**COMPANY NO. 12914740 CHARITY NO. 1194424** 

## **TRANSITIONZERO** 

**(A COMPANY LIMITED BY GUARANTEE) FINANCIAL STATEMENTS 31 MARCH 2023** 



## **TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE)** 

## **CONTENTS OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023** 

|**CONTENTS**||
|---|---|
|COMPANY INFORMATION|1|
|REPORT OF THE DIRECTORS|2|
|STATEMENT OF DIRECTORS’ RESPONSIBILITIES|17|
|INDEPENDENT AUDITOR’S REPORT|18|
|INDEPENDENT AUDITOR’S REPORT|19|
|INDEPENDENT AUDITOR’S REPORT|20|
|STATEMENT OF FINANCIAL ACTIVITIES|21|
|BALANCE SHEET|22|
|STATEMENT OF CASH FLOWS|23|
|NOTES TO THE FINANCIAL STATEMENTS|24|





## **TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE) COMPANY INFORMATION FOR THE YEAR ENDED 31 MARCH 2023** 

## **PRINCIPAL & REGISTERED OFFICE:** 

## **AUDITORS:** 

28 St. John's Square London EC1M 4DN Crowe U.K. LLP Aquis House 49-51 Blagrave Street Reading Berkshire RG1 1PL 

## **BANKERS:** 

Unity Trust Bank PO Box 7193 Planetary Road Willenhall WV1 9DG 

## **SOLICITORS** 

Orange Grove Law 20 Red Lion Street London WC1R 4PS 

Bates Wells 10 Queen Street Place London EC4R 1BE 

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## **TRANSITIONZERO** 

**(A COMPANY LIMITED BY GUARANTEE)** 

## **REPORT OF THE DIRECTORS** 

## **FOR THE YEAR ENDED 31 MARCH 2023** 

The Trustees, who are also Directors of the charity, submit their report together with the audited financial statements for the year ended 31 March 2023, and confirm that they comply with the requirements of the Charities Act 2011 and the Companies Act 2006, thus including the Directors’ Report and Strategic Report under the 2006 Act, together with the audited financial statements for the year. 

## **REFERENCE AND ADMINISTRATIVE INFORMATION** 

TransitionZero is a charitable company limited by guarantee, company registration number 12914740, charity registration number 1194424. 

The company, not having a share capital, is limited by guarantee.  Each member’s liability is limited to an amount not exceeding £1 in the event of the company being wound up. 

The present Trustees, and any past Trustees who served during the year, are given on page 16, together with the names of the senior executive staff. The principal place of business is stated on page 1. 

## **STRUCTURE, GOVERNANCE AND MANAGEMENT** 

## _**Governing Document**_ 

The company is governed by its Memorandum and Articles of Association dated 30 September 2020. 

## _**Governing Body**_ 

The Board of Trustees is responsible for the overall governance of the Charity. Existing trustees appoint new Trustees, and the appointment is minuted. 

## _**Recruitment and Training of Trustees**_ 

Potential Trustees are identified by existing trustees and are considered against the board’s specifications concerning eligibility, competence, specialist skills and local availability. Training has been provided to all new appointees on their obligations as a Trustee.  Materials are available to the Trustees on general legal obligation applicable to the organisation. 

## _**Organisational Management**_ 

Within the organisational structure, day-to-day decision-making is delegated to the staff. Up until August 2022 it was delegated to the two co-CEOs; following Sriya Sundaresan’s resignation, Matthew Gray took over as sole CEO and key decision-making was delegated to him. Following a reorganisation, to assist the CEO in day to day decision making and lead specific functions within the organisation, Hristina Petkova was promoted to Head of Operations (previously Operations Manager), Lucas Kruitwagen was hired as Head of Technology, and Sebastian Kennedy as Head of Insights. The Board decides matters of governance and is in charge of ensuring that the charity is carrying out its purposes for the public benefit. 

The CEO oversees the work of the core four functions within the organisation: Technology, Insights, Analysis, and Operations. The CEO in turn reports directly to the Trustees in the following ways: 

- Formal Board Meetings each quarter. 

- Informal meetings with the Chair of the Board of Trustees - weekly or biweekly, as appropriate and necessary 

- Informal discussions and correspondence by email between meetings [to record any necessary approvals such as spend requiring approval under the Delegation of Authority]. 

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## **TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE)** 

## **REPORT OF THE DIRECTORS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

Four key functions emerged following TransitionZero’s reorganisation: Technology, Insights, Analysis, and Operations. The CEO oversees these functions while the day to day management and objective setting sits with the department leads. The organisation also refined its strategy to focus on building an open-source energy system model without usability compromises and creating a user network effect through a scalable partnership model to support the development of a global standard for energy transition planning data. In order to execute the revised strategy, the organisation further professionalised and expanded the Operations function, built out its data infrastructure, and continues to develop its partnerships. Specific updates regarding strategic aims and impact are detailed further down in this report. 

TransitionZero grew its operations function to support the reorganisation and growth across the organisation. The operations team comprises the Head of Operations, People and Operations Coordinator, and Financial Controller. 

With regard to people and culture management, we reviewed and updated internal policies and procedures to reflect the growth of the organisation better and addressed any gaps identified along the way. To support the reorganisation, we wanted to achieve consistency, transparency, and sustainability across the internal policies and procedures: 

- Consistency: Ensuring consistency is paramount to organisational culture as it means that everyone knows they are treated fairly and that decisions are based on a standardised approach and guidelines. 

- Transparency: All policies are easily accessible; the operations team addresses all questions and concerns in an open and timely manner. 

- Sustainability: We ensured that all policies and procedures are replicable as the organisation continues to grow and that they could all be extended to every employee. All internal policies were written with flexibility in mind to allow growth for development. 

Notably, we developed and introduced brand new performance management and salary grading policies and procedures. To underpin this roll out, we updated everyone’s job descriptions and ensured that they outline main responsibilities in the context of the wider organisation. Job descriptions will be reviewed during annual performance reviews or whenever there has been a significant change in an individual’s job title, duties and responsibilities. We also introduced the Objective & Key Result (OKR) method as a way to track outcomes and performance. OKRs are developed by managers on a quarterly basis in line with company and function strategies. Our performance management system and salary grading structure will enable and support the continuous growth of the organisation and have set high standards as we seek to achieve multiple objectives through them: 

- Recruiting and retaining talented people to work at TransitionZero 

- Ensuring compliance with relevant employment legislation 

- Being fair, equitable, and transparent 

- Encouraging and recognising high-performance and behaviour in line with our values and goals 

- - Sustainability and affordability allowing us to offer good value to our funders 

In line with our reorganisation, we also expanded our tech team. We conducted a major hiring drive in November and December 2022. Following concentrated recruitment efforts, in various stages of early 2023, we will welcome two Python Analysts, a Front End Developer, a Data Engineer, an Energy Systems 

Modeller Lead and Analyst, and a South East Asia Analyst, and an Engagement Analyst. Hiring at this rate has been instrumental to expanding our tech team as well as to the development and continuous improvement of our hiring procedures and the type of recruiting experience we want to give applicants. 

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## **TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE)** 

## **REPORT OF THE DIRECTORS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

On the financial management side of the organisation, we undertook a full review of our financial procedures and processes. We have successfully identified a clear and well-managed path forward in terms of managing our finances. The financial function of the organisation is now fully managed inhouse with the Financial Controller performing all accounting and bookkeeping operations. In addition, the Financial Controller performs and maintains financial forecasts and budgets. We review all expenditures on a monthly basis and allocate each transaction to appropriate grants.  Importantly, we have set out to provide monthly financial reports to the CEO to enable well informed financial decisions and future planning. 

The CEO report includes: 

- Monthly management accounts covering Profit & Loss (up to date and forecast) and Balance Sheet overview 

- Grant balances covering grant expenditure to date and remaining balances within the lifecycle of each grant 

- Upcoming grant reporting deadlines and grant renewals 

The monthly management accounts provide a general overview of the financial health of the organisation; forecasts ensure sustainable financial planning in line with set objectives. The grant balances report ensures that we are on track with the spend of our grants and provides clear short and long term visibility  which in turn reduces the risk of over or under spending. 

