CLLS Planning & Environmental Law and Company Law Committees' response to DESNZ Consultation on Climate-related transition plan requirements

The CLLS supports the government's ambition to develop transition plan requirements so that investors and banks in particular can access decision-useful information on companies' plans regarding their transition to net zero.

Although there are a number of practical challenges associated with developing transition plans including concerns about the cost of producing them, these should be considered in the context of the opportunity cost where companies do not develop transition plans. The costs of adaptation where there have been few or inadequate plans to mitigate corporate GHG emissions are likely to significantly exceed the costs likely to be involved in developing and updating a transition plan.

A broad area for concern, and one that is often overlooked, is the quality of existing data on GHG emissions, which some consider remains inadequate to support capital allocation decisions owing to the use of estimates. If requirements to produce transition plans are to result in information that is useful to investors and banks, a focus is needed on improving data quality. Another key issue that CLLS wishes to highlight is the need to build cross-party consensus for transition plan requirements.