Transition Plans: Where Climate Regulation is Heading

Over the past few years, businesses have been steadily engaging with climate-related risks and opportunities. This has largely been driven by reporting requirements such as the UK’s Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations (CFD) and the Task Force on Climate-related Financial Disclosures (TCFD) framework. Large organisations, public sector bodies, and universities have all been affected. 

But why do these regulations matter? And where are they leading? 

Why does reporting matter?

At its core, climate-related reporting is about resilience. Businesses are operating in a changing climate that affects the cost and reliability of operations, the efficiency of supply chains, and the resilience of assets. Those same shifts are reshaping customer demand and creating new opportunities, whether through products and services that help the economy adapt, or solutions that accelerate decarbonisation. 

Regulation also ensures comparability for investors. The finance community needs reliable, decision-useful data on how companies are preparing for climate transition. That means organisations must not only identify risks and opportunities but also show how these are integrated into financial planning, strategy, and investment decisions. 

What comes next: transition planning

The next step is transition planning. A transition plan is a strategic roadmap that sets out how an organisation intends to adapt its operations, strategies, and business models to align with net zero and broader sustainability goals. 

These plans go further than risk disclosure. They bring together: 

• Climate-related risks and opportunities. 
• Scenario analysis. 
• Carbon footprints, targets, and metrics.
• Business model changes and new product opportunities. 
• Financing and capital expenditure plans to improve resilience and efficiency. 

In other words, transition planning helps businesses move from describing risks to showing how they will act and be held accountable. 

The role of the TPT and ISSB

The UK’s Transition Plan Taskforce (TPT), launched by HM Treasury in April 2022, was tasked with developing a “gold standard” for transition plan disclosures. Following public consultation, the TPT published its final disclosure framework in October 2023. 

These materials have since been taken up by the International Sustainability Standards Board (ISSB), which is responsible for global sustainability disclosure standards. The ISSB’s climate standard (IFRS S2, published in June 2023) already requires disclosure of information about an entity’s transition plan, where one exists. The ISSB is expected to issue further guidance to help companies adopt the TPT’s framework in practice. 

The UK Consultation

The UK government is now consulting on how best to bring these global standards into a domestic context. Draft UK Sustainability Reporting Standards (UK SRS) are currently open for feedback. The intention is that these will provide a consistent baseline for businesses to report sustainability-related financial risks and opportunities. 

Importantly, the government has signalled that once finalised, it may consult on requiring “economically significant” private companies to report against the UK SRS. This will potentially widen the scope of disclosure obligations. The consultation also raises the prospect of broadening transition planning to include climate resilience and nature, ensuring companies take a more holistic approach. 

Why businesses should pay attention

The direction of travel is clear. Climate disclosure is evolving from reporting risks to setting out how organisations will deliver change. Transition plans will increasingly sit at the centre of this, linking strategy, finance, and resilience. 

Forward-looking businesses should not wait for regulation to catch up. Building a credible transition plan now helps ensure resilience, prepares for investor scrutiny, and positions companies to seize opportunities in the transition to a net zero economy. 

Where to start with transition planning

Get in touch with the Acclaro team for an initial Transition Plan gap analysis. Using multiple data sources across your company’s strategies and initiatives, we build a clear picture of your organisation’s readiness to deliver a credible transition plan. This standalone diagnostic provides actionable insights and lays the foundation for deeper transition planning.