## _**Key Management Personnel Remuneration**_ 

The trustees consider the board of trustees, CEO, and Heads of Departments as comprising the key management personnel of the charity, having authority and responsibility for planning, directing and controlling the activities of the charity, directly or indirectly, on a day to day basis. All trustees give of their time freely and no trustee remuneration was paid in the year. Details of trustee expenses and related party transactions are disclosed in notes 5 and 13 to the accounts. 

The pay of the charity’s key staff management personnel is reviewed annually. The Board reviews and compares the CEO’s remuneration to that in other similar non-profit or public sector organisations. 

## _**Risk Management**_ 

The board has examined the principal area of the charity’s operations and considered what major risks may arise in each of these areas.  In the opinion of the Trustees, the charity has established resources and review systems, which under normal conditions, should allow the risks identified by them to be mitigated to an acceptable level in its day-to-day operations. 

Principal risks and uncertainties have been identified 

- Insufficient funds to maintain current staffing levels/ loss of income 

- Failure to demonstrate Impact 

- Funder leading - grant funders provide us funding for projects they wish us to pursue, not those we believe are the most impactful 

- Loss of key personnel 

- Skills gaps undermining charity effectiveness 

- Political environment hostile to campaigning for climate targets 

- Other NGOs and digital movements encroach on TZ USP 

- Seeking and accepting funds from inappropriate sources 

- Adherence to Company Law & Charity Commission regulations 

- IT Failure and Data Protection: loss of data through theft or hacking 

- Poor financial management 

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## **TRANSITIONZERO** 

**(A COMPANY LIMITED BY GUARANTEE)** 

## **REPORT OF THE DIRECTORS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

- Inaccurate or potentially libellous information given out by members of staff through reports, event appearances and/ or through digital communications 

- Negative press coverage 

## _**Fundraising**_ 

TransitionZero does not raise funds from the general public, does not employ a professional fundraiser nor engage the services of third-party organisations to help raise funds, and therefore have not considered it necessary to sign up to any regulatory code of fundraising practice. No complaints have been received during the year about any aspect of the fundraising and consideration is always given to privacy and diplomacy to ensure approaches for fundraising are appropriate. 

## **OBJECTS, AIMS, OBJECTIVES & ACTIVITIES** 

## _**Charitable Objects**_ 

The company’s declared objectives are the promotion of conservation, protection and improvement of the environment, in particular by promoting the reduction of carbon emissions and the improvement of air quality. 

The advancement of education and promotion of research into environmental protection and sustainable development in subjects including but not limited to clean energy, air pollution, renewable technologies and sustainable finance. For the purposes of this definition, “sustainable development” means development which meets the needs of the present without compromising the ability of future generations to meet their own needs. 

## _**Strategic Aims and Intended Effect**_ 

TransitionZero’s mandate is to create open data products to enable the access and adoption of fundamental climate data. We create publicly available outputs to facilitate this access. From professionalising our back-office to building out our data infrastructure, and developing partnerships, this year was transformational for the organisation as we developed and started the successful execution of our updated strategy. Specific updates include: 

1. Strategy update: we refined our strategy to focus on 1) building an open-source energy system model without usability compromises, and 2) creating a user network effect through a scalable partnership model to support the development of a global standard for energy transition planning data. 

2. Operations update: please refer to the Organisational Management section of this report. 

3. Data infrastructure: We have made considerable progress developing our data stack to ensure our models can respond to bespoke requests in 1-2 days rather than weeks or months. 

4. Modelling development: We have been developing our energy system and asset models as well as responding to partner requests to ensure we have an impact before our models are published. 

5. Partnerships: A scalable partnership model is a core feature of our revised strategy, due to our size, location and brand. We have already secured several partnerships to ensure our data is used and we are in continuous conversations with multiple potential partners. 

6. Communications: We have been expanding the reach of our digital communications operations with a new content production strategy, in addition to the existing communications and marketing operation. Increasing the frequency and analytical sophistication of written outputs is expected to grow TransitionZero’s readership significantly, engage a wider audience and introduce the organisation’s products to new stakeholders and market participants. 

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## **TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE)** 

## **REPORT OF THE DIRECTORS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

## _**Objectives for the Year**_ 

Transition Zero’s Objects stated in its Articles of Association are: 

2.1 the promotion of conservation, protection and improvement of the environment, in particular (but not limited to), by promoting the reduction of carbon emissions and the improvement of air quality; and 

2.2 the advancement of education and promotion of research into environmental protection and sustainable development in subjects including but not limited to clean energy, air pollution, renewable technologies and sustainable finance. For the purposes of this Article 2, “sustainable development” means development which meets the needs of the present without compromising the ability of future generations to meet their own needs.” 

## _**Strategies to Achieve the Year’s Objectives**_ 

To achieve our charitable objectives, we are building an open-source energy system model without usability compromises and creating a user network effect through a scalable partnership model to support the development of a global standard for energy transition planning data. As detailed in the next section of this report, we have already made good progress on both model and partnership development. Figure 1 below includes a summary of our theory of change. 

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## **TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE) REPORT OF THE DIRECTORS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

## **Figure 1. TransitionZero’s theory of change** 


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## **TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE)** 

## **REPORT OF THE DIRECTORS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

## **REVIEW OF ACHIEVEMENTS AND PERFORMANCE FOR THE YEAR** 

**Data infrastructure** : Our ‘platform’ is the data stack[1] that allows us to do efficient, novel, reproducible and extensible research and analysis. It consists of code repositories, databases, cloud computation services, and all the various connecting infrastructure and orchestration processes. We are upskilling a cross-disciplinary team that now includes machine learning engineers, data scientists, data engineers, python analysts and developers. 

Since mid-2022, we separated from being contributors to the ClimateTRACE platform hosted by WattTime to building our own platform outright.[2] Our data infrastructure now consists of three central pillars: activity data (e.g. generation, emissions, and market data), scraped from various sources daily; asset-level-data, the location and property data of real-economy assets across our coverage sectors, updated approximately quarterly; and finally the ‘sticky’ data relating to technology parameters, policies, contracts, and socioeconomic statistics of our geographies and individual assets of interest. Our platform allows no-code users to contribute to and track this ‘sticky’ data, while power users and programmatic applications have access to all data via a new API. This data infrastructure feeds our machine learning research and systems modelling activities and our new front-end user interface. 

We’ve hired a front-end developer to help us deliver new insights to our users and the general public. We’re building a data insights user interface - capable of rendering systems modelling results and giving users access to the assumptions and input data. This is best-in-class openness for systems modelling, far beyond what the likes of incumbent energy companies and international agencies make available. 

Our machine learning team has begun two new lines of research: first, into how to best accelerate the optimisation algorithms for our systems models; second, a long-term research plan for cutting-edge training and deployment of computer vision models with earth observation imagery for asset localisation and land-cover studies. All systems models are bottlenecked (in scope and sensitivity sampling) by the speed of solution finding. Expensive commercial models dominated this space until the last two years, when research by DeepMind showed the competitive performance of a suite of deep-learning models. Our machine learning team is now reproducing and expanding on this work. Meanwhile, our earth observation work will continue to focus on the large-scale deployment of computer vision models, the detection of large fixed-point emitters, and the analysis and discovery of their features and activity. 

**Modelling development:** The system modelling team is responsible for the development of the Future Energy Outlook (FEO) platform and its interaction with our asset-level tools, the Coal Asset Transition (CAT) 

> 1 A data stack is like a kitchen for data. Think of how you bake a cake. The ingredients become a cake after going around the kitchen. Most cake ingredients are inedible by themselves, but after spending some time in the kitchen with a cook, they are transformed from inedible ingredients to a cake. And that is the key: unstructured data are unusable like cake ingredients are inedible. But after journeying through a data stack, this data gets turned into insights, easily digestible by a wider variety of stakeholders. 

> 2 Please note: we are still a coalition partner to Climate TRACE and supply emissions data for electricity generation and heavy industry. 

