The UK chemical sector has an important role to play in achieving net zero. Transition plans can help companies set out their decarbonisation strategies, improve transparency for investors, and support informed decision-making. For these plans to be effective, they should be tailored to the sector’s needs and aligned with international standards. Careful design and thoughtful consultation will help ensure that reporting requirements are practical, meaningful, and supportive of the sector’s ongoing growth.

 

Transition plans are an important tool to help businesses map a path to net zero, increase transparency for investors, and demonstrate progress on decarbonisation. They provide clarity on a company’s assumptions, technology dependencies, investment needs, and operational resilience, while signalling a commitment to sustainable practices. For these reasons, the Government is consulting on implementation routes for transition plan requirements. For the UK chemical sector, however, there are unique challenges that must be recognised when designing any reporting framework.

Chemical manufacturing is energy and feedstock-intensive, relies on complex global supply chains, and depends on emerging technologies such as hydrogen, carbon capture and storage, electrification, and process innovation, many of which are not yet commercially mature. The sector’s complexity means that prescriptive, one-size-fits-all reporting requirements risk creating disproportionate administrative burdens, diverting resources from actual decarbonisation efforts, and exposing companies to unnecessary legal or financial risk.

The CIA supports transition plan requirements that are flexible, proportionate, and internationally aligned. Such requirements should enable companies to:

1. Disclose credible strategies: Companies should be able to communicate their approach to reducing emissions, the technologies and processes they rely on, their investment plans, and how they manage operational and supply chain resilience. This transparency helps investors and stakeholders assess risk while reflecting real-world constraints.

2. Align with international standards: Following frameworks such as the ISSB, EU guidelines, and other global reporting standards reduces duplication, improves comparability across markets, and protects the competitiveness of UK chemical companies. The ISSB requires disclosure of climate-related information, including any transition plans if they exist, while EU rules such as the CSRD and ESRS specifically require companies to report on transition plans or explain when they will implement one.

3. Reflect sector-specific realities: Chemicals is a hard-to-abate sector with long investment cycles, high energy intensity, and reliance on breakthrough technologies. Transition plans should allow flexibility in interim targets and timelines, recognising that achieving net zero requires gradual adoption of innovative solutions and significant capital investment.

4. Embed resilience: Plans should address climate adaptation and operational resilience, considering risks such as extreme weather, energy price volatility, water stress, and supply chain disruptions. This approach helps companies manage risk while supporting continuity and long-term sustainability. For chemical businesses, practical guidance on developing a robust climate change adaptation plan is available in CIA’s Safeguarding Chemical Businesses in a Changing Climate document.

5. Protect competitiveness: Reporting requirements should be proportionate for smaller manufacturers and UK subsidiaries of multinational groups. Where a parent company is already required to provide disclosures in its home jurisdiction, UK subsidiaries should be able to rely on those parent-level reports, as these provide more meaningful information for investors than duplicative subsidiary reporting.

The UK chemical sector is competing in a global market with challenging investment conditions. Energy and climate-related policy costs are higher than in many other countries, and access to capital for low-carbon technologies can be constrained. Policymakers must therefore design transition plan requirements that support sector competitiveness while ensuring meaningful progress on emissions reductions.

In conclusion, transition plans are a vital mechanism for driving decarbonisation, but their design must reflect the realities of the chemical sector. Requirements that are flexible, sector-specific, and internationally aligned will enable UK chemical companies to provide transparency to investors, plan strategically for net zero, and contribute effectively to the UK’s sustainability goals. Overly prescriptive or misaligned frameworks risk creating unnecessary burden without delivering additional climate benefit. By focusing on proportionate, practical, and meaningful disclosure, the Government can help ensure the UK chemical sector continues to innovate, invest, and thrive while moving towards net zero.

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