This LSA lunchtime event for exec firms was a great success, with nearly 50 LSA members enjoying the in-person session on transition planning. Huge thanks to our speakers for their valuable and interesting contribution. Thanks also to Caroline May of Norton Rose Fulbright for chairing the discussion and to Sarah Hickey and Paul Davies at Latham & Watkins for generously hosting the event. We asked our speakers for their key takeaways, listed below.

Speakers:

Thomas Hale and Emma Lecavalier, Blavatnik School of Government at the University of Oxford

Ashleigh Lee, City of London, UK Transition Finance Market Review

Ira Poensgen, LSE GRI, International Transition Plan Network

Takeaways:

Ira Poensgen, LSE GRI, International Transition Plan Network​

– The Transition Plan Taskforce was set up in March 2022 with a mandate from the UK Government to bring together leaders from industry, academia, and regulators to develop good practice for transition plan disclosures.

– Key deliverables from the TPT include its Disclosure Framework, sector-specific guidance, a paper on legal considerations for transition plans, as well as technical mappings to various other standards and frameworks.

– As of June 2024, the IFRS Foundation has assumed responsibility for the TPT’s disclosure-specific materials. This transition represents a significant milestone in global efforts to harmonise transition plan disclosures.

– The TPT wrapped up in October 2024. In its final report, TPT recommended four areas for future efforts:

1. Building market capabilities, practice and sharing experiences
2. Developing enabling tools and driving thought leadership
3. Ensuring that transition plans are integrated into decision-making: a) C-Suites and boards: Using transition plans as a change management tool. b) Investors and lenders: Enabling risk assessment, risk pricing, and informed capital allocation. c) Policymakers and regulatory authorities: Understanding transition trajectories and informing decision-making
4. Increasing global consistency in transition planning norms and expectations.

– The team behind the TPT Secretariat has launched the new International Transition Plan Network to support the development of global norms for transition plans and planning.

Emma Lecavalier, ​Blavatnik School of Government at the University of Oxford​

– Transition planning regulation is diverse: some regulation and policy targets corporate actors, but other rules use transition planning to coordinate across government or to shift sectoral performance (i.e. in energy, transportation, finance, agriculture).

– Transition planning is a valuable tool as governments look to organize economy-wide net zero transition. However, we need to be aware of risks that multiple rules can create friction or redundancy.

– Across all types of transition planning—corporate, national, and sectoral—we should be mindful of good practices such as: pairing disclosure with transition planning to enhance transparency and accountability; using third party verification and assurance to improve the data underpinning transition plans; and mainstreaming transition planning into spending (i.e. public and private procurement).

Ashleigh Lee, City of London, UK Transition Finance Market Review​

– Companies and governments will require credible transition finance to deliver on decarbonisation commitments and meet Paris Agreement goals.

– The UK is uniquely positioned to become a leading hub for the transition finance market and use its leadership position for financial and professional services to accelerate the global transition. McKinsey & Company estimate that enabling the net-zero transition could bring in £1 trillion to UK businesses by 2030.

– The UK’s Transition Finance Market Review (TFMR) provides a framework to scale the market for transition finance in the UK and globally. Central to the findings of the Review are recommendations on how to unlock the required levels of finance by creating the right policies, pathways and signals for investment through collaboration between government, investors, business and civil society.

– Key recommendations of the Review include:

a) National sectoral transition planning and policy certainty: Scaling transition finance will require a greater level of granularity in sectoral transition pathways, greater collaboration with industry, and a greater level of coordination across government. The Review recommends a commitment to resourcing the Net Zero Council to deliver this granularity.

b) Catalytic capital and activity-level de-risking: Reaching commercial maturity for emerging transition activities will require effective policy, catalytic public capital, and public-private innovation. The Review recommends establishing a Transition Finance Lab to develop and test targeted financial solutions to tackle these challenges.

c) Transition planning and the supporting ecosystem: To move towards general-purpose transition finance predicated on a credible transition plan, the Review recommends mandatory Transition Plan Taskforce-aligned transition plan development and disclosure, and an evolution in the supporting data, assessment, verification, and assurance of transition plans.

d) Embedding credibility and integrity: The Review adopts a Transition Finance Classification System and proposes Guidelines for Credible Transition Finance. A principles-based approach to transition finance aids coalescence around core elements whilst enabling sufficient flexibility in other markets including emerging markets and for SMEs.

e) Delivering a roadmap for transition finance: Establish a Transition Finance Council to ensure delivery of the Review’s recommendations, as well as supporting capacity building, collaboration, and coordination.

For more information on any of the topics listed above, or to find out more please email the LSA manager Camilla on [email protected].