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## **TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE)** 

## **REPORT OF THE DIRECTORS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

Tool and the Steel Asset Transition (SAT) Tool. We are utilising OSeMOSYS Global and PyPSA meets Earth, as they are already among the most widely used open-source energy modelling frameworks. Per the data infrastructure update, we plan to improve the assumptions of OSeMOSYS and PyPSA and, to reduce usability compromises, create an API and UI based on a modern data stack. By minimising usability compromises, we can offer flexible and timely solutions for our partners. 

**Partnerships:** We have already secured several partnerships to ensure our data is used, including: 

- Becoming a program partner for the Climate Prosperity Plans Program of the Vulnerable Twenty (V20) Group of Ministers of Finance of the Climate Vulnerable Forum (CVF)[3] , 

- - Becoming a delivery partner to the Energy Transition Council (ETC) Rapid Response Facility (RRF)[4] , 

- Becoming a technical partner for the  Coal Asset Transition Accelerator (CATA)[5] , 

- Working with the Climate Compatible Growth (CCG) programme and the Green Grids Initiative[6] , 

- Working with the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)[7] 

We are also in continuous conversations with other partners; details of these partnerships will be posted on our website. 

**Insights and communications update:** We have been expanding the reach of our digital communications operations with a new content production strategy, in addition to the existing communications and marketing operation. 

This strategy is being implemented by our new Head of Data Insights, who started in this newly created role in November. Adding a dedicated analytical writing resource has enabled the organisation to improve the consistency and rigour of its in-depth blogs and insights, and bring to life the data and tools being created by the tech and infrastructure teams. 

The new content strategy prioritises the production of blogs and written outputs analysing short-term movements in global energy markets. As well as leveraging existing datasets such as the Coal-to-Clean Price Index (CCPI) and tools such as Climate TRACE, this strategy involves developing new user dashboards to track the profitability of gas and coal-fired power stations in key markets in Europe and Asia. 

Increasing the frequency and analytical sophistication of written outputs is expected to grow TransitionZero’s readership significantly, engage a wider audience and introduce the organisation’s products to new stakeholders and market participants. 

> 3 Press release 

> 4 Press release 

> 5 Press release 

> 6 Press release 

> 7 Press release 

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## **TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE)** 

## **REPORT OF THE DIRECTORS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

## Outputs 

Notable outputs from the last year: 

- [Article] Fuel Switching 2.0: Carbon Price Index for Coal-to-Clean Electricity. Available. 

- [Article] 6 Ways The REPowerEU Plan Supports Energy Affordability. Available. 

- [Article] Financing Indonesia's coal phase-out: Coal Asset Transition Tool. Available. 

- [Article] Thirst for (clean) power. Available. 

- [Article] Indonesia’s coal retirement conundrum. Available. 

- [Article] 2022 in review: Goodbye normality, hello volatility. Available. 

- [Article] Is gas-fired power back in the money? Available. 

- [Article] Can ‘green’ steel halt EU deindustrialisation? Available. 

- [Dataset] Contributed power and manufacturing data to Climate TRACE. Available. 

- [Open Data Tool] Coal Asset Transition (CAT) Tool. Available. 

- [Webinar] Supporting Indonesia’s Energy Transition Using New Coal Asset Transition Tool Available. 

- [Report] Coal Asset Transition Tool methodology report. Available. 

- [Presentation] Speaking at the Subak Climate Summit 

- [Presentation] Co-hosting and speaking at COP27 event: Filling in the gaps: Open data and artificial intelligence for equitable climate action in monitoring, reporting, and verification 

- [Presentation] Presenting CAT at FIRE coal phase out working group, including British Embassy 

- [Presentation] Presenting CAT and CCPI to the Department of Energy, Indonesia 

- [Presentation] Presenting CAT to Energy Transition Partnership 

- [Presentation] Presenting CAT at AIGCC investor member meeting 

- [Presentation] Presenting CAT to RMI 

- [Presentation] Presenting on ammonia-cofiring to Kamakura Sustainability Institute 

- [Presentation] Presenting CAT to Systemiq Energy Platform 

- [Presentation] Presenting CAT to Rockefeller Foundation 

- [Meetings] Discussing gas market reforms with policymakers in the Philippines, including policymakers, regulators, and legislators from the Philippine Department of Energy, Energy Regulatory Commission, Securities and Exchange Commission, Senate, and House of Representatives 

## Communications metrics 

- Press: 151 pieces of coverage between April 22 - March 23, including, but not limited to Financial Times, FT Moral Money, Bloomberg, Reuters, New York Times, The Economist, The Guardian, The Wall Street Journal, The Nikkei, The Straits Times, The South China Morning Post, CNBC, Japan Times, China Dialogue, Mongabay, Katadata, IHS Markit, Economic Times, S&P Platts 

- Website traffic: 84k page views from 38k unique visitors 

- Social media: LinkedIn - 2900+ followers, 11k monthly impressions, 6% engagement rateTwitter - 2,600+ followers, 64k monthly impressions, 2.9% engagement rate. (53% growth in social media followers between April 2022 and March 2023) 

- Email: 1,302+ subscribers 

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## **TRANSITIONZERO** 

**(A COMPANY LIMITED BY GUARANTEE)** 

## **REPORT OF THE DIRECTORS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

## Data downloads 

- 740 data downloads from our website between April 2022 and March 2023 

- Including from, but not limited to  Imperial College London, University College London, Oxford University, the University of Indonesia, IIT Bombay, Shell, BP, HSBC, Barclays, DWS, BNEF, London Stock Exchange, OECD, Greenpeace, ClimateWorks, Solutions for Our Climate 

## _**Public Benefit**_ 

The Trustees consider that the activities carried out by Transition Zero during the past year illustrate that they have provided considerable benefit to the public as summarised above.  The Trustees have therefore complied with their duty in section 17(5) of the Charities Act 2011 to have due regard to the Charity Commission’s published general guidance concerning the operation of the public benefit requirement under that Act. 

## **RELATED PARTIES AND OTHER ORGANISATIONS** 

There are no related parties.  TransitionZero works primarily with its Funders to deliver its objectives. Our current funders are: 

- Quadrature Climate Foundation and ClimateWorks Foundation via Bloomberg Philanthropies 

- WattTime Corporation via the Climate TRACE coalition. 

- European Climate Foundation 

- Client Earth 

- Tara Climate Foundation 

TransitionZero also works with Subak, an accelerator for climate not-for-profits. This allows for collaborations with other think tanks and organisations focused on climate change in order to avoid duplication of work and maximising opportunities for impact. 

## **FINANCIAL REVIEW AND RESULTS FOR THE YEAR** 

Income for the year amounted to £1,953k of grant income (18 month period ending 31 March 2022 was £2,484k of which £2,457k was grant income).Expenditure for the year was £1,925k, leaving £869k total funds held by the charity at the year end (18 month period ending 31 March 2022 was £1,643k). By far the largest element of expenditure was the cost of employing our staff to provide the activities of the charity. 

Principle sources of funding were from Quadrature Climate Foundation, ClimateWorks Foundation via Bloomberg Philanthropies; WattTime Corporation via the Climate TRACE coalition, European Climate Foundation, Client Earth. Please see below for background of how funding supports our objectives. 

- **Quadrature Climate Foundation and ClimateWorks Foundation via Bloomberg Philanthropies** which provide us with unrestricted funding to support TransitionZero building on existing open data and open source projects as well as bolstering private sector initiatives by making transition capital more aligned with positive climate outcomes. 

- **WattTime Corporation via the Climate TRACE coalition** . Climate TRACE is a project founded by a global coalition of nonprofits, tech companies, and universities created to make meaningful climate action faster and easier by independently tracking greenhouse gas (GHG) 

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## **TRANSITIONZERO** 

**(A COMPANY LIMITED BY GUARANTEE)** 

## **REPORT OF THE DIRECTORS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

emissions with unprecedented detail and speed. Climate TRACE harnesses satellite imagery and other forms of remote sensing, artificial intelligence, and data science expertise to identify human-caused GHG emissions when and where they happen. The sub-grant is e for the purposes of supporting the completion of Phase 5 deliverables for Climate TRACE; TransitionZero is providing emissions for power generation and selected heavy industry subsectors and will support the ClimateTRACE deliverables as follows: 

   - Country Level Data 

   - Asset Level Data 

   - User Support 

   - Communications 

- **European Climate Foundation** - restricted funding for specific projects such as the Future Energy Outlook (FEO) and Heavy Industry work. 

