Nearly 18 months after the Government’s COP26 pledge that UK listed businesses would be mandated to publish decarbonisation plans by 2023, only 5% of FTSE 100 companies have so far disclosed transition plans that would be deemed ‘credible’ or sufficiently detailed under draft Government guidance, according to research by EY.
EY analysed Net Zero transition plan material published publicly by FTSE 100 businesses, as of 31 January 2023, and assessed them against the Transition Plan Taskforce’s (TPT) Draft Disclosure Framework. The Framework, which is set to be finalised this year following industry consultation, outlines guidance for companies to create decarbonisation plans that can be deemed “credible, useful, and consistent”.
The Treasury’s TPT was announced in November 2021 at COP26, where it was pledged that all UK listed businesses and financial institutions would be required to publish Net Zero transition plans by 2023, albeit a specific date was not set.
EY’s analysis finds that while 78% of FTSE 100 companies have disclosed partially-developed plans that include public targets to achieve Net Zero emissions by 2050, they have not yet adequately outlined how they will reach these targets, therefore missing key current TPT Framework requirements around strategy and execution. Seventeen per cent of FTSE 100 firms are still in the stage of setting targets and are yet to publicly disclose any actionable plans.
According to the research, just 5% of FTSE 100 businesses have disclosed plans that EY would consider to be sufficiently detailed to meet the TPT Framework guidance and have started to put these plans into action. However, even companies within this group have more work to do before their published plans can be considered fully TPT-aligned, due to gaps across a range of areas such as financial planning or the definition of financial metrics and targets.
EY’s analysis finds that more than 80% of FTSE 100 firms have made public commitments to reach Net Zero carbon emissions by 2050.
Commenting on the findings, EY UK&I managing partner for sustainability, Rob Doepel, said: “While the Government has previously said that listed companies will be expected to publish their transition plans this year, a final date hasn’t been disclosed. By setting a deadline, the Government would give much-needed certainty to the UK’s largest businesses and would send a clear message that inaction is not an option.
“The TPT’s draft Framework offers vital guidance around developing detailed, ambitious transition plans, but currently just a handful of the UK’s largest businesses appear to be on track. We expect the Framework to be finalised this year following a Government consultation, and, given the praise it received in the recent Skidmore Review, it’s expected to become mandatory. Businesses should now be clear about what credible, detailed plans need to look like, and should have a good idea about the direction regulation is moving in. There can be no excuse for being unprepared and the UK’s largest businesses need to push ahead with developing detailed, actionable plans that enable their organisations to transition and reap the benefits of Net Zero.”