The TPT was announced at COP26 in Glasgow and launched in April 2022 with a two-year mandate to deliver the gold standard for transition plans. This week, its mandate has been extended by HM Treasury until at least 31 July 2024, with a possible further extension of three months to the end of October 2024, in order to support the Transition Finance Market Review.
As of January 2024, the TPT has nearly completed delivery of the tasks listed in its Terms of Reference, including the publication of the TPT Disclosure Framework together with implementation guidance and draft sector guidance, informed by over 600 organisations around the world.
The TPT’s technical work has been accompanied by ongoing international engagement that is informing approaches and new regulatory requirements in a number of jurisdictions and through multilateral processes. This includes with the Financial Stability Board, IOSCO and the NGFS, as well as the G7, G20, UNFCCC and the Coalition of Finance Ministers for Climate Action. The TPT’s outputs are included in the IFRS Knowledge Hub, supporting financial institutions and corporates globally to disclose against IFRS S1 and S2 with the help of TPT resources. Building the TPT’s outputs on the work of the ISSB, and drawing on GFANZ, was supported by many of TPT’s stakeholders and TPT has been able to fully respond to these stakeholder requests.
This year, the TPT will release its final outputs:
· Final Deep Dive Sector Guidance for Asset Owners, Asset Managers, Banks, Electric Utilities & Power Generators, Food & Beverage, Metals & Mining and Oil & Gas;
· Notes on adaptation, nature, just transition, Emerging Markets & Developing Economies (EMDEs) and Small to Medium-Sized Enterprises (SMEs); and
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· A Forward Pathway on transition plans, with considerations for the maintenance of a strong ecosystem around transition plans. All materials can be accessed in the ‘Build Your Transition Plan’ section of the TPT website.
The UK has announced a Transition Finance Market Review (TFMR) and this launched on 22 January 2024. The Terms of Reference for the TFMR can be viewed here. To ensure alignment and synergies between the work of the TPT and the TFMR can be realised, the TPT mandate has now been extended to align with TFMR, aligning the timescales of both processes.
The link between transition plans and credible transition finance
As the global discussion on transition plans has progressed over the last few years, it has become clear that credible transition plans are expected to play a central role in the development of high-integrity transition finance approaches. Beyond the UK, many jurisdictions and global multilateral initiatives are now considering the connections between the two.
By creating a period of overlap between the lifetimes of the TPT and the Transition Finance Market Review, the UK will be able to fully support these developments at home and abroad.
The Transition Finance Market Review will consider what the UK financial and professional services ecosystem needs to do to become a leading hub for and provider of transition financial services. Its Terms of Reference can be seen here. It will explore how to create the conditions for:
– Scaling transition-focussed capital raising with integrity;
– Maximising the opportunity for UK based financial services; and
– Positioning the UK’s professional services ecosystem as a global hub.
The extension to the TPT’s mandate will allow the TPT to fully contribute to the work of the Review, drawing on the knowledge and networks that the TPT has established on transition finance and transition plans, including on transition finance instruments, international standards, and ensuring credibility and global alignment.
The TPT’s extension also allows it to continue engaging internationally to support the development of globally-consistent approaches on transition plans and transition finance, and to support market actors with the guidance and tools they need to deliver high quality transition plans.