- **Client Earth** - restricted funding to deliver original asset level economic analysis against ClientEarth targets in Asia, including in Japan and Indonesia. 

- **Tara Climate Foundation** - restricted funding to deliver economic analysis focusing on the South East Asia region. 

## _**Reserves Policy**_ 

The amount of total funds held by the charity at the year end was £869,356 _._ The amount of funds which are restricted and not available for general purposes of the charity at the year end were £243,168 _._ 

Our Board of Trustees mandates that we must have at least 3 months cash in hand at all times to support financially sustainable decision making when it comes to taking on new projects, hires and growth of the organisation. So far, we have never dropped below this threshold. 

## **FUTURE PLANS** 

In line with our updated Theory of Change, we believe that ambitious and urgent policy changes are required to make clean energy affordable and dependable for everyone. For instance, analysis finds direct capital expenditure for decarbonisation needs to triple in 2021 to 2025 compared to 2016 to 2020 and will need to average $4.5 trillion annually after 2026. The changes required are most likely to be implemented in an environment where evidence-based proposals are being put forward by a wide range of stakeholders based on accessible, auditable and replicable data. 

To date, access to data and tools to support energy transition planning is highly constrained, where analysis is often done based on closed data and models. There are several reasons for this market failure, including: 

- For-profits often require control over their entire data stack for commercial, legal and practical reasons 

- Supranationals (e.g. IEA) are beholden to member states who are often influenced by fossil interests and view energy infrastructure data as private and confidential 

- Not-for-profits often have no incentive to embrace open-source or open-data frameworks, as it is not a requirement to get funding 

- Several not-for-profits, particularly those in finance, outsource their data to commercial providers for resource and strategic reasons 

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## **TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE)** 

## **REPORT OF THE DIRECTORS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

- Energy modelling, particularly system modelling, comprises thousands of assumptions which tend to restrict accessibility for non-specialist audiences 

This situation creates a number of fundamental problems which we believe are stifling the transition to a zero-carbon economy: 

- There is no global standard for energy transition planning data because organising and processing data for modelling is duplicated amongst several organisations, wasting time and resources 

- Data is not auditable, and therefore, quality is often impossible to assess, preventing long-term, least-cost policy decisions that would likely favour carbon-free energy 

- The modelling and analysis tend to (i) be based on opaque methodologies and input data, (ii) beholden to fossil fuel interests, and (iii) offer no avenue for debate or review by all relevant stakeholders 

- Failure to incentivise a genuine first-mover narrative beyond performative policies, initiatives, and announcements to be net-zero by 2050 

These problems make it nearly impossible for all stakeholders to engage in the conversation productively. The result is linear and incremental policy development, particularly in low-income countries, where governments often (i) do not have the resources to afford bespoke consultancy solutions or (ii) rely on supranational RFP mechanisms that often engage the same consultants who produce analysis based on closed data and models. 

To solve the aforementioned problems, we plan to build an open-source energy transition data platform without usability compromises and partner with organisations and initiatives that help scale our user growth. In doing so, we believe we can create an energy transition data standard to facilitate the climate flows from high- and low-income countries. 

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## **TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE)** 

## **REPORT OF THE DIRECTORS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

We will continue utilising OSeMOSYS and PyPSA, which are already among the most widely used opensource energy modelling frameworks. For example, these frameworks have been copied by well-known consultancies and initiatives (e.g., McKinsey, UN PRI), used as a core planning tool for several governments (e.g., Cyprus, Costa Rica, Bolivia), and incorporated into major technical assistance initiatives (e.g., UN DESA and CCG Programme). OSeMOSYS already covers 164 countries[8] separated by 265 nodes[9] . 

More specifically, our strategy is to take the most promising open-source frameworks and: 

1. Improve the quality and quantity of their input files - Energy system modelling has historically been a victim of “garbage in and garbage out”, the concept that flawed input data produces flawed outputs. There are many reasons for this, such as the number of assumptions, the confidential nature of energy infrastructure information, and the purpose of least-cost modelling. In short, for intentional and unintentional reasons, the outputs of energy system models are often detached from what happens on the ground. Modern data science and market expertise can help overcome these shortcomings. For example, our Coal Asset Transition (CAT) Tool provides facility-level estimates of productivity, emissions and power purchase agreements from our detection algorithms and incountry expertise. The outcome is more granular and accurate input files and, thus, a more helpful model for market participants. 

2. Reduce usability compromises by modernising the data stack - Our data platform will enable anyone to rapidly and flexibly develop, save and share long-term model runs and scenarios for energy transition decisions relating to the electricity sector. The platform will serve both developers and regular users via an API and UI. The UI will allow for downloads in XLS or CSV formats. 

3. Create a network effect by partnering with users on both sides of the ledger - Once FEO has no usability compromises, we hope to create a network effect through a scalable partnership model. A network effect is where the value of a product or service increases as more users engage with it. Take climate finance as an example. Currently, high-income and low-income countries have no shared understanding of how much and what type of finance is required. 

4. Create a network effect by partnering with users on both sides of the ledger - Once FEO has no usability compromises, we hope to create a network effect through a scalable partnership model. A network effect is where the value of a product or service increases as more users engage with it. Take climate finance as an example. Currently, high-income and low-income countries have no shared understanding of how much and what type of finance is required. 

> 8 Afghanistan, Angola, Albania, United Arab Emirates, Argentina, Armenia, Antarctica, Australia, Austria, Azerbaijan, Burundi, Belgium, Benin, Burkina, Faso, Bangladesh, Bulgaria, Bahrain, Bosnia and Herzegovina, Belarus, Bolivia, Brazil, Brunei Darussalam, Bhutan, Botswana, Central African Republic, Canada, Switzerland, Chile, China, Côte d'Ivoire, Cameroon, Congo, Democratic Republic of the Congo, Colombia, Cabo Verde, Costa Rica, Cuba, Cyprus, Czechia, Germany, Djibouti, Denmark, Dominican Republic, Algeria, Ecuador, Egypt, Eritrea, Western Sahara, Spain, Estonia, Ethiopia, Finland, Fiji, France, Gabon, United Kingdom of Great Britain and Northern Ireland, Georgia, Ghana, Guinea, Gambia,  GuineaBissau, Equatorial Guinea, Greece, Guatemala, French Guiana, Guyana, Honduras, Croatia, Hungary, Indonesia, India, Ireland, Iran, Iraq, Iceland, Israel, Italy, Jamaica, Jordan, Japan, Kazakhstan, Kenya, Kyrgyzstan, Cambodia, Korea, Kuwait, Laos, Lebanon, Liberia, Libya, Sri Lanka, Lesotho, Lithuania, Luxembourg, Latvia, Morocco, Moldova, Madagascar, Mexico, North Macedonia, Mali, Myanmar, Montenegro, Mongolia, Mozambique, Mauritania, Mauritius, Malawi, Malaysia, Namibia, Niger, Nigeria, Nicaragua, Netherlands, Norway, Nepal, New Zealand, Oman, Pakistan, Panama, Peru, Philippines, Papua New Guinea, Poland, Korea, Portugal, Paraguay, Qatar, Romania, Russia, Rwanda, Saudi Arabia, Sudan, Senegal, Singapore, Sierra Leone, El Salvador, Serbia, Slovakia, Slovenia, Sweden, Eswatini, Syria, Togo, Thailand, Tajikistan, Turkmenistan, Trinidad and Tobago, Tunisia, Turkey, Taiwan, Tanzania, Uganda, Ukraine, Uruguay, United States of America, Uzbekistan, Venezuela, Vietnam, Yemen, South Africa, Zambia and Zimbabwe. 

> 9 The following countries have more than one node: Australia (8), Brazil (8), Canada (10), China (35), India (6), Japan (7), Russia (8) and United States of America (25) 

Page 14 



## **TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE)** 

## **REPORT OF THE DIRECTORS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

Beyond negotiation tactics and political realities, part of the reason why climate finance is so fractious is there is no global data standard - no shared understanding of how much ‘net zero’ policies cost beyond high-level reports based on closed data, which cannot be audited or replicated by all stakeholders in low-income countries. One of the reasons why a global standard for energy transition data has not emerged for low-income countries is due to hoarding behaviour to preserve business models and avoid credibility challenges. 

