Back in June, the Energy Secretary Ed Miliband outlined plans to support banks and large companies in developing climate transition plans – a move he said could help to “unlock billions in clean energy investment” and accelerate green economic growth.
The UK is consistently ranked first in the world for sustainable finance, and 70% of FTSE 100 companies have already voluntarily developed many of the key elements of a transition plan. Now, the government is moving to formalise those efforts.
Three consultations are currently underway to make the UK ‘The Sustainable Finance Capital of the World’:
1 – Mandatory climate-related transition plan requirements for large companies and financial institutions.
- It requires those in scope to develop, disclose and, potentially, implement credible transition plans aligned with the Paris Agreement’s 1.5 °C target and the UK’s net-zero 2050 goal.
- Explore the option of a “comply‑or‑explain” model where entities would explain why they have not published a plan or require mandatory disclosure, separate from annual reporting.
- Address gradual expansion of scope, potentially including larger non-financial corporates deemed to be “economically significant.” SMEs are not expected to be formally required to comply, though they may be indirectly impacted via supply chains.
- Align with existing frameworks such as the UK Transition Plan Taskforce’s standards and the draft UK Sustainability Reporting Standards (UK SRS).
- Prioritise a proportionate regulatory burden by assessing the cost versus market benefits, aiming to unlock private capital while maintaining global competitiveness and transparency for investors.
2 – New UK Sustainability Reporting Standards, designed to improve the quality and consistency of sustainability disclosures.
These drafts build on the global ISSB standards (IFRS S1 and S2), with six carefully scoped amendments tailored for UK applicability, such as transitional relief tweaks and alignment sequencing.
The consultation seeks feedback on both the drafts themselves and the likely costs and benefits of adopting them. The aim is to gather evidence that will inform whether these standards should become mandatory for economically significant entities in future rule updates.
If finalised, the UK SRS are expected to be published by autumn 2025, initially on a voluntary basis. Subsequent consultations, led by the UK Government and the FCA, will explore whether adoption should become compulsory for listed companies and other relevant large businesses.
3 – A voluntary assurance regime for sustainability reporting.
This consultation is focused on how sustainability-related financial disclosures should be assured. This follows last year’s Financial Reporting Council (FRC) market study, which highlighted demand for stronger oversight in the assurance market.
The paper proposes that the newly established Audit, Reporting and Governance Authority (ARGA) take responsibility for operating a voluntary registration regime for third-party assurance providers auditing sustainability disclosures. This regime would identify accredited firms capable of verifying reporting aligned with UK Sustainability Reporting Standards (UK SRS), European standards (ESRS), or other frameworks consistent with international norms.
All three consultations are open until 17th September 2025 and are aimed at institutional investors, corporates, financial institutions, and reporting bodies to help shape how sustainable finance will be regulated and implemented across the UK.
To put the scale in perspective, analysis from the Department for Energy Security and Net Zero (DESNZ) using Bloomberg (BNEF) data showed that global investment into low-carbon sectors reached £1.6 trillion in 2024. The UK’s share of that total accounted for 1.8% of national GDP, the second highest among G7 countries.
These are big ambitions, and our take on it is finance team will be responsible for turning these transition plans into something actionable and accountable
Transition Plans: What’s Yours?
ESG is becoming a core part of business strategy. Transition planning is now about putting together a realistic, costed and measurable roadmap to net zero. Regulators, investors and stakeholders want to see how businesses are going to get there, and those plans need to stand up financially.
That means finance teams will be the ones working out how much capital it’ll take to make low-carbon changes happen. They’ll need to model risk across the supply chain, factor in climate-related disruption and build that into the wider forecasting picture. Investment decisions will need to make sense not only commercially, but in terms of sustainability too.
And when it comes to reporting, businesses will be relying on their finance teams to pull it all together in a way that’s consistent, accurate and clear.
What The Consultations Signal for Finance
The three government consultations send a clear message about the future of sustainable finance in the UK. They signal a strong intent to support industries driving clean energy growth, give investors reliable, consistent data for capital decisions and establish a more trusted, professional approach to sustainability assurance.
For finance professionals, this means transition plans are becoming part of core business planning. They’re moving into the mainstream, with increasing expectations around how they’re built, costed and reported.
Sustainability reporting is starting to appear in more places, from audit reviews and capital planning to investor conversations and internal decision-making. Over time, these plans and disclosures will directly shape how performance is measured and how investment decisions are made.
These are the kinds of changes that influence day-to-day work, team capability and how finance functions are built. The organisations putting the right structure and people in place now will be well equipped to keep pace with what’s coming next.
Why All of This Matters for Finance Leaders
Sustainability isn’t a side project anymore. These consultations signal real intent to make sustainability integral to how businesses plan, report, raise capital and create long-term value. And finance is right at the heart of it.
That doesn’t mean you need to become a climate expert overnight. But you do need to understand how net zero, regulation and investment are converging because it’s going to change your team’s remit and responsibilities.
At Core3, we help finance leaders build the kind of teams that are ready for this. Our Core3 Method goes beyond standard recruitment as we look for mindset, adaptability and the ability to translate sustainability ambition into financial reality.
If you’re already thinking about how to shape your team for what’s next and need some support, let’s have a chat. We’re here to help you lead from the front, with a finance function built for what’s coming.
