UK Government explores routes for UK transition plan requirements

What does this mean?

The consultation explores a modular framework for implementing transition plan requirements in the UK, as part of broader non-financial reporting reforms. The Government indicates that the proposals could be phased or combined and that any framework must balance ambition, proportionality and international interoperability. 

The consultation also highlights Department for Work and Pensions (DWP)-led work in 2025 to assess the feasibility of transition plan requirements for large pension schemes.

Scope of proposals

While the original manifesto commitment focused on UK-regulated financial institutions and FTSE 100 companies, the consultation proposes expanding scope to economically significant firms. SMEs are not expected to be in scope. It also notes the potential supply chain effects, as large firms may require input from smaller entities.

To support capital markets, the consultation seeks views on how requirements can preserve UK competitiveness and avoid deterring listings or international investment.  

Disclosure options

Two options are presented to increase transparency and comparability in transition planning:

• Option 1: ‘comply or explain’ disclosure

Firms would state whether they have a UK SRS-aligned transition plan and explain if not. There would be no obligation to prepare or publish a plan. This would be a transitional step intended to promote transparency while giving firms time to build capacity.

• Option 2: mandatory transition plan disclosure 

Firms would be required to develop and disclose a transition plan, potentially including a standalone version every three years, aligned with UK SRS and the Transition Plan Taskforce (TPT) framework. The Government is also seeking views on whether future requirements should apply a financial materiality lens or take a broader approach, such as incorporating impact materiality. This option would improve consistency and support investor decision-making but may raise compliance costs and must align with broader UK non-financial reporting reforms.     

Mandated implementation of transition plans

This proposal explores a legal requirement for firms to deliver on their transition plans. This aims to close the gap between target-setting and credible delivery strategies. Plans would need actions, governance, resourcing and timelines.

The consultation also explores legal risks, including liability for non-delivery, and seeks views on how accountability could be designed proportionately.

Alignment with strategic climate and environmental goals

The Government is exploring whether and how transition plans should align with national and international climate and environmental goals.

Net zero by 2050 alignment

Views are sought on whether firms should align with the UK’s net zero pathway and how this should apply in hard-to-abate sectors and emerging markets. Design approaches under consideration include: 

• requiring firms to disclose how their plans are aligned to net zero by 2050, including setting interim targets 

• mandating the development and disclosure of transition plans aligned to net zero by 2050, including setting interim targets aligned to 1.5°C pathways 

• requiring the development, disclosure and implementation of plans aligned to net zero by 2050, including setting interim targets aligned to 1.5°C pathways.

Climate adaptation and resilience

The consultation invites feedback on the integration of climate adaptation within transition plans, focusing on how companies address physical climate risks and build long-term resilience. It seeks insights into the current use and effectiveness of 2°C and 4°C climate scenarios in informing risk assessments and strategic planning. The Government also asks for feedback on what steps it could take to support and improve climate adaptation and resilience planning in a proportionate manner.

Nature-related alignment

While no immediate requirements are proposed, the consultation explores how nature-related targets could feature in future transition plans, aligned with the Environment Act 2021 and global biodiversity frameworks. For example, integrating nature transition disclosure frameworks, developing sector-specific ‘nature positive’ pathways for high-impact sectors, supporting efforts to close nature-related data gaps, providing guidance for companies, or exploring potential regulation or other policy measures.

Other legal and policy considerations

• As transition plans often depend on estimates, assumptions, and third-party data beyond a company’s control, views are requested on the legal risks of publishing such information and whether legal changes may be needed to support transition plan disclosures (and forward-looking information)

• The Government is considering the interconnectedness of transition planning with other policies and frameworks, such as national net zero frameworks, voluntary carbon and nature markets, and related international policy and regulatory developments

• The consultation seeks input on the guidance, support, and capacity-building measures that would best assist companies with effective transition planning, as well as the key barriers to developing or publishing a transition plan.

What do firms need to do?

The proposals in this consultation, if taken forward, could materially shift expectations around transition planning in the UK. The extent of this shift will depend on the implementation route adopted and the specific requirements companies may face following the introduction of UK SRS S2, which sets out climate-related disclosure requirements aligned with the ISSB standards. UK SRS S2 is expected to go beyond the current TCFD requirements.

This is a key opportunity for firms to help shape the UK’s transition plan disclosure framework. They should review the consultation and consider responding directly or through relevant industry groups.

Alongside this, firms should assess their current approach to transition planning, considering the implications of the proposals, broader commercial drivers and the opportunities transition plans offer for value creation and preservation.

For firms with only high-level climate targets, this may involve laying the foundations for a more detailed plan or developing a clear rationale if a 'comply-or-explain' model is adopted.  Where plans are more advanced, firms should assess alignment with the proposed UK SRS S2 and relevant frameworks such as the TPT Disclosure Framework, the IFRS Foundation guidance or guidance developed by the Glasgow Finance Alliance for Net Zero. They should also evaluate whether plans are actionable, integrated into business decision-making and supported by effective governance, timelines and resources.

Firms should continue to monitor international developments and consider the interoperability of global regulatory regimes to inform a strategic approach to meeting their obligations.

Next steps

The consultation closes on 17 September 2025 and the Government expects to set out policy proposals in autumn 2025.  A roadmap outlining any future requirements will be published in subsequent phases of consultation.

The FCA is expected to consult on applying UK SRS and transition plan disclosures to listed companies in Q3 2025.

The DWP plans to undertake a review of the Climate Change Reporting Regulations in 2025. The Pensions Regulator has been asked to assess the practicalities of implementing transition plans for pension schemes - findings to be presented to DWP later in 2025.