International practices in climate transition plan reporting: lost in translation?

Disclosing transition plans to meet future net zero climate targets requires organisations to fundamentally move beyond traditional historical-oriented stewardship reporting towards forward-looking accountability to meet their obligations to their future shareholders and stakeholders. However, despite a range of varying requirements concerning disclosure of climate-related targets to meet the Paris Agreement, confusion remains over the appropriate form, content and standard of transition plan disclosure that are required to implement these targets. The former UK based Transition Plan Taskforce set out globally leading requirements for transition plan reporting in 2023, however the extent to which these recommendations have since been implemented has not yet been comprehensively analysed. This paper summarises the key differences between UK, European and International guidelines for transition plans and then discusses the results of an analysis of variations in transition plan reporting practices by a sample of globally large financial and industrial organisations. It is predicted that a combination of both firm-level climate risk and country-level institutional factors are associated with the propensity to produce public transition plans. The empirical results are largely supportive of these predictions. Firms with greater levels of engagement with climate risk (as proxied by the CDP score), and UK and-or EU based firms, are more likely to produce climate transition plans. The empirical results are corroborated by qualitative analysis, which compares examples of good practice transition plan reporting by a sub-sample of firms within each industry sector. It is concluded that the resulting lack of clarity by regulatory authorities, and diversity in transition plan reporting practices by globally large financial and industrial firms, may potentially result in confusion and a lack of informed decision-making by their stakeholders and policymakers concerning climate-related resilience and risk mitigation actions.