Transition plan mandates for climate-related activities
UK Government Announces Consultations to Boost Sustainable Finance and Align with Paris Agreement Goals
The UK government has launched a series of consultations aimed at enhancing transparency in sustainability reporting, and mandating financial institutions and FTSE 100 companies to develop and disclose credible transition plans aligned with the 1.5°C temperature goal of the Paris Agreement.
The consultations form part of the first phase of modernizing the UK's sustainable finance framework, which is designed to drive the UK's net zero by 2050 target, secure its status as a global green finance hub, and support an orderly transition to a low-carbon economy.
Key elements of the plan include mandatory disclosure and credible development of climate transition plans that align with the Paris Agreement’s 1.5°C goal, incorporating strategies for net zero by 2050, climate resilience, and nature-positive outcomes. To ensure transparency for investors and the public, robust reporting requirements are proposed, potentially on a three-year cycle, using standardized sustainability reporting frameworks such as the UK Sustainability Reporting Standards (UK SRS) and guidance from the Transition Plan Taskforce (TPT).
The government aims to support an orderly transition that balances legal accountability with flexibility, addressing the complexities and potential legal risks companies may face when fulfilling their transition commitments. The initiative is also intended to strengthen the UK’s competitiveness and growth prospects in sustainable finance by positioning its financial services industry as a global hub for green investment.
The consultations, which were launched on June 25, 2025, seek input from stakeholders on the practical implementation of these transition plans, including their content, reporting cadence, and assurance possibilities. The consultation remains open until September 17, 2025, after which the government and the Financial Conduct Authority (FCA) will formalize regulatory expectations and possibly extend requirements to include listed companies and asset managers.
In addition to these consultations, the Department for Business and Trade has published consultations on UK sustainability reporting standards and assurance of sustainability reporting. The Department for Energy Security and Net Zero has also published a consultation on voluntary carbon and nature markets, which is closing to responses on 10 July 2025.
The Mansion House 2024 initiative, which aims to enhance the competitiveness of the UK's financial services sector, is also part of this modernization effort. The government's plan aims to support companies in capturing opportunities from the global net zero transition, while maintaining the UK's status as a global financial hub.
The International Financial Reporting Standards (IFRS) has resources for a Transition Plan Taskforce, which may provide further guidance on the practical implementation of the UK's sustainable finance framework. The consultations do not specify a closing date for responses, and have been published alongside other related initiatives.
By mandating alignment with climate goals, promoting transparency, corporate opportunity through sustainable growth, and international interoperability within the evolving global climate finance landscape, the UK's approach seeks to enhance the competitiveness of its financial services industry and maintain its status as a global financial hub.
- To support the ambitious goal of becoming a global leader in green finance and achieving net zero emissions by 2050, the UK government is considering extending the requirements for climate transition plans to include listed companies and asset managers, as part of its sustainable finance modernization efforts.
- In order to strengthen the UK's position as a hub for green investment and ensure a transparent, orderly transition to a low-carbon economy, the government is seeking input on robust reporting requirements and the practical implementation of climate transition plans, including their content, reporting cadence, and assurance possibilities, within the context of environmental-science, finance, business, and climate-change.
