“Measurement is the X-Ray, net zero commitments are the diagnosis but transition plans are the treatment.” Paul Dickinson, Co-Founder
CDP
?
At
London Climate Action Week
(LCAW) 2024
Giki
and the Race to Zero hosted a roundtable, bringing together policy experts and practitioners at leading companies to discuss one of the next big trends in sustainability – Transition Plans.??
Transition Plans lay out the strategy, including targets, actions and resources, that organisations can use both publicly and internally to demonstrate how they are going to reduce greenhouse gas emissions, manage risks and opportunities and contribute to an economy wide transition. As a result, they are a critical component for companies looking to transition towards a low-carbon economy because without a full, thought-out plan it’s hard for any company to achieve the speed and scale of emissions reduction that’s needed.?
At the Transition Plan roundtable, we heard from transition plan experts including:??
-
Paul Dickinson
, Co-Founder CDP, Co-host Outrage+Optimism and Time100 Climate 2023?
-
Jules Peck
Co-Chair WBCSD Responsible Policy Engagement and Partner ERM?
And from sustainability professionals who are responsible for implementing plans including:?
From a wide ranging and detailed discussion here are the 6 key insights we took away:?
The
Transition Plan Taskforce (TPT)
brings clear guidance and by building on frameworks already in place it provides companies with one resource of best practice?
- Kate Levick from the TPT highlighted that the TPT’s work was focused on all stakeholders and the international context. Right from the start they were looking to build something that could bring together frameworks and different actors together.?
- For us this forward thinking was highlighted by an announcement as part of LCAW that the
IFRS Foundation
will assume responsibility for the disclosure-specific materials developed by the Transition Plan Taskforce.?
- This is part of a wider trend in sustainability moving towards global alignment.?
It’s not just about the final document, it’s about everything that goes into creating and implementing it
- A number of participants highlighted the 3As. Ambition, action and accountability. These served to underline?that any plan must be a rounded approach and that it’s not just about how you are going to get there but also managing risks and opportunity and how contribute to the overall economy wide transition as companies make the transition. The process is as important as the published plan.?
Only with a plan will we see the climate action we need?
- Paul Dickinson provided a simple, clear summary of where transition plans fit in “Measurement is the X-Ray, net zero commitments are the diagnosis, but transition plans are the treatment.”?
- Everyone needs a plan. Countries have NDCs (National Determined Contributions), companies have Transition Plans. We thought the launch of Mission 2025, a coalition convened by Groundswell, encouraging governments to increase their climate ambitions at LCAW, demonstrates the interplay between plans that is going to become increasingly important.?
There’s real excitement that transitions plans are the next big step in sustainability?
- Participants highlighted that more and more countries are looking at transition plans including the EU, UK, Australia and Singapore as part of wider regulation on reporting. They also form a part of the
International Sustainability Standards Board (ISSB)
first two Standard on Sustainability disclosure. Expect to see an accelerating trend in regulators, investors, clients and employees seeing plans as a necessary part of a company’s strategy.??
- From a very experienced group, transition plans are seen as one of the most exciting developments in 25 years.?
- Some believe that it goes beyond that and that without transition plans companies will struggle to compete in a changing global marketing place. As one participant put it “There’s a huge transfer of wealth that will happen and companies need to decide if they’re Canon or Kodak”.?
There’s a lot involved in building a plan. But practitioners were able to share some of the key elements of building a plan:?
- Steven Thompson at National Grid highlighted the importance of leading the way. For National Grid this was because the electricity industry is at the heart of the low carbon transition and their first plan, in 2021, was well ahead of almost all companies. However, many participants shared the view that leading by example is important to drive change.?
- Steven also highlighted that whilst shareholders were a key driver they’ve seen multiple other benefits including: having a plan has enabled employees to see where they fit in; the plan has allowed deeper conversations with stakeholders as they have with the plan and the data to support it.??
- As National Grid move to their second plan, one of the key parts is the role of external dependencies and specifically what they are doing about them. For them regulation, planning reform and sector alignment are important and policy was topic that many participants came back to time and again.??
- Alexis Munro from NatWest highlighted that transparency is key and multiple stakeholders were pushing for a transition plan including investors, regulators and colleagues. We believe this point, echoed by others, shows the importance of getting started immediately as the demands will come. Alexis shared some practical and insightful learnings: data is key, as only then can you have data driven decision making, the plan needs to be integrated with budget process (this links to the TPT guidance) and the materiality lens is crucial as you need to know where to focus effort.??
- However, we also thought her final point needs to be remembered, “Don’t forget the excitement – people need to see the opportunity!”. Sometimes this can be forgotten in sustainability, but the picture for business has to be one of commercial success and growth. As with National Grid, Alexis also highlighted the importance of understanding dependencies, but noted this is so they can be communicated internally as well and externally.?
- Stuart West from Deloitte highlighted the need for deep planning as this needs to be an organisation wide change. Everyone from the board down needs clarity on not just what the plan is but how it will be achieved.??
- Linked to the need for company wide change Stuart also talked about the need for sustainability teams to make sure they’re not sitting in a silo. Cue much nodding from all people in sustainability!?
Last but definitely not least. Policy is crucial (but don’t wait for it to be perfect)?
- As noted above, a key part of a transition is dependencies and within this policy is going to be paramount. This was highlighted by Jules Peck from ERM as a central part to companies building the plan and that we must make sure it’s not the missing piece.?
- However, at the same time Tessa Ferry from the Race to Zero implored people not to wait for policy to be perfect. We don’t have time for that (and it’s an unachievable goal) so companies need to take the lead.?
- Paul Dickinson summed it up well, “We need whole company thinking and that involves innovation, strategy and public affairs all being linked”. This is new ground for many companies.?
And one final quote from Tessa Ferry from the Race to Zero to sum up,” Now is the time to start thinking about transition plans, how you are going to be sustainable, how you’re going to survive the next 10 years. Look at the TPT and start doing it!”?