Since FEO is open source, anyone can use the model without restrictions, meaning the more users we can attract from host and donor countries, the more accepted and powerful the data will become. We plan to attract users from low-income and high-income countries to generate a network effect and support the development of a global standard for energy transition planning data. This data standard will allow for consistent measurement, qualification or exchange of data for transition or climate finance. For example, we partner with V20 to produce Climate Prosperity Plans for loan applications and grant applications for climate finance and with the CCG Programme to improve their starter kits to increase international concessional finance. 

Page 15 



**TRANSITIONZERO** 

**(A COMPANY LIMITED BY GUARANTEE)** 

## **REPORT OF THE DIRECTORS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

## **TRUSTEES** 

The trustees during the year were as follows:- 

Trustees: 

Thomas David Gardner (chair) Paraskevi Bertseka Ho Yan Yulanda Chung Mayumi Omi Geoffrey David Sinclair 

Key Management Personnel: Matthew Gray – CEO Lucas Kruitwagen - Head of Technology     Appointed 1 September 2022 Sebastian Kennedy - Head of Insights         Appointed 1 November 2022 Hristina Petkova - Head of Operations         Appointed 1 November 2022 Sriya Sundaresan – Co-CEO                       (Resigned August 2022) 

## **GOING CONCERN BASIS** 

The charitable company has cash resources to meet its day to day working capital requirements. Current forecasts indicate that the charitable company expects to be able to operate within these facilities for the foreseeable future. The trustees continue to believe the going concern basis of accounting is appropriate in preparing the annual financial statements. 

## **PROVISION OF INFORMATION TO AUDITORS** 

Insofar as each of the directors of the charity at the date of approval of this report is aware there is no relevant audit information (information needed by the charity’s auditor in connection with preparing the audit report) of which the charity’s auditor is unaware. 

Each director has taken all of the steps that they should have taken as a director in order to make themselves aware of any relevant audit information and to establish that the charity’s auditor is aware of that information. 

## **AUDITORS** 

The Auditors, Crowe U.K. LLP will be proposed in accordance with section 485 of the Companies Act 2006. 

In preparing this report, the directors have taken advantage of the small companies exemptions provided by Section 415A of the Companies Act 2006. 

This Annual Report, prepared under the Charities Act 2011 and the Companies Act 2006, was approved by the Trustee Body of TransitionZero onincluding in their capacity as company directors approving the Strategic Report contained therein, and is signed as authorised on its behalf by: 

Thomas Gardner Thomas Gardner (Jul 25, 2023 20:48 EDT) 

Jul 25, 2023 

Thomas David Gardner **Director** 

Page 16 



## **TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE)** 

## **STATEMENT OF DIRECTORS’ RESPONSIBILITIES FOR THE YEAR ENDED 31 MARCH 2023** 

The Trustees (who are also directors of TransitionZero for the purposes of company law) are responsible for preparing the Trustees’ Annual Report and the financial statements in accordance with applicable law and United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards). 

Company law requires the Trustees to prepare financial statements for each financial period. Under company law the Trustees must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the charitable company and of the incoming resources and application of resources, including the income and expenditure, of the charitable company for that period. In preparing these financial statements, the Trustees are required to: 

- select suitable accounting policies and then apply them consistently; 

- observe the methods and principles in the Charities SORP; 

- make judgments and estimates that are reasonable and prudent; 

- state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and 

- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charitable company will continue in business. 

The Trustees are responsible for keeping adequate accounting records that are sufficient to show and explain the charitable company’s transactions, disclose with reasonable accuracy at any time the financial position of the charitable company and enable them to ensure that the financial statements comply with the Companies Act 2006 and the provisions of the charity’s constitution. They are also responsible for safeguarding the assets of the charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. 

Page 17 



**Independent Auditor’s Report to the Members and the Trustees of TransitionZero** 

## **Opinion** 

We have audited the financial statements of TransitionZero (‘the charitable company’) for the year ended 31 March 2023 which comprise of a Statement of Financial Activities, Balance Sheet, Statement of Cash Flows and Notes to the Financial Statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice). 

In our opinion the financial statements: 

- give a true and fair view of the state of the charitable company’s affairs as at 31 March 2023 and of income and expenditure, for the year then ended; 

- have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and 

- have been prepared in accordance with the requirements of the Charities Act 2011. 

## **Basis for opinion** 

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the charitable company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 

## **Conclusions relating to going concern** 

In auditing the financial statements, we have concluded that the trustees' use of the going concern basis of accounting in the preparation of the financial statements is appropriate. 

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the charitable company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. 

Our responsibilities and the responsibilities of the trustees with respect to going concern are described in the relevant sections of this report. 

## **Other information** 

The trustees are responsible for the other information contained within the annual report. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. 

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. 

We have nothing to report in this regard. 

## **Matters on which we are required to report by exception** 

We have nothing to report in respect of the following matters in relation to which the Charities (Accounts and Reports) Regulations 2008 requires us to report to you if, in our opinion: 

- adequate and proper accounting records have not been kept; or 

Page 18 



**Independent Auditor’s Report to the Members and the Trustees of TransitionZero** 

- the financial statements are not in agreement with the accounting records and returns; or 

- certain disclosures of trustees' remuneration specified by law are not made; or 

- we have not received all the information and explanations we require for our audit; or 

## **Responsibilities of trustees** 

As explained more fully in the trustees’ responsibilities statement set out on page 12, the trustees (who are also the directors of the charitable company for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. 

In preparing the financial statements, the trustees are responsible for assessing the charitable company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees either intend to liquidate the charitable company or to cease operations, or have no realistic alternative but to do so. 

## **Auditor’s responsibilities for the audit of the financial statements** 

We have been appointed as auditors under the Charities Act 2011 and report in accordance with the Acts and relevant regulations made or having effect thereunder. 

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 

Details of the extent to which the audit was considered capable of detecting irregularities, including fraud and non-compliance with laws and regulations are set out below. 

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. 

## **Extent to which the audit was considered capable of detecting irregularities, including fraud** 

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We identified and assessed the risks of material misstatement of the financial statements from irregularities, whether due to fraud or error, and discussed these between our audit team. We then designed and performed audit procedures responsive to those risks, including obtaining audit evidence sufficient and appropriate to provide a basis for our opinion. 

We obtained an understanding of the legal and regulatory frameworks within which the charitable company operates, focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The laws and regulations we considered in this context were Charities Act 2011 together with the Charities SORP (FRS 102). We assessed the required compliance with these laws and regulations as part of our audit procedures on the related financial statement items. 

In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which might be fundamental to the charitable company’s ability to operate or to avoid a material penalty. We also considered the opportunities and incentives that may exist within the charitable company for fraud. The laws and regulations we considered in this context for the UK operations were General Data Protection Regulation (GDPR), Health and safety legislation and Employment legislation. 

Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the Trustees and other management and inspection of regulatory and legal correspondence, if any. 

Page 19 



**Independent Auditor’s Report to the Members and the Trustees of TransitionZero** 

We identified the greatest risk of material impact on the financial statements from irregularities, including fraud, to be within the timing of recognition of income, and the override of controls by management. Our audit procedures to respond to these risks included enquiries of management and the trustees about their own identification and assessment of the risks of irregularities, sample testing on the posting of journals, reviewing accounting estimates for biases, reviewing regulatory correspondence with the Charity Commission, reading minutes of meetings of those charged with governance. 

Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed noncompliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non-compliance and cannot be expected to detect noncompliance with all laws and regulations. 

## **Use of our report** 

This report is made solely to the charitable company’s trustees, as a body, in accordance with Part 4 of the Charities (accounts and Reports) Regulations 2008. Our audit work has been undertaken so that we might state to the charitable company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charitable company and the charitable company’s members as a body and the charitable company’s trustees as a body, for our audit work, for this report, or for the opinions we have formed. 

