Transition Plans Under UK SRS: Aligning TPT Framework Disclosures with Mandatory Reporting

Key Takeaways

• UK SRS S2 requires companies to disclose their climate transition plans, with the Transition Plan Taskforce (TPT) framework serving as the recommended structure for UK disclosures
• The TPT framework is built around five elements: Ambition, Action, Accountability, Governance, and Engagement — each with specific sub-elements and disclosure expectations
• A credible transition plan must be more than a list of targets: it must demonstrate how the company will actually achieve its decarbonisation commitments, with specific actions, timelines, and investment
• The FCA and Bank of England both expect regulated entities to develop transition plans, creating pressure from both listing rules and prudential supervision
• Common gaps in existing transition plans include missing short-term milestones, vague action plans, insufficient capital expenditure commitments, and disconnection from financial statements

What UK SRS Requires for Transition Plans

UK SRS S2 (effective for financial years beginning January 2028) requires companies to disclose their climate-related transition plans as part of their strategy disclosure. Specifically, companies must disclose:

• The company’s climate-related targets, including interim targets and the scientific basis for target-setting
• The specific actions the company plans to take to achieve its targets, including changes to business model, products, technology, and operations
• The financial resources allocated or planned for transition activities
• How progress against the transition plan is monitored and reported to the board
• Key assumptions, dependencies, and uncertainties that could affect delivery

The FCA has endorsed the TPT framework as the recommended structure for transition plan disclosures under UK SRS, though companies may use other structures provided they meet the disclosure requirements.

The TPT Framework: Five Elements

1. Ambition

The transition plan must articulate the company’s overall climate ambition:

• Long-term target (typically net zero by 2050 or earlier, with reference to a specific pathway)
• Near-term targets (5–10 year milestones, consistent with 1.5°C pathways)
• Scope coverage (Scope 1, 2, and material Scope 3 categories)
• Scientific basis (alignment with SBTi, IEA net zero pathway, or sector-specific pathways)

The ambition must be specific enough to be assessed against actual performance. Vague commitments to “reduce emissions in line with science” without quantified targets do not meet the standard.

2. Action

This is where most transition plans fall short. The action element requires companies to specify:

• Decarbonisation levers: What specific actions will drive emission reductions? (e.g., electrification, energy efficiency, fuel switching, process changes, supply chain engagement)
• Timeline: When will each action be implemented? Plans should include actions in the near term (1–3 years), medium term (3–10 years), and long term (10+ years)
• Quantified impact: What emission reduction does each action deliver? The sum of individual actions should be consistent with the company’s overall targets
• Capital expenditure: What investment is required? Credible plans include specific capex commitments, not just aspirational numbers
• Dependencies: What external factors must materialise for the plan to succeed? (e.g., grid decarbonisation, technology availability, policy support)

3. Accountability

How is delivery tracked and consequences applied:

• Progress reporting: annual disclosure of performance against interim targets
• Remuneration linkage: executive compensation tied to transition plan delivery
• Board oversight: regular review and challenge of transition plan progress
• Update mechanism: how and when the transition plan will be revised

4. Governance

The governance structures that ensure the transition plan is taken seriously:

• Board-level responsibility and committee structures
• Management roles and organisational capacity for delivery
• Skills and competencies needed (and gaps to be addressed)
• Internal controls and data quality assurance

5. Engagement

How the company engages with external stakeholders to support its transition:

• Supply chain engagement strategies (for Scope 3 reduction)
• Industry collaboration and sector initiatives
• Policy advocacy positions (and consistency with transition targets)
• Customer and investor engagement on transition progress

Sector-Specific Considerations

The TPT has published sector-specific guidance for several industries:

• Energy: Focus on production mix shift (fossil to renewable), asset retirement schedules, and CCUS investment
• Financial services: Focus on financed emissions targets, portfolio alignment metrics, and client engagement strategies
• Transport: Focus on fleet electrification, alternative fuels, and modal shift
• Real estate: Focus on building energy performance, retrofit programmes, and whole-life carbon
• Heavy industry: Focus on process decarbonisation, fuel switching, and technology deployment timelines

Common Gaps in Current Transition Plans

Based on our review of published transition plans from FTSE 350 companies, the most common weaknesses are:

• Missing short-term milestones: Many plans jump from today to 2030 or 2050 without specifying what happens in 2027 or 2028. Credible plans need annual or biennial interim targets
• Vague action plans: “We will engage with our supply chain to reduce Scope 3 emissions” is not an action plan. What engagement? With which suppliers? What reduction by when?
• No capex commitment: A transition plan without specific capital expenditure is an aspiration, not a plan. Investors look for committed and conditional capex figures
• Disconnected from financials: Transition plans that exist as standalone sustainability documents, disconnected from capital allocation decisions and financial statement assumptions
• Inconsistent policy positions: Companies with net zero targets that simultaneously lobby against climate regulation undermine transition plan credibility

How to Upgrade Your Transition Plan

• Adopt the TPT structure: Even if your transition plan pre-dates TPT, restructure it around the five elements to ensure completeness
• Add short-term milestones: Break your 2030 target into annual or biennial interim targets with specific actions for each period
• Quantify the action plan: For each decarbonisation lever, specify the expected emission reduction, timeline, and required investment
• Connect to financial statements: Ensure your transition plan assumptions are reflected in asset valuations, provision estimates, and capital expenditure budgets
• Disclose dependencies: Be honest about what is within your control and what depends on external factors (grid decarbonisation, technology costs, regulation)
• Get board sign-off: The transition plan should be approved by the full board, not just the sustainability team or CEO
• Prepare for assurance: Maintain documentation sufficient for external review — assumptions, data sources, and methodology should be traceable

Need Help Developing Your Transition Plan?

Our net zero advisory team helps companies develop credible transition plans aligned with the TPT framework and UK SRS requirements, from target-setting through action planning to board approval.

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