Five key factors for your successful climate transition plan

Is your business ready? The Transition Plan Taskforce’s (TPT) Disclosure Framework means businesses should publish details on how they will transform to operate at net zero and the steps they will take to get there.

Many businesses have set science-based targets, which means halving emissions by 2030 for the vast majority. Achieving this deep decarbonisation requires enterprise-wide transformation across products, services and operations – from linear and extractive, to circular and regenerative. To do this over the next six years requires a robust and pragmatic transition plan.

The Transition Plan Taskforce (TPT) recently published their guidance on what a credible climate transition plan looks like and there’s lots to work through, across some key areas:

• setting a clear ambition and assessing the impact on the business;
• defining strategies for implementing change and engaging customers,employees, suppliers and external stakeholders;
• defining targets and metrics to track and report on progress; and
• standing up an enterprise-level change programme with accountable senior leaders for delivery.

This isn’t mandatory yet, but the ‘transition plan’ framework is expected to become the ‘gold-standard’, as the TCFD became. So, organisations need to get going.

But this is not a simple planning exercise…

Businesses need a plan that delivers bold ambitions to cut emissions without compromising commercial performance, while still engaging leaders and employees in the process of creating a practical transition plan to reach 2030 goals – otherwise it will sit on the shelf.

How can you create a realistic climate transition plan and set up for success?

We recently interviewed business leaders across a range of sectors to understand the challenges they’re facing in delivering their sustainability ambitions.

Based on these insights and our experience of sustainability transformation, we have five critical success factors for creating your realistic net-zero transition plan and setting your organisation up for delivery success.

1. Align leadership mindset and get buy-in from the top

Achieving net-zero means re-thinking how you do business. Our recent interviews revealed that leaders are not always aligned on the competing priorities of cutting costs, improving margin and growing sales, while operating with 50% lower emissions by 2030. Net zero plans can still feel disconnected from commercial objectives and plans, so before defining your plan to cut carbon, it’s crucial to align leadership on the level of ambition and balance of priorities across the business for the near and long-term. Be realistic as 2030 is only a few business planning cycles away.

2. Engage consumers and suppliers

Decarbonisation is a team sport. For most organisations, the bulk of their emissions are in their supply chain or consumption of products and services, yet some organisations we spoke to hadn’t yet considered how to engage customers on behavioural change such as with circular-based services. Scope 3 plans are generally at an early stage, requiring more engagement with suppliers to determine how to get to net zero. It’s therefore crucial to engage customer and supplier representatives in the transition planning process, to make it real. In fact, many expressed that consumers are increasingly keen to be engaged in how they can reduce energy, water and food waste.

3. Be data-driven

If you can’t measure it, you can’t change it. Much of the data that needs to be collected and measured is not often available at the right level of detail or consistency, or requires manual effort to acquire. While many organisations are keen to incorporate carbon risk and pricing into financial planning, this requires the right data to inform decision making.

A key part of creating a credible transition plan is defining the use cases for data in decision making and progress tracking, and working with suppliers to find an efficient way of sourcing the data. While it will take time to build up the maturity of your data, be transparent on assumptions that form action across the transition plan. You can iterate your plan as data maturity improves; it doesn’t need to be perfect first time.

4. Align your ‘be-do-say’ to be credible

The fear of greenwashing, green-hushing or green-botching applies to transition plans, as these need to be public disclosures. So, you need alignment from your organisation’s purpose (be), its plans and actions (do) and your communications (say). This should come through in your transition plan disclosure but also across all sustainability communications, from your strategy and annual report to your customer communications. It’s also important to highlight where there are gaps between be-do-say, so leaders can take action to address this. Use the transition planning process to flush out these issues and have an open debate about how to align the narrative for your business.

5. Stand-up the change programme and governance to deliver at pace and evolve

Based on our interview insights, governance to manage delivery of sustainability initiatives is often not fit for purpose. Accountabilities are not always integrated into business roles, the governance doesn’t drive progress and resolve risks or issues as it should, and progress slips. As 2030 looms nearer, businesses need to manage their climate transition with the rigour of any other large complex transformation.

Developing a robust transition plan requires more than just your sustainability team to take action, it requires an enterprise-wide transformation effort. There are several essential components you’ll need to have in place, including accountable executive sponsorship, a network of skilled change makers in each department, and management information, reporting and governance to drive progress.

MORE THAN A ‘PAPER EXERCISE’

Building a transition plan is more than a ‘paper exercise’ – it needs to be owned by business leaders, bold yet realistic and inspiring to employees. Creating the plan will become essential disclosure practice, but delivering the transition requires the multi-year transformation of your organisation.