Transition plans are essential for UK organisations aiming to achieve net zero emissions. These plans outline the steps and strategies an organisation will take to reduce its greenhouse gas emissions and contribute to a low-carbon economy.
What is a transition plan?
A transition plan sets out how a business will adapt its operations, assets, and overall strategy to align with climate goals. The UK, committed to achieving net zero by 2050, already requires transition plans from many financial institutions and large businesses. More sectors are likely to be included in future regulations.
To help organisations create credible and effective plans, the Transition Plan Taskforce (TPT) has developed a framework based on three key principles:
- Ambition – A clear, strategic commitment to climate goals
- Action – A detailed and structured roadmap for delivery
- Accountability – Transparent reporting on measurable targets
The role of the Transition Plan Taskforce (TPT)
The UK government established the Transition Plan Taskforce (TPT) to develop a standard for climate transition plans. In October 2023, the TPT released its Disclosure Framework, providing guidance for organisations on creating credible and robust transition plans. This framework aligns with international standards, ensuring consistency and transparency in reporting.
Are transition plans mandatory for the UK?
In the UK, transition plans are currently mandatory for certain organisations, particularly those in the financial sector and large listed companies. The UK government has outlined that:
- Firms regulated by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA), including large asset managers, insurers, and banks, must disclose transition plans under the Task Force on Climate-related Financial Disclosures (TCFD) framework.
- Large, listed companies are required to publish their climate-related financial disclosures, including transition plans.
- Public sector organisations and high-emitting industries are increasingly being encouraged to develop transition plans, with future regulatory requirements expected to expand to more sectors.
As climate regulations evolve, businesses of all sizes are likely to face growing expectations to develop and disclose their transition strategies, ensuring alignment with the UK’s net zero targets.
Transition plans vs net zero plans
A transition plan and a net zero plan are closely related but not the same. Both are important for organisations working towards sustainability, but they serve different purposes.
Feature | Transition plan | Net zero plan |
Scope | Broad – covers overall business adaptation to a low-carbon economy | Specific – focuses on achieving net zero emissions |
Focus areas | Emissions reduction, financial risks, supply chain, governance, business model changes | Emissions reduction, renewable energy use, energy efficiency improvements |
Regulatory expectation | Increasingly required for listed and large companies | Often voluntary but expected as part of climate commitments |
Timescale | Long-term strategy beyond emissions | Typically aligns with 2030, 2040, or 2050 targets |
Will organisations need both?
Yes, many organisations will need both. A net zero plan is a crucial part of a transition plan, but a transition plan goes beyond just emissions reduction. It ensures the organisation is financially and operationally prepared for the shift to a low-carbon economy.
For example:
- A net zero plan might outline how a company will cut carbon emissions from its operations and supply chain.
- A transition plan will include this but also address how the business model, investments, and workforce will adapt to a greener economy.
With UK regulations evolving, businesses, especially large ones, are expected to develop credible, detailed transition plans that integrate their net zero commitments.
Characteristics of best-practice transition plans
Effective transition plans typically include:
- Clear objectives: Setting ambitious yet achievable emission reduction targets.
- Detailed strategies: Outlining specific actions, such as adopting renewable energy, enhancing energy efficiency, and innovating low-carbon products.
- Stakeholder engagement: Involving employees, customers, suppliers, and the community in the transition process.
- Regular monitoring and reporting: Tracking progress and being transparent about achievements and challenges.
Transition plans and net zero plans are set to play a key role in the UK in the coming years, particularly as compliance obligations continue to strengthen. Stay ahead of the curve by setting up a futureproof plan for your organisation.
To get started with your transition plan or for further advice, get in touch for a no-obligations chat with one of our specialists at Sustainable Energy First.
