New Report Lays Out Best Practices For Corporate Climate Transition Planning

New Report Lays Out Best Practices For Corporate Climate Transition Planning

Firms face increasing pressure to act on their climate targets. A crucial first step for moving from goal-setting to implementation is a transition plan that lays out concrete actions that an organization will take as it prepares for and contributes to a low-carbon, climate-resilient economy. Although several organizations have put out transition planning guidance, questions remain about best practices.

The Verdantix team has been researching the value of transition plans, what a good plan looks like and how organizations should approach the undertaking. We interviewed sustainability leaders from 10 firms that have either published or are in the process of creating a transition plan. We also spoke to consultants and software vendors who support transition planning, reviewed transition plan guidance documents, and read 31 transition plans from various industries. Among other aspects, we have found that a good plan covers:

• GHG emission reductions.
  GHG management forms the backbone of many corporate transition plans. This often starts with net zero targets and roadmaps, but to be a transition plan, it must go further and address specific actions to reach decarbonization goals. Good plans identify how a firm will finance and carry out changes to production processes, renewable energy procurement, climate-friendly products and services, and other activities that support decarbonization.
  
  
• Comprehensive risk management.
  In addition to carbon management, transition plans should address other climate and nature-related risks. This encompasses strategies to reduce risks to the plan and other physical and transition risk management activities that increase overall climate resilience. Further integrating climate risk management into strategic planning and enterprise risk management helps make the business case for implementing the transition plan and increases the likelihood of success.
  
  
• Climate governance.
  Strong climate governance that engages senior leaders from across an organization is a prerequisite for both developing and implementing a transition plan. Good governance often includes tying executive remuneration to climate targets, providing climate training for employees and board members, and building a culture of sustainability. These initiatives help secure resources to carry out the plan and to periodically update it.
  
  
• Just transition.
  Transition plans should assess and address impacts on workers, communities and consumers. Although many firms acknowledge the importance of a just transition, few transition plans include detailed descriptions of how the organization will support equitable outcomes.

Addressing all of the above requires significant work and extensive information. People from many parts of the organization – for example finance, legal, operations, procurement and risk – must be involved. Necessary data are climate risk analyses, GHG emission inventories, financial information and business plans. To learn more about how to bring all this together into a high-quality transition plan, check out our recent report on best practices for developing a corporate transition plan.