The Glasgow Financial Alliance for Net Zero (GFANZ) has released guidance for large and small companies to support them in disclosing their climate transition plans, as it is revealed only 30% of companies reporting climate data have a decarbonisation plan in place.
GFANZ, the coalition of more than 500 financial institutions committed to transitioning the economy to net zero, has released the Expectations for Real-economy Transition Plans report, which outlines how firms can create their own plans including setting objectives and priorities, how to align businesses and operations with these and information on engagement strategies to influence others such as third parties in supporting its transition.
It also explains how companies can set quantitative goals against which to measure their progress and offers guidance from a governance perspective on how to ensure staff have the correct skills and training, and incentives to support the implementation of the transition plan.
GFANZ flagged the “lack of consistent frameworks” for climate transition plans as a barrier for businesses to accelerate towards net zero. It estimated just 30% of companies disclosing climate-related data to CDP are developing a low-carbon transition plan and only 1% of these companies reported all key indicators associated with a credible transition plan.
The report highlighted, however, this is not another framework but guidance to navigate existing frameworks. It has drawn upon the Task Force on Climate-related Financial Disclosures, CDP, Science Based Targets initiative and the Transition Pathway Initiative Carbon Performance for its guidance as well as using assessment tools from Assessing Low Carbon Transition, Climate Action 100+, and the Transition Pathway Initiative Management Quality.
Mary Schapiro, vice-chair of GFANZ, said: “A global net-zero economy transition requires financial institutions and real-economy firms to work from a common set of expectations. Ensuring companies know what financial institutions deem credible underpins the essential work driving emissions reductions. GFANZ is providing the blueprint for the real-economy to transform net-zero commitments into a business-aligned decarbonisation strategy.”
GFANZ has itself faced recent scrutiny, when in June the UN’s Race to Zero initiative tightened its criteria, resulting in calls for GFANZ to require its members to comply with the new requirements.
