Why Net Zero Transition Plans are Important
Navigating the path to a sustainable future is becoming increasingly crucial for businesses, especially in the UK. With the government’s impending 2023 rules, the importance of having a clear ‘net zero transition’ plan is undeniable.
From understanding the intricacies of climate transition and its related emissions to adapting to the imminent changes for UK businesses, companies are advised to take proactive steps now. MJ Kane’s team are dedicated to helping businesses navigate these new requirements whilst maintaining a focus on tax planning.
- Understanding Climate Transition: It’s important for companies to know what climate transition means and the different types of emissions involved.
- UK Business Changes: Transition plans will be needed for UK businesses starting from 2023. Companies without a plan might face consequences.
- Steps to Prepare: There are seven actions businesses can do now for their green journey.
UK Government’s Commitment
The UK Government wants to make the finance world net zero by 2050. During a big meeting called COP26, they said that by 2023, big UK businesses and some finance groups should share their green plans.
What the Government Said at COP26
The UK is working on rules for companies to show clear net zero transition plans on how they will go green. This will be for big investment managers, big asset holders, and UK public companies. Many might share their plans before 2023 because of pressure from shareholders and investors.
What’s a Climate Transition Plan?
It’s a company’s plan to reduce harmful air gases. It should have:
- Goals for reducing these gases.
- Steps to achieve these goals by 2050.
- Details on direct and indirect gases from company activities, including three types of emissions.
Understanding Emission Types
There are three kinds of emissions:
- Scope 1: Gases a company makes directly.
- Scope 2: Gases made from the energy a company uses.
- Scope 3: Gases from a company’s suppliers, investments, and product users.
What to Include in the Net Zero Transition Plan
A good plan should have:
- Big goals to reduce the risk of climate change.
- Clear steps to reach these goals and how to pay for them.
- Ways to check and share the plan’s progress.
The Net Zero Transition Plan Taskforce (TPT)
The UK set up a group in 2022 to show companies a top-quality plan. This group shared their advice in November 2022, which people can give feedback on until February 2023. The final advice will come in summer 2023.
Rules on Sharing Plans
The UK’s money rules group, the FCA, will check the new rules. Companies without a plan will have to say why.
Making Your Net Zero Transition Strategy
Having a net zero transition plan will affect how people see a company’s green promise. So, it’s important to make a plan now. Here are seven steps to help:
- Know your gas emissions and how to lower them.
- Match your company goals with your green goals.
- Make a strong case for your green goals.
- Make sure important people in your company agree.
- Find the money needed for your green changes.
- Set up ways to check and share your plan’s progress.
- Share the plan.
In the end, the push for companies to help the world go net zero by 2050 will grow. Now is a good chance to lead in the green change and make your brand look good.
Sharing a Net Zero Transition green plan before the UK Government’s 2023 rule is a chance to lead in being green. Your plan should have your goals to lower harmful gases and the steps to do it. MJ Kane’s team are dedicated to helping businesses navigate these new requirements whilst maintaining a focus on tax planning.