IEMA signs letter asking government to require mandatory disclosures of net zero transition plans for large companies

Leading UK companies including various FTSE companies and financial institutions responsible for over £4.5 trillion GBP in assets have written to the Chancellor and Secretary of State for the Department of Business, Energy and Industrial Strategy calling on the UK Government to make a landmark announcement ahead of the UN Climate Change Conference (COP26) to make the disclosure of net-zero transition plans mandatory for large companies.

Signatories include FTSE 100 companies such as BT, Kingfisher, and Tesco, and financial institutions such as Aviva, Legal & General Investment Management (LGIM), and Santander, as well as industry groups such as the Association of British Insurers (ABI) and the Aldersgate Group, and civil society organisations such as WWF.

The letter notes that transition plans are needed for companies to credibly deliver their net-zero goals. The signatories also note that financial institutions will find it challenging to deliver their net-zero goals without having transition plans for companies in their portfolios.

The UK Government has already called on companies to voluntarily set net-zero targets and disclose net-zero transition plans ahead of the crucial COP26 summit in Glasgow. Moreover, the government has adopted a roadmap to make it mandatory by 2025 for large businesses and financial institutions to disclose climate-related risks and opportunities according to the recommendations of the Taskforce on Climate Related Financial Disclosures (TCFD).

However, although the TCFD this year has moved toward making transition plans a key part of its guidance, the UK government has yet to provide clarity on how the rollout of UK disclosure requirements will cover transition plans and other net-zero disclosures.

The letter therefore calls on the government to go a step further and make the disclosure of net-zero transition plans mandatory for large companies, with a clear timeline for rolling out this policy by 2025, and to help in developing official guidance on what a credible transition plan looks like.

The UK has a clear opportunity to catalyse a stronger and more resilient UK economy by helping to ensure that the business and finance community is prepared to meet the goals of the Paris Agreement. According to new analysis from WWF (embargoed 07.10.21, 00:01), currently only 19% of FTSE100 have disclosed a credible action plan to reduce their climate emissions to net-zero by 2050.

By committing to make disclosure of net-zero transition plans mandatory and to develop official guidance on transition plans, the UK would be at the forefront of global leadership on climate policy and standard-setting in green finance.

Sarah Mukherjee MBE, CEO at IEMA:

"Translating corporate net-zero ambition into action requires credible transition plans which focus on delivery. Mandating this for large companies is a critical step towards a net-zero future."