## Alastair Lyon 

Alastair Lyon (Aug 2, 2023 09:28 GMT+1) 

Alastair Lyon Senior Statutory Auditor For and on behalf of Crowe U.K. LLP Statutory Auditor 

## **Reading** 

Date: Aug 2, 2023 

Page 20 



## **TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE)** 

## **STATEMENT OF FINANCIAL ACTIVITIES** 

## **(INCORPORATING AN INCOME & EXPENDITURE ACCOUNT) FOR THE YEAR ENDED 31 MARCH 2023** 

||||||**18 month**|
|---|---|---|---|---|---|
|||**Unrestricted**|**Restricted**|**Total**|**period to**|
|||**Funds**|**Funds**|**2023**|**31 March**|
||||||**2022**|
||Notes|**£**|**£**|**£**|**£**|
|**Income and endowments from:**||||||
|**Donations and legacies**||||||
|Donations and legacies||**-**|**-**|**-**|**500**|
|**Income from charitable activities**||||||
|Grants receivable|2|**1,010,959**|**942,454**|**1,953,413**|**2,457,152**|
|Climate Training||**-**|**-**|**-**|**26,735**|
|**TOTAL INCOME**||**1,010,960**|**942,454**|**1,953,413**|**2,484,387**|
|**Expenditure on:**||||||
|**Expenditure on charitable**||||||
|**activities**||||||
|Provision of workshops||**-**|**-**|**-**|**26,660**|
|Provision of emissions analysis||**1,167,681**|**757,184**|**1,924,865**|**1,616,919**|
|**TOTAL EXPENDITURE**|4|**1,167,681**|**757,184**|**1,924,865**|**1,643,579**|
|**Net Income/ (Expenditure)**||**(156,722)**|**185,270**|**28,548**|**840,808**|
|Transfers between funds||**-**|**-**|**-**|**-**|
|**NET MOVEMENT IN FUNDS**||**(156,722)**|**185,270**|**28,548**|**840,808**|
|**Funds at 31 March 2022**||**782,910**|**57,898**|**840,808**|**-**|
|**FUNDS AT 31 MARCH 2023**|10|**626,188**|**243,168**|**869,356**|**840,808**|



The notes on pages 24 to 34 form part of these financial statements 

Page 21 



**(A COMPANY LIMITED BY GUARANTEE)** 

## **TRANSITIONZERO** 

## **BALANCE SHEET** 

## **31 MARCH 2023** 

## **COMPANY NUMBER: 12914740** 

|Notes<br>**FIXED ASSETS**<br>Tangible assets<br>6<br> <br>**CURRENT ASSETS**<br>Debtors<br>7<br>Cash at bank and in hand<br> <br>**CREDITORS:**amounts falling due within one year<br>8<br> <br>**NET CURRENT ASSETS**<br> <br>**NET ASSETS**<br> <br>**FUNDS**<br>Restricted<br>9<br>Unrestricted - General<br>**TOTAL FUNDS**<br>10|**2023**<br>**£**<br>**12,656**<br>115,120<br>1,189,227<br>**1,304,347**<br>**447,647**<br>**856,700**<br>**869,356**<br>243,168<br>626,188<br>**869,356**|**2022**<br>**£**<br>**12,363**<br>138,831<br>1,061,283|
|---|---|---|
|||**1,200,114**<br>**371,669**|
|||**828,445**|
||||
|||**840,808**|
|||57,898<br>782,910|
|||**840,808**|



Approved and authorised for issue by the Board of Directors on and signed on its behalf by:- 

## Thomas Gardner 

Thomas Gardner (Jul 25, 2023 20:48 EDT) 

## Jul 25, 2023 

Thomas David Gardner **Director** 

The notes on pages 24 to 34 form part of these financial statements 

Page 22 



## **TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE) STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2023** 

|**Cash generated by operating activities (see below):**<br>**Cash flows from investing activities**<br>Purchase of fixed assets<br>**Change in cash and cash equivalents at the end of the year**<br>**Reconciliation of net cash flow to movement in net funds/debt**<br>Net funds at 1 April 2022<br>Increase/ (decrease) in cash in the year<br>**Net funds at 31 March 2023**<br>**Analysis of cash and cash equivalents**<br>Cash in hand<br>**Total cash and cash equivalents at end of the year**<br>**Reconciliation of cash flows from operating activities**<br>Net movement in funds<br>Depreciation and amortisation<br>Decrease/(increase) in debtors<br>Increase/ (decrease) in creditors<br>**Net cash provided by operating activities**|**2023**<br>**£**<br>**135,394**<br>(7,451)<br>**127,943**<br>1,061,283<br>127,943<br>**1,189,227**<br>1,189,227<br>**1,189,227**<br>28,548<br>7,157<br>23,711<br>75,978<br>**135,394**|**18 month**<br>**period to**<br>**31 March 2022**<br>**£**<br>**1,079,471**<br>(18,188)<br>**1,061,283**<br>-<br>1,061,283<br>**1,061,283**<br>1,061,283<br>**1,061,283**<br>840,808<br>5,825<br>(138,831)<br>371,669<br>**1,079,471**|
|---|---|---|



The notes on pages 24 to 34 form part of these financial statement 

Page 23 



**TRANSITIONZERO** 

**(A COMPANY LIMITED BY GUARANTEE) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023** 

## **1. ACCOUNTING POLICIES** 

## **a) Charity information** 

TransitionZero is registered as a company limited by guarantee (without share capital) incorporated in the UK with its registered office at 28 St. John's Square, London, EC1M 4DN. Its principal activity is the promotion of conservation, protection and improvement of the environment, in particular by promoting the reduction of carbon emissions and the improvement of air quality. 

## **b) Basis of preparation** 

The financial statements have been prepared in accordance with Accounting and Reporting b Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective 1 January 2015) – (Charities SORP (FRS 102)), the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) and the Companies Act 2006.  TransitionZero meets the definition of a public benefit entity under FRS 102. 

Assets and liabilities are initially recognised at historical cost or transaction value unless otherwise stated in the relevant accounting policy note (s). 

## **c) Going Concern** 

The charitable company has cash resources to meet its day to day working capital requirements. Current forecasts indicate that the charitable company expects to be able to operate within these facilities for the foreseeable future. 

Having regard to the above, the trustees believe it is appropriate to adopt the Going Concern basis of accounting in preparing the financial statements. 

## **d)** 

## **Income recognition policies** 

Income from donations and special efforts are recorded on a receipts basis.  Grant income is included when the related condition for legal entitlement to the grant has been met.  Contract income is included when the relevant performance conditions within the contract have been met.  All other income is recorded on a receivable basis. 

## **e) Funds** 

## _General fund:_ 

These are funds which can be used in accordance with the charitable objects at the discretion of the directors. 

## _Restricted fund:_ 

Restricted funds are to be used for specified purposes laid down by the donors. Expenditure for those purposes is charged to the fund. For more detail on these funds please see note 9. 

Page 24 



**TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE)** 

## **NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

## **1. ACCOUNTING POLICIES (CONTINUED)** 

## **f) Expenditure** 

Expenditure is recognised in the Statement of Financial Activities (SOFA) as incurred.  Expenditure on charitable activities relates to the provision of emissions analysis data.  Support costs are those functions that assist the work of the charity but do not directly undertake charitable activities. Support costs include back office costs, finance, personnel, payroll and governance costs which support the charities’ activities. 

## **g) Depreciation and capitalisation of tangible fixed assets** 

Fixed assets are depreciated over their expected useful economic lives as follows:- 

Computer equipment - 33% straight line 

Contributions towards the cost of fixed assets are included as income whilst the gross cost of fixed assets are capitalised. Items under £150 are not capitalised. 

## **h) Debtors** 

Trade and other debtors are recognised at the settlement amount due. Prepayments are valued at the amount prepaid. 

## **i) Creditors and provisions** 

Creditors and provisions are recognised where the charity has a present obligation resulting from a past event that will probably result in the transfer of funds to a third party and the amount due to settle the obligation can be measured or estimated reliably. Creditors and provisions are normally recognised at their settlement amount. 

