‘Inaction is not an option’: EY warns only fraction of FTSE 100 firms have ‘credible’ net zero strategies in place
Over 95 per cent of large UK firms have yet to disclose detailed net zero transition plans despite looming regulations that are set to make such strategies mandatory
Just a fraction of large companies in the FTSE 100 have disclosed detailed plans for how they intend to achieve net zero emissions, despite growing political and regulatory pressure that is likely to soon make such plans mandatory in the UK.
That is the headline finding of fresh analysis released today by consulting giant EY, shows 95 per cent of FTSE 100 firms have still yet to publish net zero transition plans, despite most of them having set their sites on achieving the goal before 2050, and a UK government consultation expected later this year on making such plans mandatory.
The UK government originally said in 2021 that all large UK businesses would need to publish transition plans by 2023, setting up the Transition Plan Taskforce (TPT) to draw up a draft disclosure framework to assist companies in doing so. However, the timeline for implementation has since been pushed back, with a consultation now expected later this year on making such plans mandatory when the TPT framework is finalised.
Even so, draft TPT guidelines that have already been released set out standards for corporate transition plans to be deemed “credible, useful and consistent”, and EY’s analysis suggests that – as of the end of January 2023 – only a fraction of FTSE 100 firms have delivered plans that make the grade, despite more than 80 per cent having made public commitments to achieving net zero by 2050.
While 78 per cent of FTSE 100 companies have disclosed “partially-developed” plans, which include public targets to achieve net zero emissions by 2050, it notes that they have not adequately outlined how they will reach these targets, and are therefore missing key TPT draft framework requirements around strategy and execution.
The analysis also found that 17 per cent of FTSE 100 firms are still in the stage of setting targets and are yet to publicly disclose any actionable plans.
Overall, just five per cent of FTSE 100 businesses analysed had disclosed plans which EY said were “sufficiently detailed” to meet the TPT Framework guidance and have started to put these plans into action. Yet even these firms still have more work to do if their transition plans are to be considered fully TPT-compliant, it warned, noting in particular common gaps in areas such as financial planning or the definition of financial metrics and targets.
Rob Doepel, EY managing partner for sustainability in UK and Ireland, noted that while the government has previously said that listed companies should be expected to publish their transition plans this year, a final date had still yet to be confirmed. By setting a deadline, however, he said the government could provide much-needed certainty to the UK’s largest businesses and send a clear message that “inaction is not an option”
“The TPT’s draft framework offers vital guidance around developing detailed, ambitious transition plans, but currently just a handful of the UK’s largest businesses appear to be on track,” Doepel explained. “Businesses should now be clear about what credible, detailed plans need to look like, and should have a good idea about the direction regulation is moving in. 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.”
In related news today, WWF has launched a digital information hub in a bid to encourage sustainable practices among businesses in central and Eastern Europe, by providing actionable insights on the leading practices relevant for selected industries.
Dubbed ‘The Future of Business’, the online platform is freely accessible an designed to provide actionable insights on the leading sustainability practices across various industries.
The charity stressed that businesses were “critical in the fight against climate change and biodiversity loss”, citing research by Generation Investment Management which found that listed companies account for 40 per cent of all climate-warming emissions.
“All businesses are strongly incentivised to do their utmost to cut emissions within their own operations and in their supply chain,” said Irene Lucius, regional conservation director, WWF Central and Eastern Europe. “Companies invest in ecosystems health, communities drive innovation and nature is finally being seen as an essential element in this equation. That is how I would like to imagine the future of business in our region and beyond.”
