Briefing: Climate change transition planning is likely to be a task and a half

By Jon Guy

Aviva chief executive Amanda Blanc has this week been announced as the co-chair of the newly formed UK Transition Plan Taskforce (TPT), launched by HM Treasury.

She will share the responsibility of chairing the newly created forum with economic secretary to the Treasury John Glen. The taskforce’s remit is to create “granular transition planning templates that would be suitable for incorporation into regulatory frameworks in the UK”.

In plain language, the taskforce will help companies to create and deliver meaningful transition plans as the UK moves towards a net zero future.

For big firms, the climate driven clock is already ticking. The country’s largest companies, which will include Aviva, are required by regulators to publish their climate transition plans by 2023 - but all listed firms will need to have plans in place by 2024.

The new taskforce has said it will deliver a gold standard for how companies - including financial institutions - disclose their plans for reaching net zero goals over the next two years.

Fast forward to 2024 and firms will be expected to have their strategies not only in place, but ready for inspection by the regulators.

Size matters

Like so many government and political announcements, the transition timetable is ambitious and the news “momentous”.

It is also very thin on detail in terms of what the taskforce sees as being part and parcel of its gold standard – will the firms required to report in 2023, for example, have any ideas about the gold standard’s contents ahead of its 2024 publication date to ensure they are not caught out?

Blanc said: “Preventing the worst impacts of climate change will take all businesses developing ambitious, consistent transition plans to get us to a low carbon future.”

The issue in that statement is the term “all businesses”.

My immediate thought when I read the announcement was that the biggest threat to the ability of big businesses to meet the yet to be set gold standards will be their customers and supply chains.

There is little doubt that the country’s biggest firms will have teams already working on net zero transition plans and the strategies they will need to provide in the coming two years.

The same it not likely to be the case for the SMEs and smaller firms that may be either supplying goods and services or are customers of these listed giants.

The best efforts to clean up operations are all well and good, but businesses are only as strong as their weakest link - and that may lie many miles from the corporate HQ.

For insurers and brokers, will this mean they will be judged on the net zero performance of their clients?

A very tricky issue given the world is likely to be reliant on fossil fuels for the next three decades.