The UK government published a package of consultations on transition planning, sustainability reporting and assurance on 25 June. Together, they represent “the first phase of consultations to modernise the UK’s sustainable finance framework”.

With an overarching objective of “developing a UK sustainability reporting framework that is fit for the long term”, the consultations cover:

• The draft UK Sustainability Reporting Standards (UK SRS), based on the International Sustainability Standards Board’s (ISSB) IFRS S1 and S2;
• developing an oversight regime for assurance of sustainability-related financial disclosures; and 
• climate-related transition plan requirements.

These are highly interconnected consultations and ICAEW will be considering them as a whole and will seek to engage ICAEW members in developing its responses. The sustainability team will be leading on climate-related transition plan requirements, issued by the Department for Energy, Security and Net Zero (DESNZ). 

The UK government made a manifesto commitment to mandating UK-regulated financial institutions (including banks, asset managers, pension funds and insurers) and FTSE 100 companies to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement. 

At the heart of this is securing the UK’s security and economic prosperity. The consultation notes that net-zero sectors grew three times faster than the overall UK economy in 2024 and that: “The prime minister’s mission to make Britain a clean energy superpower is about harnessing its potential not just to increase our energy security, but also to create jobs, boost exports and drive economic growth.”

To deliver on this mission, the government needs to unlock £130bn a year to 2050, to meet its net-zero target. A collaborative effort across the economy, government and regulators will be necessary to create the policy and legal frameworks for the transition – the guardrails to support this investment. 

The consultation notes: “An important objective of this work is to deliver decision-useful and credible information about sustainability and climate-related financial risks and opportunities to investors. This is also fundamental to building and promoting secure and sustainable growth.” 

Transition plans will be an important plank in this, helping businesses and providers of capital to seize this opportunity. 

The consultation seeks views on how the government should take forward this commitment while meeting four key objectives:

• supporting an orderly transition;
• enabling providers of capital to receive decision-useful information;
• maintaining the UK’s position as a global financial centre and supporting growth in the financial services sector;
• capturing the opportunities of the transition.

The consultation also notes that transition plans are core to maintaining the UK’s position as the green finance capital of the world. The Financial Services Sector Plan as part of the Industrial Strategy is due to be published on 15 July and part of this, as with the overarching Industrial Strategy, is the need for skills development, including green skills to support the transition – a key thread throughout. ICAEW is supporting the sector through the Sustainable Finance Education Charter, the key mechanism for disseminating green and sustainable skills throughout the economy. 

The consultation also explores taking forward the recommendations of the Transition Finance Market Review and the use of the Transition Plan Taskforce (TPT) framework. 

ICAEW has been a longstanding supporter of transition plans, having been represented on both the steering and delivery groups of the TPT and we are pleased to see the government progressing with mandating transition plans. 

Transition planning not only helps with decarbonisation efforts, but leads to stronger business resilience by enabling businesses to think holistically about the risks and opportunities relating to climate change and the transition to net zero ultimately unlocking investment in the transition.

 Richard Spencer, Director of Sustainability at ICAEW, welcomes the consultation, noting: “Transition planning is not simply a reporting framework, but a strategic tool allowing organisations to adequately evaluate risk and opportunities posed by the transition, and transparently showcase to stakeholders their plan to achieve net zero. By mandating transition planning, this will improve decision-useful information dissemination into markets and will help to unlock transition finance across the economy.”

The DESNZ consultation closes on 17 September 2025. ICAEW will be responding to all three consultations. We’d be very pleased to hear from you; comments can be emailed to sarah.reay@icaew.com.