Most FTSE 100 fail on ‘credible’ net zero plans

As the urgency for climate action intensifies, research by EY has unveiled a concerning reality: a mere 5% of FTSE 100 companies possess ‘credible’ climate transition plans. While over 80% of UK-listed firms have pledged commitment to becoming Net Zero by 2050, the vast majority (95%) have not yet publicly disclosed detailed, actionable transition plans.

The Transition Plan Taskforce’s (TPT) Draft Disclosure Framework

EY’s analysis examined Net Zero transition plan materials publicly available from FTSE 100 businesses as of 31 January 2023. The findings were assessed against the Transition Plan Taskforce’s (TPT) Draft Disclosure Framework. Following industry consultation, this framework, scheduled for finalisation this year, guides companies to develop decarbonisation plans deemed “credible, useful, and consistent.”

Worryingly, 17% of FTSE 100 firms are still in the process of setting targets, failing to disclose any actionable plans publicly. This raises questions about how committed these companies are when it comes to climate action.

Corporate transition plans play a crucial role in mitigating the effects of climate change. As countries around the world commit to limiting temperature rises, businesses must also take responsibility and accountability for their carbon footprints. By developing and implementing detailed, actionable transition plans, companies can reduce emissions and adapt to the inevitable impacts of climate change. This, in turn, contributes to the global effort to minimise environmental damage and avert catastrophic consequences.

Making informed business decisions

For investors, this information is vital. Understanding which companies possess credible climate transition plans can help them make informed decisions, aligning their investments with environmentally responsible businesses. As governments and regulators increasingly focus on climate action, companies with robust transition plans will likely fare better in the long run, offering more sustainable investment opportunities. Furthermore, environmental, social, and governance (ESG) factors have significantly impacted long-term financial performance.

The EY report highlights the urgent need for FTSE 100 companies to step up their climate action efforts. As the world strives to combat climate change, businesses must develop and implement credible, useful, and consistent transition plans, not only for the planet’s sake but also to ensure long-term success and investor confidence.

Rob Doepel, EY UK&I Managing Partner for Sustainability, commented on the research’s findings: “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.

He added that with the TPT’s draft Framework, “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.”

 

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