UK government urged to make mandatory climate plans for businesses workable

Leading global accountancy body ACCA is calling on the government to ensure that rules governing plans by business to help to hit UK climate goals are realistic.

The government is gathering views on implementing mandatory transition plans for UK-regulated financial institutions and FTSE 100 companies to meet the Paris Agreement. Responding to the consultation from the Department for Energy Security and Net Zero (DESNZ), ACCA says credible, forward-looking transition plans help businesses align with national climate goals and strengthen market confidence.

They could attract investment into future-focused industries critical to the UK's long-term economic resilience and competitiveness, helping businesses and investors seize the opportunities presented by the net zero transition. This would help achieve the UK's ambition to become a clean energy superpower.

Maggie McGhee, Executive Director -Strategy and Governance, ACCA, said: 'ACCA recognises the urgency of addressing the climate emergency and supports the need for swift action. However, transition plan requirements must reflect market realities, including current talent and skills shortages, as well as the potential impacts on the UK's market competitiveness and investment attractiveness.

'To be effective, these requirements should strike a balance: encouraging meaningful organisational change without imposing disproportionate administrative burdens, particularly where the costs of compliance may outweigh the benefits.'

ACCA does recognise that businesses are facing increasing demands from investors, regulators, and other stakeholders for clear transition-related disclosures. Investors need relevant, comparable, consistent, and decision-useful information about companies and their management of climate-related risks and opportunities to be able to assess their exposure and effectively allocate capital.

Glenn Collins, Head of Technical Advisory and Strategic Engagement, ACCA UK, said: 'DESNZ should adopt a proportionate approach, particularly in relation to SMEs and entities in emerging market and developing economies (EMDEs). SMEs play a vital role in the net zero transition but face growing regulatory and reporting pressures. Recognising these differences is important to avoid creating unintended barriers and to promote inclusive participation in the global transition.'

ACCA is calling on the government to pursue organisational change without imposing disproportionate administrative burdens where the costs of compliance outweigh the benefits.

ACCA response is here

Government consultation is here