A Mere 5% of FTSE 100 Companies Have Credible Net Zero Plans.
According to a recent analysis by EY, only 5% of FTSE 100 companies have disclosed transition plans that would be deemed “credible” or detailed enough to meet the draft UK government guidance on decarbonization. With looming regulations and policies, along with the growing pressure to set standards that enable the world to achieve the goal of avoiding 1.5 C warming from the Paris Climate Agreement, organizations needs to act now.
The Transition Plan Taskforce’s Framework provides a guideline for creating a credible Net Zero transition plan, and it consists of five main elements. Currently, FTSE 100 firms have performed well (with a 78% compliance rate) in the initial 'Foundation' stage of the TPT Framework. This stage necessitates companies to disclose transition objectives and priorities, as well as the effects on the company's business model.
However, the analysis found that while 78% of these companies had disclosed partially developed plans, they had not yet adequately outlined how they would achieve their net-zero goals by 2050, missing key requirements around strategy and execution. Currently, only 5% would comply with the Transition Plan Taskforce’s draft disclosure framework.
Rob Doepel, EY UK&I Managing Partner for Sustainability, said:
“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 finalized this year following a Government consultation, and, given the praise it received in the recent Skidmore Review, it’s expected to become mandatory."
The Taskforce was set up last year after the UK government pledged that UK listed businesses would have to publish decarbonization plans by 2023. The research also found that companies scored weakest against the TPT framework’s implementation requirement, which asks companies to disclose how they intend to adapt business planning and operations and change products and services.
Additionally, 17% of FTSE 100 firms have not disclosed any actionable plans. EY’s analysis found that companies scored best on the TPT Framework’s ‘Foundation’ stage, which requires companies to publish transition objectives and priorities, while they scored weakest on the ‘Implementation Strategy’ element.
Photo by Matthias Heyde on Unsplash
Rob Doepel, EY UK&I Managing Partner for Sustainability, continued on to say,
“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 organizations to transition and reap the benefits of Net Zero.”
Companies must start to properly plan, prepare, and implement their decarbonization and transition plans as soon as possible. As policies and frameworks are implemented across the globe it is very likely those who are not complaint will face steep fines among other serious consequences.
Sources:
https://www.esgtoday.com/only-5-of-ftse-100-companies-have-published-credible-decarbonization-plans-ey/
https://www.climateaction.org/news/5-of-ftse-100-have-net-zero-plans-that-would-be-deemed-credible-under-gover#:~:text=Nearly%2018%20months%20ago%2C%20the,to%20meet%20this%20Government%20guidance.
https://www.ft.com/content/5bc9bdf5-1e13-4a53-ab90-e71d9fb6c759
https://www.ey.com/en_uk/news/2023/04/only-five-percentage-of-ftse-100-have-published-net-zero-plans
