5% of FTSE 100 have net zero plans that would be deemed ‘credible’ under Government’s guidance

Analysis by EY reveals that only 5% of FTSE 100 companies have so far disclosed transition plans that would be deemed ‘credible’ or sufficiently detailed under draft Government guidance.

Nearly 18 months ago, the Government pledged that UK listed businesses would be mandated to publish decarbonisation plans by 2023, EY now reveal that only 5% of FTSE 100 companies have disclosed transition plans to meet this Government guidance.

EY analysed Net Zero transition plan material published publicly by FTSE 100 businesses, as of 31 January 2023, and assessed them against the Transition Plan Taskforce’s (TPT) Draft Disclosure Framework. The Framework, which is set to be finalised this year following industry consultation, outlines guidance for companies to create decarbonisation plans that can be deemed “credible, useful, and consistent”.

The Treasury’s TPT was announced in November 2021 at COP26, where it was pledged that all UK listed businesses and financial institutions would be required to publish Net Zero transition plans by 2023, albeit a specific date was not set.

EY’s analysis finds that while 78% of FTSE 100 companies have disclosed partially-developed plans that include public targets to achieve Net Zero emissions by 2050, they have not yet adequately outlined how they will reach these targets, therefore missing key current TPT Framework requirements around strategy and execution.

According to the research, just 5% of FTSE 100 businesses have disclosed plans that EY would consider to be sufficiently detailed to meet the TPT Framework guidance and have started to put these plans into action.

However, even companies within this group have more work to do before their published plans can be considered fully TPT-aligned, due to gaps across a range of areas such as financial planning or the definition of financial metrics and targets.

EY’s analysis finds that more than 80% of FTSE 100 firms have made public commitments to reach Net Zero carbon emissions by 2050. 

The TPT Framework outlines five key elements required to create a credible Net Zero transition plan. According to the research, FTSE 100 firms scored best (with a 78% adherence) on the initial ‘Foundation’ stage in the TPT Framework, which requires companies to publish transition objectives and priorities, as well as implications for the business modelling.

Commenting on the findings, 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 finalised this year following a Government consultation, and, given the praise it received in the recent Skidmore Review, it’s expected to become mandatory."

"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.”

Find out more here.