Transition plans are essential tools for organisations strategically navigating their path to net zero. With the newly launched Transition Plan Taskforce’s sectoral guidance, the ground rules have been set for what is expected from companies’ transition plans to get them to net zero.
But as the requirement for mandatory transition planning rises, how do we make sure those plans are meaningful and financed to be effective? What governance and regulation is in place to help steer organisations through transition planning? And, how can we make sure transition plans align with credible net-zero pathways? We explored these questions in our first thematic webinar on mandatory transition plans in June 2024. Our convened panel of experts shared insights with our Community for what businesses can expect from policy, and equally how businesses can contribute to net-zero policy on transition planning.
For those who missed the webinar, we’ve summarised some of our key takeaways from the session:
1. Demand for robust transition planning is growing amongst investors
Dr Jennie Dodson (WBCSD) shared that demand for and interest in robust transition planning is growing, especially amongst policymakers and investors. Investors want to see the structure that transition plans give organisations’ internal strategic decision-making. These plans can therefore provide a competitive edge for organisations when engaging with investors and stakeholders. But as increasing numbers of companies launch transition plans investors and other stakeholders want to see their robustness, alignment and comparability. Therefore, enforcement mechanisms are a crucial part of ensuring the integrity of these plans, and allow firms’ progress and actions to be assessed by external parties.
2. Companies are advocating for shifts in policy environments to help them deliver on their transition plans
Findings from comparative analysis of the net zero governance landscape, shared by Dr Matilda Becker, show that encouragement amongst net-zero standards for companies to advocate for the policy environments that would make their transition plans achievable is quite limited. Meanwhile, during Jennie Dodson’s reflections on WBCSD’s membership, we heard that companies are focusing on policy advocacy as part of their transition plans, in coalition with other firms. This policy engagement by companies is being matched by increased focus on internal company policies that will enable a company to meet its net-zero commitments through its transition plans – whether through supplier engagement or workforce development.
3. Sector-level guidance is key for transition plan guidance that pinpoints interventions to make deep emissions cuts
The TPT’s newly-published sectoral guidance is complementary to the TPT Disclosure Framework published in October 2023. The guidance is provided to 30 sectors, with additional deep-dive guidance to seven sectors including food and beverages, oil and gas, metals and mining. These sector-specific aids help bridge a critical gap within transition plan guidance more generally. As shown by Oxford Net Zero’s comparative net-zero guidance analysis, there is limited convergence around recommendations that could have material impacts on decarbonisation and emissions reductions such as phasing out fossil fuels or switching to renewable energy supply. Sector-specific guidance provides the nuanced detail needed by different sectors with different emissions profiles to evaluate most effective decarbonisation levers at their disposal.
4 . Transition plans are a crucial start, but they need to align with credible pathways to net zero
Establishing systems where credibility of transition plans can be evaluated is a hefty governance challenge. Panellists presented different potential solutions to this. Ira Poensgen of the Transition Plan Taskforce suggested that existing policies to assess companies’ net-zero commitments through e.g. procurement processes should additionally focus on their transition plans. This allows for a level of supervision and credibility assessment by buyers. Kaya Axelsson added that a global public data utility platform, similar to that proposed for the UNFCCC’s Global Climate Action Portal, could be used to assess, track and compare companies’ transition plans over time. Meanwhile, Jennie Dodson highlighted the importance of collective learning to ensure transition plan credibility, with the use of working groups a key way that WBCSD brings its members together to be prepared for sustainability disclosures.
The invited panel of speakers were:
A full recording of the webinar can be found here.
Written and researched by Wei Qiang