over regulatory overload

Announced on Tuesday at COP27, the Transition Plan Taskforce document responds to market demand for more uniformity on corporate plans.

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Photo: iStock

The Transition Plan Taskforce (TPT) published its transition plan disclosure framework on Tuesday at COP27, on the second day of the Sharm El Sheikh implementation summit.

The framework was built on the recommendations of the Taskforce on Climate-Related Financial Disclosures (TCFD), which acts as a reference text for companies to draw up transition plans and disclose them to shareholders.

The TPT was announced at COP26 in Glasgow last year, when the UK announced it would be the first nation to have mandatory transition plans. The TPT acts as an advisory body for the UK government, helping make its efforts a reality.

“The framework outlines the key transition topics, how to track progress on them, and how to make sure the information makes sense to end-users,” says James Vaccaro, member of the GFANZ advisory panel and executive director of the Climate Safe Lending Network, a global initiative to accelerate the decarbonization of the banking sector.

At this rate, listed companies are on track to make the world 2.9°C warmer by the end of the century, significantly missing the Paris Agreement targets
MSCI

The standardization of transition plans is an important development on the regulatory side of the net-zero debate. A year after Glasgow, 2050 or 2030 net-zero pledges were widely criticised for coming before data on emissions reductions in the corporate and financial sectors was made available. Now, investors expect corporates to be ready.

If we are going to stay on course for limiting global temperature rises to 1.5C, a key challenge for businesses is to figure out how to reach their net-zero goals – with a clear implementation plan that stacks up,” says Bridget Beals, partner and co-head of climate risk and decarbonization strategy at KPMG.

Gapping

Corporate transition plans are rooted in data-driven key performance indicators, but the state of emissions reporting for listed companies is still underwhelming. MSCI’s October net zero tracker revealed that only 36% of listed companies have set a decarbonization target.

“At this rate, listed companies are on track to make the world 2.9°C warmer by the end of the century, significantly missing the Paris Agreement targets,” the report says.

The bigger risk is that data and the knowledge gap is used as an excuse for companies to move slowly
James Vaccaro, Climate Safe Lending Network
James Vaccaro, Carbon Safe Lending Network.jpg

For Vaccaro, this isn’t a knowledge or data gap, but an attention gap.

“Any company that wants to understand its Scope 3 emissions should be able to get a roughly right figure quickly,” he says. "The bigger risk is that data and the knowledge gap is used as an excuse for companies to move slowly."

At COP27’s Climate Innovation Zone, the race for net-zero is fuelled by data-driven tech and infra companies, mostly from Israel, looking for low-carbon solutions in key sectors such as energy and real estate.

Corporate consultants are still finding that sustainability knowledge isn’t evenly distributed across many companies’ structures. Disclosure frameworks – whether on emissions or transition – should help mitigate this.

"Too much ambiguity in the disclosure frameworks is confusing for companies. We need to streamline into a single method of reporting,” says Ivri Verbin, chief executive and co-chair of the global sustainability committee at accountant and consultancy firm Grant Thornton International in Israel.