Investors wanting more on corporate climate transition plans


Investors wanting more on corporate climate transition plans

80% of UK investors are having regular discussions on net zero transition plans with their clients, with many encouraging businesses to create bolder and more ambitious climate targets. 

The new study from Lloyds Bank Corporate & Institutional explored the insights of decision-makers at institutional investors responsible for managing more than £100 million of assets. The study involved the thoughts of 100 executives at major corporations with annual revenues exceeding £100 million.

Many investors are ready for the next UK Government to mandate the production of transition plans by larger corporations in high-emitting markets. This mandate was initially discussed by Chancellor Rishi Sunak in 2021. Over 80% of investors surveyed said talks on transition plans are more common in discussions with corporates. Nearly 60% of investors believe assessing a corporate investment plan is critical in determining whether to support an organisation. Over 50% of the surveyed believe that businesses with bold climate targets and detailed transition plans will create a competitive advantage. Investors are actively looking for transition plans from corporates in high-emission and hard-to-abate industries such as oil and gas, mining and manufacturing. Transition plans go further than focusing on emission targets. The Transition Plan Taskforce (TPT) framework for delivering a ‘Gold Standard’ plan recommends that companies must disclose climate-related risks, transition opportunities, investment measures for low carbon technologies and impacts on employees and other factors.

The Gold Standard was released last year, and earlier this year the TPT announced a sector-focused guidance. Without these modern and more targeted measures, businesses found it difficult to create reliable transition plans, with many failing to measure the risks and opportunities across several future scenarios.

In the Lloyds survey, nearly 75% of corporates stated that the level of detail and boldness of targets within a transition plan aligns with investor expectations. However, 60% of investors said they believe their corporate clients could be more ambitious if they were not concerned about being considered for greenwashing or missing emissions targets.

Scott Barton, the MD and head of corporate coverage of Lloyds Bank, explains that through client conversations and their research, it’s clear there is a balancing act between creating realistic targets and having ambitious plans to deliver a sustainable future. While every business varies, Barton hopes their research will highlight some of the challenges that businesses face, opening up a dialogue to determine the enablers to enhance transition plans with solid actions to support net zero goals.

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