The UK’s ambition to be a global hub for green and transition finance depends on credible, comparable transition plans that unlock investment, manage risk and maximise economic growth. Getting the UK’s transition plan requirement right is a strategic economic opportunity, not just a disclosure exercise.
Green and transition investment is a transformative opportunity. The UK’s net-zero economy grew by 10% in 2024 – three times faster than the overall economy – generating £83 billion in gross value added (GVA). With over $2 trillion invested in global clean tech in 2024, the transition to a cleaner economy could boost GDP up to £149 billion per year and drive a £104 billion increase in inward investment by 2040. Introducing an ambitious transition plan requirement would bring the UK back into the global race to attract this investment.
The UK is in a global competition to lead on net zero and to secure the economic benefits from leadership. London is already an international hub for financial product innovation, with financial and related professional services exports totalling £158 billion in 2022, or 22% of UK’s export income. The IEA estimates the cumulative amount that could be supported by transition finance in the next decade to be between $4 trillion and $5 trillion. The UK is well placed to capture the financial and professional services associated with this. Transition plans are crucial to aligning private sector investment and financial markets with the government’s target.
However, the UK risks being left behind as other jurisdictions move further, faster. Delivery of Labour’s 2024 manifesto commitment on transition plans is key to staying ahead of the pack. A high ambition approach would increase the UK’s global competitiveness and secure its share of the high growth transition finance market. If the UK does not maintain momentum and implement ambitious regulation on transition planning, it risks losing its leadership position and market confidence in its transition finance potential.
Recommended actions for ministers
- Set a clear timetable for implementing the manifesto pledge on transition plans.
- Confirm application of the UK Sustainability Reporting Standards (UK SRS) and transition plan requirements beyond listed companies, including large private firms.
- Embed the core design elements – develop, disclose, align and implement – within an ambitious, interoperable transition plan requirement.
- Ensure continuity of market signalling during the regulatory transition to allow corporates and investors to plan with confidence.
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