Sector Transition Plans guidance supports sector benchmarking, coordination and accountability
28 October 2025
What you need to know
The UK Net Zero Council and the Transition Finance Council have published guidance on Sector Transition Plans (STPs), which sets out a framework for sectors to collaboratively develop decarbonisation pathways aligned with national net zero targets. The Net Zero Council, (supported by secretariat services from the Broadway Initiative) is a partnership between government, business and civil society, supporting delivery of the government’s net zero strategy.
The guidance is part of the Net Zero Council's 3-year programme to develop STPs to help businesses, investors and policymakers coordinate the UK’s transition to a clean energy economy.
STPs will explain what the clean energy transition means for every major sector, and help sector leaders to capitalise on the economic opportunities presented by the transition. They will underpin clean energy investment, innovation, and policy development, and will become an important tool for benchmarking, coordination, and accountability across sectors.
Companies should engage early with any STP process in their sector to ensure their interests are represented.
What are Sector Transition Plans (STPs)?
STPs are strategic documents co-created by sector bodies (such as trade associations), businesses, financial institutions, and other stakeholders. They set out a shared vision and pathway for a sector’s decarbonisation, including a baseline of current emissions, a credible reduction pathway, a delivery plan, and a finance plan where needed.
STPs will be the bridge between national transition plans (for example the UK's carbon budget delivery plan(s) created under the Climate Change Act 2008, its nationally determined contribution or NDC as well as relevant government policies and strategies) and individual businesses' transition plans. They will align sectoral climate ambitions with national climate targets and the sectors' economic growth objectives, identify key actions and dependencies, and provide a mechanism for tracking the relevant sector's progress and updating strategies as circumstances evolve. Although not government documents, STPs are developed in close collaboration with government and are expected to become the reference point for sectoral transition.
The guidance sets out:
details of the key elements of STPs (which are summarised below);
use cases for STPs;
the process for developing an STP; and
how the STP can be implemented as well as KPIs that can be used to measure implementation progress (e.g. GHG emission reductions, deployment rates of key transition solutions and transition finance flows).
Key elements of STPs
The structural framework for an STP identified in the guidance aligns with the elements of company transition plans identified in the Transition Plan Taskforce's (TPT's) Disclosure Framework (see Figure 3 on p.12).
| Element | Explanation |
| Scope | Explains the sector's boundaries, emissions categories (e.g. Scopes 1, 2, and 3), and geographical extent. |
| Vision | Explains how the sector expects to evolve through changes to the goods or services being delivered and the technologies required. It should include an accurate emissions baseline and a credible emissions reduction pathway to reduce emissions in line with national targets from the baseline. |
| Delivery Plan | Outlines the main actions to deliver the emissions reduction pathway, and references regulation and fiscal incentives as appropriate. It should also identify dependencies upon which the delivery plan relies, such as policy development, availability of skills, and grid decarbonisation, and an assessment of investment needs. |
| Finance Plan | Where a transition finance gap is identified using the Transition Finance Council guidance, it specifies the total investment need for the relevant decarbonisation solutions and how this needs to be phased. |
| Key metrics | Ensures the sector's progress against the STP can be measured. |
Overlap with the Transition Plan Taskforce (TPT) sector guidance
The STP Guidance builds on the Disclosure Framework developed by the Transition Plan Taskforce (TPT) for corporate transition plans ( see Transition Plan Taskforce issues Disclosure Framework and consults on sector guidance).
It incorporates the TPT’s core pillars—Ambition, Action, and Accountability—ensuring consistency between sectoral and company-level planning. The STP structure mirrors TPT’s approach, requiring a clear vision, baseline, pathway, delivery plan, finance plan, and metrics for progress. This alignment is intended to streamline reporting, reduce duplication, and ensure that sector and company plans are mutually reinforcing.
How Sector Transition Plans interact with company Transition Plans
An increasing number of companies have produced transition plans in response to investor and other stakeholder demand (see Transition Plan Taskforce publishes final report on next steps for Transition Plans) and in anticipation of future regulation. The UK government consulted in summer 2025 on mandating transition plan development and disclosure for financial institutions and large companies (see UK Government consults on adopting ISSB sustainability reporting standards and mandating Transition Plans to develop a sustainability reporting framework).
STPs provide a sector-wide benchmark and shared pathway, enabling companies to align and measure their own transition plans with sectoral objectives and actions.
For larger businesses, STPs inform the development of company-level transition plans, while for SMEs, they offer practical guidance and identify immediate actions and opportunities. The STP framework encourages companies to orientate their strategies, investment decisions, and disclosures around the sector plan, and to provide feedback that can inform future updates to the STP. This creates a dynamic, iterative process where sector and company transition plans evolve together.
Financial institutions are expected to use STPs to identify future transition finance opportunities, which are usually set out in financial institution transition plans.
STPs also allow coordination between these two levels, which can help further progress in situations where achieving a company's transition plan objectives may depend on national plans, policies and regulation. For example, companies in the cement or steel sector are likely to require carbon capture usage and storage (CCUS) deployment to achieve their climate objectives but fro that deployment to happen, demand signals are needed from those companies to ensure the relevant investment and also any necessary policy development. STPs provide a new collaborative arena to allow for that dialogue.
Competition issues
The collaborative nature of STP development inevitably raises potential competition law considerations. The guidance emphasises that sector bodies must manage competition law risks and avoid anti-competitive behaviour or lobbying/capture during the co-creation process, but all corporate stakeholders will need to ensure that their engagement with STPs does not risk infringing competition law. The process by which STPs are developed and implemented should be inclusive and transparent and will need to be carefully structured to ensure that commercially sensitive information is not inappropriately shared and that the plan does not facilitate collusion or otherwise restrict competition.
Sector bodies and stakeholders are advised to draw on dedicated resources and legal expertise to ensure compliance throughout the development and implementation of STPs. For example, the UK Competition and Markets Authority has published guidance on the application of competition law to sustainability agreements between businesses (see our update from October 2023) and also operates an 'open door' policy to enable organisations to seek an informal opinion from the CMA (see our updates from March 2024 and April 2025 in respect of previous opinions issued to Fairtrade, WWF-UK and the Builders Merchants Federation).
Future developments
STPs are intended to be ‘live’ documents, regularly reviewed and updated to reflect changing market conditions, technological advances, and policy developments. The Net Zero Council will continue to refine the guidance based on experience and feedback.
The Net Zero Council plans to host STPs developed with it on a digital platform to ensure transparency and support benchmarking.
What you should do
STPs will help the development of company transition plans by providing a framework to work within. Companies should engage early with any STP process in their sector to ensure their interests are represented and to leverage the benefits of benchmarking and collaboration.
Developing a company-level Transition Plan can be time-consuming. With the UK Government consulting on mandating Transition Plans aligned to the requirements of IFRS S2, companies should not put on hold preparing their own plans while waiting for STPs to be published. Transition Plans are dynamic documents that can be updated as sector STPs become available, allowing companies to align with sector pathways. Initiating company Transition Plans will identify key dependencies - such as policy or infrastructure needs - required to achieve net zero. These insights can shape the company’s input into the relevant STP ensuring sector pathways reflect those needs.
An STP will give context to a company's targets, the roadmap of actions that it sets, and the dependencies it identifies as affecting delivery of the plan. It will also provide a benchmark against which to measure a company's transition plan. Ashurst's Transition Plan Accelerator helps support you through the transition plan process and to address issues such as greenwashing risk and implementing the roadmap of actions in your processes and contracts. For more information, please get in touch.
