The UK is moving transition planning from a voluntary leadership practice to the beginnings of a formal regime. At London Climate Action Week, the government launched a consultation on climate-related transition plans, building on its commitment to require UK-regulated financial institutions and FTSE 100 companies to develop and implement credible plans aligned to a 1.5°C pathway.
Two signals matter for executives: first, the government notes that over 70% of FTSE 100 companies already do some form of transition planning – so expectations are shifting from “should we?” to “how credible is it?” Second, the consultation is explicitly positioned as part of a broader sustainable finance package (UK Sustainability Reporting Standards and assurance), with the consultation window currently set to close 17 September 2025.
What the consultation is really trying to solve
The policy intent is not simply more reporting. It’s about creating transition plans that:
- support an orderly transition aligned with global climate goals,
- improve investor transparency and capital allocation,
- help companies seize net zero opportunities, and
- keep the UK framework internationally competitive – while also aligning to a stated aim of reducing regulatory compliance costs.
What may change for companies
1) A higher standard for “what counts” as a transition plan
The consultation draws on the Transition Plan Taskforce (TPT) framework (now hosted under the ISSB umbrella) as a “gold standard” reference point.
In parallel, it links transition planning to the wider direction of travel in reporting standards – where IFRS S2 requires disclosure of transition plans when an entity has one, and the UK is consulting on UK versions of ISSB standards (UK SRS).
Implication: many organisations that have “a plan” will need to upgrade it into a decision-useful, comparable, investor-grade plan.
2) A likely move from “plan disclosed” to “plan governed – and possibly implemented”
The consultation asks whether requirements should simply mandate development and disclosure, or adopt a “comply or explain” model.
It also discusses design questions around implementation obligations, including how to avoid creating undue legal risk for firms acting in good faith – while still ensuring any implementation requirement has real force.
Implication: governance and evidence will matter more than glossy narrative – because scrutiny shifts from intention to execution.
3) Increased need for coordination across regulators and reporting channels
The government signals coordination with the FCA so disclosure requirements align.
It also frames transition plans as relevant for a range of market users and regulatory functions (investors, prudential supervisors, securities regulators), reflecting why consistency and comparability are a core objective.
Implication: firms should expect transition planning to intersect with financial reporting, risk management, and assurance – not sit as a standalone ESG document.
How leaders can get ahead now (without waiting for final rules)
Instead of starting with “what will the regulation say?”, high-performing organisations start with a practical question:
Could our transition plan survive external challenge – investor, regulator, or auditor – based on the evidence we can show today?
A strong transition plan usually has five “credibility anchors”:
- Governance that is decision-grade. Clear board oversight, named executives accountable for delivery, and an internal cadence that ties climate priorities to capital allocation decisions.
- A strategy with explicit trade-offs. Where to play, what to exit, what to fund – linked to the business model and value creation logic (not just emissions targets).
- A delivery roadmap that looks like an operating plan. Milestones, dependencies, capability build, and sequencing – so the plan reads like execution, not aspiration.
- Metrics and targets that are usable in management routines. Not only long-term targets, but near-term indicators that show whether the plan is on track.
- A financing and capital story. How the plan is funded, how risk is managed, and how it affects competitiveness (including cost of capital narratives – explicitly referenced as a potential benefit of transition planning).
A quick readiness sprint you can run in 4–6 weeks
Week 1: Plan reality check. Benchmark the current plan against TPT-style expectations (governance, strategy, implementation, metrics, assumptions).
Weeks 2–3: Evidence and gaps. Build an “evidence register”: what data and decisions support each key claim (capex, operational changes, supplier strategy, product changes).
Weeks 4–5: Implementation wiring. Put the plan into the operating model: decision rights, reporting cadence, and integration with finance planning and risk management.
Week 6: Disclosure and assurance readiness. Prepare the plan to be read externally: consistency, traceability, and what can be assured – aligned to the broader UK consultations on sustainability reporting and assurance.
