FTSE 100 firms not drawing up ‘credible’ net-zero transition plans, EY warns

According to EY, 80% of listed firms have publicly declared an intention to reach net-zero by 2050 or sooner, in line with the UK Government’s legally binding long-term climate target. Yet the majority of these firms are not backing these ambitions up with interim goals to cut emissions, nor plans on changing investments or upskilling and reskilling staff to deliver decarbonisation.

The firm analysed the climate plans of the FTSE 100 and compared their makeup with the latest recommendations made by the Transition Plan Taskforce (TPT).

The TPT was established last year to determine what would constitute a ‘gold standard’ transition plan, so that when the UK introduces a transition plan mandate, businesses are not able to deliver greenwashed plans. Its guidance covers how to ensure that plans are detailed enough and also “credible and actionable”.

According to EY, 78 of the FTSE 100 have published a climate plan in some form. But the vast majority of them do not meet the TPT standards. The most commonly omitted details pertain to how businesses intend to adapt their planning, including financial planning; their operational processes and their portfolio of products and/or services.

Only five of the firms were deemed by EY to be complying with the TPT’s recommendations.

EY has expressed concern over this trend, given that the UK Government first announced that transition plans would be mandated in late 2021, beginning with the largest businesses in the highest-emitting sectors. A decision on when the mandate should be enforced has been delayed to the second half of 2023, but the TPT is urging businesses to prepare initial plans this year in any case,

EY UK & Ireland’s managing partner for sustainability, Rob Doepel, said: “While the Government has previously said that listed companies will be expected to publish their transition plans this year, a final date hasn’t been disclosed. By setting a deadline, the Government would give much-needed certainty to the UK’s largest businesses and would send a clear message that inaction is not an option.

“The TPT’s draft Framework offers vital guidance around developing detailed, ambitious transition plans, but currently just a handful of the UK’s largest businesses appear to be on track. We expect the Framework to be finalised this year following a Government consultation, and, given the praise it received in the recent Skidmore Review, it’s expected to become mandatory.”

The results of Chris Skidmore MP’s review into delivering a “pro-growth, pro-business” transition to net-zero were published in January and the UK Government published its response to all 129 of his proposals last week.

The response paper does not confirm that transition planning will become mandatory, nor does it provide any clarity on timelines. It states that it will align new requirements “closely” with existing mandates from the Financial Conduct Authority (FCA) and that the mandate, if introduced, would cover both listed and private companies.

Related News: Most companies in global built environment sector lack climate transition plans

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