Business Insight

Board Priorities 2024: Transition plans

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    The development, production and disclosure of climate transition plans has recently moved into the spotlight with a greater focus being given by policy makers around the world on this particular tool. Climate transition plans are action plans for firms that outline how a firm will contribute to and prepare for a rapid global transition towards a low emissions economy.

    Transition plans will describe how an organisation will adapt its strategy and operations towards a trajectory that aligns with science-based recommendations. They should also explain the emission reduction targets the organisation has set, the measures it will take to reduce its emissions, how those measures will be financed, governance arrangements concerning the plan and the metrics for monitoring progress towards the targets.

    Transition plans are currently generally encouraged and expected as part of TCFD disclosures. In some countries we are seeing a movement towards mandatory transition plans for certain entities. In the UK, it is likely that following the publication of the Transition Plan Taskforce Disclosure Framework, transition plans will become a requirement for listed issuers, asset managers and regulated asset owners (in the same way as we saw TCFD reporting being introduced). We expect this direction of travel will be initiated by the Financial Conduct Authority (who also acts as the competent authority for listed securities), with consultations expected in 2024.

    For financial services firms and companies, this will be an important shift. Coupled with a new anti-greenwashing rule, and experience from reviewing climate-related financial disclosures, financial regulators and other stakeholders are likely to scrutinise what firms' transition plans look like, the commitment and targets that they have set themselves and, importantly, what actions are proposed or taken when milestones are not met. The Transition Plan Taskforce Disclosure Framework will therefore play a pivotal role in setting the market standard for the content and form of transition plans and their recent consultation on sector deep dives provide practical guidance for a range of different industry sectors.


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    Ms Eleanor Reeves Thumbnail

    Eleanor Reeves, Partner, Environment and Safety, London

    T: +44 7823 340 854

    Eleanor leads Ashurst’s London Environment and Safety practice where she is noted for her ability to advise on the environmental aspects of transactions, including risk management and regulatory compliance concerns. She is recognised as a leading individual in legal directories Legal 500 and Chambers & Partners, particularly for ESG and sustainability matters.

    Eleanor specialises in environmental and safety regulation including legal risk management, incident response and crisis management, regulatory obligations and compliance, regulatory investigations and enforcement action including civil and criminal sanctions. She is a member of the UK Environmental Law Association and the UK Health and Safety Lawyers' Association.

    Mrs Lorraine Johnston Thumbnail

    Lorraine Johnston, Partner, Finance regulatory, London

    T: +44 7766 835 841

    Lorraine is a partner in our Global Finance Regulatory practice. Lorraine works with institutions across the financial sector, including banks, asset managers, brokers and others, specialising in a broad range of conduct and technical matters. Lorraine has a particular focus on the governance of large financial services firms, including Senior Managers & Certification Regime rules. She led the widest review to date of the impact of SMCR within banks on behalf of UK Finance, the leading bank industry body, leading to the publication of SMCR: Evolution and Reform.

    Lorraine is leading the firm's practice on Environmental, Social and Governance regulation in Europe and the UK.

    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.


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