Ultimately, COP26 did not have the impact that the UK government was hoping, but it did lead to the inception of some important projects, one of which being the Transition Plan Taskforce (TPT).
The remit of the TPT was simple. For too long there had been a lack of standardisation or homogeneity around climate transition plans. It had been at the discretion of individual companies to decide what information is contained within a transition plan, what targets are set, and the timeline to which they are working towards. Most companies just followed the guidance laid out as part of the wider rules set by the Task Force on Climate-Related Financial Disclosures (TCFD), but the TPT wanted to go further, they wanted to create a “gold standard” for transition plans.
A climate transition plan is a timeline of actions (best practice would have decreed that these actions be backed by clearly measurable targets and underpinned by accountability measures at the company) that details how a business will transition its activities away from carbon-intensive practices to more carbon-neutral or carbon-positive ones.
A thorough transition plan gives companies a tool that allows them to develop strategies on how they deliver their climate objectives whilst addressing their associated, identified risks and opportunities. Crucially, if engaged with properly, climate transition plans allow companies to gain foresight on climate-related risks and opportunities that are upcoming and put in place holistic measures to engage with them.
For instance, if a company can see that a great deal of their carbon-intensive equipment is up for renewal in the upcoming years, they can take steps to find more carbon friendly alternatives.
If a company operates without an effective transition plan their efforts to move to a less carbon intensive model will lack cohesion and clarity, making them far less impactful. A thorough transition plan can, therefore, serve as a really distinguishing mark between your company and your competitors.
The TPT recommends that a good climate transition plan should have three elements. It should be ambitious (it should be clear from your targets that you believe your company can hit ambitious targets in a short timescale), actionable (an action plan should be backed by concrete steps and a fully realised timescale) and accountable (it should be backed by clear targets (ideally endorsed by a third-party expert) and each stage should have defined associated deadlines with penalties for overrun).
The TPT knows that this could be a daunting prospect, and so have created the following four-point plan to break down the steps of creating a gold standard transition plan.
1. As with any thorough disclosure it starts with assessing your baseline, work out where you are currently and what information you have access to.
2. Based on where you are at the moment you set your ambitions, a serious of objectives and targets to reduce your company’s GHG emissions.
3. Then you develop your action plan, a strategic roadmap alongside a change-management programme to set out how you are going to convert your business.
4. Finally, you take concrete steps to make this plan accountable and deliverable in a timely manner.
Well, that is a fair question. According to the Carbon Disclosure Project, “very few companies currently have a credible climate transition plan” and so it is possible that one isn’t very high on your company’s list of priorities.
However, change is coming. Fundamentally, all companies will be affected by the global transition to less carbon-intensive ways of operating. Pressure is building both from the public at large and from investors so taking steps to de-carbonise your business now will ensure that you stay ahead of this scrutiny.
The change is coming from the legislative side as well. The UK government has a stated aim of becoming a net-zero finance centre and they “intend to legislate to deliver this”. In support of this aim, the implied goal of the TPT has always been to provide this ‘gold standard’ as a precursor to the UK government mandating transition plans.
From the TPT’s Disclosure Framework, it is clear that the UK’s eventual mandated transition plan requirement will go far beyond the rather minimal transition plans currently required by TCFD.
Whilst we currently do not have a timescale for when transition plans will become mandated, we will inevitably learn more once the TPT have analysed the public consultation (which closes on February 28th) they currently have out there to gather thoughts and inputs.
Whilst the climate transition plan landscape may seem like an overwhelming prospect, there is no need to worry at this stage. We will continue to follow the development of this narrative going forward. At Black Sun we pair industry-leading best-practice knowledge with contemporary understanding of the ever-shifting regulatory landscape to ensure that our clients are positioned in the best possible way to be able to tell their sustainability story with effectiveness and authenticity.
If you would like to hear more about how Black Sun can help your business tell your ESG and sustainability story, please get in touch enquiries@blacksun-global.com
Black Sun is a global group of strategic advisors, consultants and stakeholder engagement specialists. We believe that brands and businesses can have a big impact on our society – they can shape more ethical practices, build more inclusive communities and deliver more sustainable performance. Ultimately, they can spark positive change in the world.
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