A recent study by EY has found that 95% of companies in the FTSE 100 committing to net zero by 2050 have not published ‘credible’ decarbonisation plans.
According to ESG Today, the UK initially committed to introduce mandatory disclosure of transition plans from financial institutions and listed firms during the COP26 conference in 2021, with an expectation for reporting to start in 2023.
In the company’s study of the net zero transition material published publicly by FTSE 100 businesses as of the end of January 2023. However, only 5% of these firms have disclosed plans that meet the draft TPT Framework guidance and started putting the plans into action.
Across the elements outlined by the TPT Framework required to create a net zero transition plan – Foundation, Implementation Strategy, Engagement Strategy, Metrics and Targets, and Governance – the study found the strongest performance by these companies on the ‘Foundation’ stage, which involves describing the plan’s objectives, interim targets, milestones, priorities and a summary of how the companies will embed the ambition of its transition plan.
However, the weakest element for the FTSE 100 companies was the Implementation Strategy stage, with only 11% publishing some of the required elements, which include more detailed disclosure of short-, medium- and long-term actions to deliver on the transition plan, planned product and services changes, internal policies to align strategy with the plan and a description of the financial implication of the planned strategic changes.
Amongst the 5% assessed to have provided credible plans, the study found gaps in areas including financial planning and the definition of financial metrics and targets.
EY UK&I managing partner for sustainability Rob Doepel said, “Businesses should now be clear about what credible, detailed plans need to look like, and should have a good idea about the direction regulation is moving in. There can be no excuse for being unprepared and the UK’s largest businesses need to push ahead with developing detailed, actionable plans that enable their organisations to transition and reap the benefits of Net Zero.
“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.”
Everstream Analytics, a global supply chain insights and risk analytics firm, recently raised $50m in a Series B funding round.
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