Glasgow Financial Alliance for Net Zero offers companies transition plan guidance

Guidance to help companies report their net-zero transition plans more completely and consistently was released Thursday by the Glasgow Financial Alliance for Net Zero.

GFANZ is a practitioner-led, global coalition of more than 500 member firms from the financial sector and sector-specific industry alliances working to address climate change.

GFANZ’s Expectations for Real-economy Transition Plans report covers components that companies need to disclose about their transition strategies to enable financial institutions to assess those plans and support the efforts. Real economy refers to economic activity outside of the financial sector.

The report cites several data points showing the need for better reporting. Among companies reporting climate-related data to global disclosure organization CDP, just 30% are developing a low-carbon transition plan and only 1% of those reported all key indicators of a credible transition plan, CDP said. Only 40% of companies disclosing under the Task Force on Climate-related Financial Disclosures reported on the impact of climate change on business strategy and financial planning, according to a TCFD 2021 status report.

“Many companies are pledging to cut emissions, but very few have an actual transition plan to deliver on those pledges. And companies need much clearer guidance to do that,” GFANZ Principal David Schwimmer, CEO of the London Stock Exchange Group, said in a news release on the report.

The GFANZ guidance builds on existing transition plan guidance and frameworks that companies may already use, and can help companies understand the information and data that global financial institutions will need to evaluate the credibility of their strategies and measure their progress towards net-zero goals, the report said.

Mary L. Schapiro, vice chairwoman of GFANZ, said in the release that having a common set of expectations and ensuring that companies know what financial institutions deem to be credible “underpins the essential work driving emissions reductions.”

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