How to transition your business
As the importance of sustainability and decarbonisation increases for companies in response to a changing climate, so does the importance of setting a credible and robust plan on how to transition your business. In October 2023, the Transition Plan Taskforce (TPT) released their Final Disclosure Framework as the gold-standard for companies developing a transition plan, which is intended to set out a company’s action plan to meet their climate and sustainability targets and pivot their business towards a net-zero economy. This is backed by a steady steer towards integration with ISSB standards, commitments from the FCA and UK Government to consult on mandatory transition plans for listed and large companies, and the release of Sector Deep Dives by the TPT in November 2023 which provide more granular details for a range of sectors.
At the start of November, I had the privilege of hosting a panel discussion on implementing best practice transition plans and how companies should be looking ahead with the new guidance that has been released. I was joined by four panellists:
- Kate Levick (Co-Head of TPT Secretariat & Associate Director, Sustainable Finance at E3G)
- Mark Manning (Strategic Policy Advisor, Sustainable Finance at FCA)
- Liz Harrowell (Director, ESG Strategy Group at KPMG)
- James Dennis (Director, ESG Strategy Group at KPMG)
The topics covered ranged from when and how companies should start their transition plan journey, key challenges from clients in the market around implementation in their business, what processes and thinking has fed into the final disclosure framework, and what’s coming next for disclosure requirements.
You can watch the full recording of the panel discussion below.
What we heard from the market
As part of our panel discussion, we asked participants three key questions around their transition plan journey:
- Are you reporting, or planning to report, your transition plan externally?
- What are you finding most difficult in developing and implementing your transition plan?
- What would help you overcome barriers you have to implementing your transition plan?
The results from these polls provided some great insights. Firstly, there is a big spread across the market currently with regards to the position people are in their transition planning journey - many people waiting to hear more or for mandatory requirements before disclosure, alongside around 30% of people who have either released a transition plan or are planning to in the coming year.
The other key insight was around the barriers and solutions to successfully implementing transition plans. While setting an ambition or target appears achievable, difficulties look to be split between stakeholder engagement, translation into action, and the internal business case to get it off the ground. In terms of what could help, there were two stand-out answers:
- Guidance on how to set the right governance framework in place to deliver a transition plan across a given business; and
- Better understanding of what transition planning means for different sectors, and the nuances that will come in implementation
At KPMG, we are committed to ensuring our clients understand what transition planning means for them going forwards and helping set a robust plan for implementation across your business. That’s why we released a comprehensive guide to transition planning in our publication Transition Plans: Moving beyond disclosure and why we hold these panel discussions to provide you with a look behind the scenes.
Given the interest in both setting an effective governance framework and sector-specific considerations for transition planning, we’ll be looking to release follow-up publications which tackle those issues over the coming month – including individual addendums to our full transition planning guidebook for several key sectors.
As you look ahead to what transition plans means for your business and how you can use them to get ahead of a changing market, the KPMG team are here to help.