## **j)** 

## **Legal status** 

TransitionZero is a company limited by guarantee and has no share capital. In the event of the charity being wound up, the liability in respect of the guarantee is limited to £1 per member of the charity. There were 5 members at the Balance Sheet date (2022: 3 members). 

## **k) Financial instruments** 

The charity only has financial assets and financial liabilities of a kind that qualify as basic financial instruments.  Basic financial instruments are initially recognised at transaction value and subsequently measured at their settlement value. 

Page 25 



**TRANSITIONZERO** 

**(A COMPANY LIMITED BY GUARANTEE)** 

## **NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

## **1. ACCOUNTING POLICIES (CONTINUED)** 

## **l) Pension costs** 

The company operates a defined contribution pension scheme. The charge in the SOFA is the amount of contributions payable to the pension scheme in respect of the accounting period. 

## **m) Critical accounting judgements and key sources of estimation uncertainty** 

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 

Critical accounting estimates and assumptions: 

The charity makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. 

The Trustees consider that there are no material judgements. 

## **2. GRANTS** 

|ClientEath<br>European Climate Foundation - Future Energy Outlook<br>European Climate Foundation - Steel<br>Tara Climate Foundation<br>Watttime – Phase 1<br>Watttime – Phase 2<br>Watttime – Phase 3<br>Watttime – Phase 4<br>Watttime – Phase 5<br>ClimateWorks<br>Quadrature Climate Foundation<br>Centre for Research on Energy and Clean Air RY<br>Subak|**2023**<br>**£**<br>139,917<br>79,379<br>101,403<br>14,965<br>-<br>-<br>-<br>518,538<br>88,252<br>54,134<br>950,000<br>2,659<br>4,166<br>**1,953,413**|**18 month**<br>**period to**<br>**31 March 2022**<br>**£**<br>120,000<br>144,660<br>-<br>-<br>195,450<br>224,511<br>159,478<br>151,156<br>-<br>162,402<br>1,091,667<br>161,995<br>45,833|
|---|---|---|
|||**2,457,152**|



Page 26 



## **TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE)** 

## **NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

## 3. **NET INCOME/(EXPENDITURE)** 

|**NET INCOME/(EXPENDITURE)**|||
|---|---|---|
||**Total**|**Total**|
|||**18 month**|
||**2023**|**period to 31**|
|||**March 2022**|
||**£**|**£**|
|Is stated after charging:|||
|Depreciation of tangible assets|7,157|5,825|
|Audit Fee (excluding VAT)|13,800|12,000|
|Non-Audit Fee (excluding VAT)|18,236|19,829|



## **4a** ) **CHARITABLE ACTIVITIES** 

|Staff costs<br>Depreciation<br>Other operating expenses<br>Support costs|**Unrestricted**<br>**Funds**<br>£<br>555,126<br>7,157<br>226,080<br>379,318<br>**1,167,681**|**Restricted**<br>**Funds**<br>£<br>347,562<br>-<br>370,376<br>39,246<br>**757,184**|**Total**<br>**2023**<br>£<br>902,688<br>7,157<br>596,456<br>418,564<br>**1,924,865**|**Total**<br>**18 month**<br>**period to**<br>**31 March 2022**<br>£<br>1,017,251<br>5,825<br>301,800<br>318,703|
|---|---|---|---|---|
|||||**1,643,579**|



## **4b) OTHER OPERATING EXPENDITURE** 

|Consulting<br>Project costs<br>Direct expenses<br>Staff training|**Total**<br>**2023**<br>**£**<br>564,508<br>-<br>-<br>31,948<br>**596,456**|**Total**<br>**18 month**<br>**period to**<br>**31 March 2022**<br>£<br>292,500<br>8,254<br>258<br>788|
|---|---|---|
|||**301,800**|



Page 27 



**TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE)** 

## **NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

## 4c) **SUPPORT COSTS** 

|Advertising & Marketing<br>Audit & Accountancy fees<br>Bank Charges<br>Exchange Gains<br>Insurance<br>Miscellaneous<br>Motor and Travel Expenses<br>Printing, postage and stationery<br>Professional Fees<br>Rent<br>Software and office expenses<br>Staff Cost - recruitment<br>Staff welfare cost<br>Subscriptions<br>Repairs and maintenance|**Total**<br>**2023**<br>**£**<br>4,046<br>47,310<br>217<br>2,683<br>3,824<br>42,332<br>26,813<br>65<br>31,068<br>171,056<br>13,245<br>21,575<br>15,091<br>39,239<br>-<br>**418,564**|**Total**<br>**18 month**<br>**period to**<br>**31 March 2022**<br>**£**<br>49,920<br>36,389<br>467<br>737<br>4,676<br>19,942<br>2,922<br>472<br>68,652<br>44,791<br>2,749<br>39,831<br>-<br>46,727<br>428<br>**318,703**|
|---|---|---|



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## **TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE)** 

## **NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

## **5. STAFF COSTS** 

|Wages and salaries<br>Social security costs<br>Pension costs<br>The average number of employees during the period:|**2023**<br>**£**<br>794,450<br>94,586<br>13,652<br>**902,688**<br>**2023**<br>**No.**<br>12|**18 month**<br>**period to**<br>**31 March**<br>**2022**<br>**£**<br>899,775<br>104,786<br>12,690<br>**1,017,251**<br>**18 month**<br>**period to**<br>**31 March 2022**<br>**No.**<br>8|
|---|---|---|



During the year none of the Trustees received any remuneration. During the year one trustee received reimbursement of expenses totalling £6,005 (18 month period to 31 March 2022: £NIL) and no expenses were waived in the year by the trustees and senior management (2022: None) 

The number of employees earning over £60,000 during the year was as follows :- 

|||**18 month**|
|---|---|---|
|||**period to 31**|
||**2023**|**March 2022**|
||**No.**|**No.**|
|60,001 – 70,000|3|2|
|70,001 – 80,000|1|1|
|80,001 – 90,000|-|1|
|180,001– 190,000|1|2|



The trustees consider the board of trustees, the CEO and Department Heads as comprising the key management personnel of the charity.  The total number of benefits of the key management personnel of the charity in the year were £410,589 (18 month period to 31 March 2022: £432,605). 

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## **TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE)** 

## **NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)** 

## **FOR THE YEAR ENDED 31 MARCH 2023** 

## **6. TANGIBLE FIXED ASSETS** 

|**COST:**<br>At 1 April 2022<br>Additions<br>Disposals<br>**At 31 March 2023**<br>**DEPRECIATION:**<br>At 1 April 2022<br>Charge for the year<br>Disposals<br>At 31 March 2023<br>**NET BOOK VALUES:**<br>**At 31 March 2023**<br>At 1 April 2022|**Computer**<br>**Equipment**<br>**£**<br>18,188<br>7,450<br>-<br>**25,638**<br>5,825<br>7,157<br>-<br>**12,982**<br>**12,656**<br>12,363|
|---|---|



All fixed assets are employed directly in furtherance of the charity’s objects, or in support thereof. 

## **7. DEBTORS** 

|**DEBTORS**|||
|---|---|---|
|Other debtors<br>Prepayments and accrued income|**2023**<br>**£**<br>67,577<br>47,543<br>**115,120**|**18 month**<br>**period to**<br>**31 March 2022**<br>**£**<br>32,873<br>105,958|
|||**138,831**|



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## **TRANSITIONZERO** 

## **(A COMPANY LIMITED BY GUARANTEE)** 

## **NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

## **8. CREDITORS:** Amounts falling due within one year 

|Trade creditors<br>Other taxes and social security<br>Other creditors<br>Accruals and deferred income|**2023**<br>**£**<br>47,862<br>-<br>-<br>399,785<br>**447,647**|**18 month**<br>**period to**<br>**31 March 2022**<br>**£**<br>1,148<br>42,129<br>1,886<br>326,506|
|---|---|---|
|||**371,669**|



## **9. RESTRICTED FUNDS** 

## **2023** 

|Watttime phases 1 - 3<br>Watttime phase 4<br>Watttime phase 5<br>Client Earth<br>Client Earth<br>Centre for Research on Energy<br>and Clean Air – China project<br>European Climate Foundation<br>FEO<br>European Climate Foundation<br>Steel<br>ECF Workshop<br>TARA|**31 March**<br>**2022**<br>**_£_**<br>1,208<br>19,368<br>-<br>(301)<br>-<br>3,243<br>34,304<br>-<br>76<br>-<br>**57,898**|**Income**<br>**£**<br>-<br>518,538<br>88,252<br>-<br>139,917<br>-<br>79,379<br>101,403<br>-<br>14,965<br>**942,454**|**Expenditure**<br>**£**<br>-<br>(388,303)<br>(30,623)<br>-<br>(140,103)<br>-<br>(113,176)<br>(75,844)<br>-<br>(9,135)<br>**(757,184)**|**31 March**<br>**2023**<br>**£**<br>1,208<br>149,603<br>57,629<br>(301)<br>(186)<br>3,243<br>507<br>25,559<br>76<br>5,830|
|---|---|---|---|---|
|||||**243,168**|



**WattTime Phase 4 – 5** – Climate TRACE is a project founded by a global coalition of nonprofits, tech companies, and universities created to make meaningful climate action faster and easier by independently tracking greenhouse gas (GHG) emissions with unprecedented detail and speed. Climate TRACE harnesses satellite imagery and other forms of remote sensing, artificial intelligence, and data science expertise to identify human-caused GHG emissions when and where they happen. The sub-grant is e for the purposes of supporting the completion of Phase 5 deliverables for Climate TRACE; TransitionZero is providing emissions for power generation and selected heavy industry subsectors and will support the ClimateTRACE deliverables as follows 

- Country Level Data 

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**(A COMPANY LIMITED BY GUARANTEE)** 

## **TRANSITIONZERO** 

## **NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

- Asset Level Data 

- User Support 

- Communications 

**Client Earth** - restricted funding to deliver original asset level economic analysis against ClientEarth targets in Asia, including in Japan and Indonesia. 

**European Climate Foundation FEO** - restricted funding for Future Energy Outlook (FEO) platform which supports energy transition campaigning and decision making in different geographies by developing a credible and transparent alternative to incumbent energy models providers. 

**European Climate Foundation Steel –** restricted funding focusing on the Heavy Industry sector, specifically on Steel. The funding is intended for the development of a database to asset owners and investment banks to start meaningfully pricing physical, legal, and transition risk, as well as supporting the evidence base to finance the process retrofits needed to ensure the steel sector is aligned with the temperature goal in the Paris Agreement. 

**TARA** - restricted funding to deliver economic analysis focusing on the South East Asia region. 

## **10. ANALYSIS OF NET ASSETS** 

Fund balances at 31 March 2023 are represented by:- 

|Tangible fixed assets<br>Current assets<br>Current liabilities|**Unrestricted**<br>**General**<br>**Funds**<br>**£**<br>12,656<br>1,061,179<br>(447,647)<br>**626,188**|**Restricted**<br>**Funds**<br>**£**<br>-<br>243,168<br> -<br>**243,168**|**Total**<br>**Funds**<br>**£**<br>12,656<br>1,304,347<br>(447,647)|
|---|---|---|---|
||||**869,356**|



Fund balances at 31 March 2022 are represented by:- 

|Tangible fixed assets<br>Current assets<br>Current liabilities|**Unrestricted**<br>**General**<br>**Funds**<br>**£**<br>12,363<br>1,142,216<br>(371,669)<br>**782,910**|**Restricted**<br>**Funds**<br>**£**<br>-<br>57,898<br> -<br> **57,898**|**Total**<br>**Funds**<br>**£**<br>12,363<br>1,200,114<br>(371,669)|
|---|---|---|---|
||||**840,808**|



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## **TRANSITIONZERO** 

**(A COMPANY LIMITED BY GUARANTEE)** 

## **NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

## **11. PENSION COSTS** 

The company operates a defined contribution pension scheme.  The assets of the scheme are held separately from those of the charity in a separately administered fund.  The pension cost represents contributions payable by the charity to the fund and amounted to £13,652 (18 month period to 31 March 2022 £12,690). There was no outstanding balance at the period end (2022: £1,886). 

## **12. FINANCIAL INSTRUMENTS** 

|**FINANCIAL INSTRUMENTS**|||
|---|---|---|
||**2023**|**2022**|
||**£**|**£**|
|Basic financial assets measured at amortised cost|1,294,298|1,099,715|
|Basic financial liabilities measured at amortised cost|64,092|20,634|



Basic financial assets measured at amortised cost are all cash in hand and debtors minus prepayments and VAT debtor. 

Basic financial liabilities measured at amortised cost are all creditors minus other taxes and social security and deferred income. 

The entity’s income, expense, gains and losses in respect of financial instruments are summarized below: 

||**2023**||**2022**||
|---|---|---|---|---|
||**£**||**£**||
|Total interest income for basic financial assets||-||-|



## **13. RELATED PARTY TRANSACTIONS** 

There were no related party transactions in the period (2022: None). 

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**(A COMPANY LIMITED BY GUARANTEE)** 

## **TRANSITIONZERO** 

## **NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 MARCH 2023** 

## **14. COMPARATIVE STATEMENT OF FINANCIAL ACTIVITY FOR THE 18 MONTH PERIOD TO MARCH 2022** 

|Note<br>**Income and endowments from:**<br>**Donations and legacies**<br>Donations and legacies<br>**Income from charitable activities**<br>Grants receivable<br>3<br>Climate training<br>2<br>**TOTAL INCOME**<br>**Expenditure on:**<br>**Expenditure on charitable**<br>**activities**<br>Provision of workshops<br>Provision of emissions analysis<br>**TOTAL EXPENDITURE**<br>5<br>**Net income/ (expenditure)**<br>4<br>Transfers between funds<br>**NET MOVEMENT IN FUNDS**<br>_Funds at 30 September 2020_<br>**FUNDS AT 31 MARCH 2022**<br>11|**Unrestricted**<br>**Funds**<br>**£**<br>**500**<br>**1,386,271**<br>**-**<br>**1,386,771**<br>**-**<br>**603,861**<br>**603,861**<br>**782,910**<br>**-**<br>**782,910**<br>**-**<br>**782,910**|**Restricted**<br>**Funds**<br>**£**<br>**-**<br>**1,070,881**<br>**26,735**<br>**1,097,616**<br>**26,660**<br>**1,013,058**<br>**1,039,718**<br>**57,898**<br>**-**<br>**57,898**<br>**-**<br>**57,898**|**Total**<br>**2022**<br>**£**<br>**500**<br>**2,457,152**<br>**26,735**<br>**2,484,387**<br>**26,660**<br>**1,616,919**<br>**1,643,579**<br>**840,808**<br>**-**<br>**840,808**<br>**-**<br>**840,808**|
|---|---|---|---|



Page 34 



## Audited Financial Statements and Trustee 

## Report 

Final Audit Report 2023-08-02 Created: 2023-07-25 By: Hristina Petkova (hristina@transitionzero.org) Status: Signed Transaction ID: CBJCHBCAABAACFgDwRosmLbYAwSpL3rKPmF1p9h2WW2L 

## "Audited Financial Statements and Trustee Report" History 

Document created by Hristina Petkova (hristina@transitionzero.org) 2023-07-25 - 12:38:33 PM GMT 

Document emailed to Thomas Gardner (tgards79@gmail.com) for signature 2023-07-25 - 12:42:24 PM GMT 

Email viewed by Thomas Gardner (tgards79@gmail.com) 2023-07-26 - 0:48:25 AM GMT 

Document e-signed by Thomas Gardner (tgards79@gmail.com) Signature Date: 2023-07-26 - 0:48:44 AM GMT - Time Source: server 

Document emailed to Alastair Lyon (alastair.lyon@crowe.co.uk) for signature 2023-07-26 - 0:48:45 AM GMT 

Email viewed by Alastair Lyon (alastair.lyon@crowe.co.uk) 2023-08-02 - 8:28:13 AM GMT 

Document e-signed by Alastair Lyon (alastair.lyon@crowe.co.uk) Signature Date: 2023-08-02 - 8:28:58 AM GMT - Time Source: server 

Agreement completed. 2023-08-02 - 8:28:58 AM GMT