For the many firms who have made climate commitments, the question is: “Now what?” The easiest next step is to publish a high-level decarbonization roadmap and continue with business as usual. Unfortunately, that comes with no climate benefits and creates significant risk exposure, ranging from greenwashing accusations and legal noncompliance to higher operational costs as other parts of the economy transition and climate risks intensify. Instead, it’s necessary for organizations to work towards delivering on their commitments. Central to this endeavour is a transition plan.
A transition plan lays out the targets, actions and resources that support an organization’s strategy for contributing to and preparing for a low-carbon, climate-resilient economy. The plan should be forward-looking and include clear steps to reduce emissions, as well as descriptions of the governance systems, risk management and other elements that enable success (see below).
Transition planning can, and should, build on internal processes already in place. For example, a good transition plan engages stakeholders from across the organization, including senior executives and the board – so why not use existing engagement forums to bring in finance, risk, legal, operations, procurement and other leaders? Transition plans can even be embedded within other strategic plans. In this way, climate-related operational changes and value chain engagement become part of the firm’s strategic objectives. This alignment with business strategy makes it more likely that the transition plan will be funded and ultimately implemented.
Integrating climate and business strategies has the additional benefit of making the overall business plan more resilient to climate risks and taking advantage of climate-related opportunities. As the value of contributing to and preparing for a low-carbon, climate-resilient economy becomes apparent, it’s easier to bring internal stakeholders on board and institutionalize climate governance systems – a prerequisite for climate action.
Of course, this doesn’t happen overnight. Transition planning is a process, and it’s important to get started now without worrying about perfection on the first go around. By design, transition planning is iterative – plans need to be updated at least every 3-5 years in response to internal progress, improved emissions data, new technologies, changing policies, updated climate risk assessments and market developments. Starting early creates learning opportunities that can be integrated into later iterations, laying the foundation for improvement. The climate is changing rapidly and the transition to a low carbon economy is underway. Waiting to start the planning process will leave a firm ill-prepared for these global transformations.
To learn more, check out our research on best practices for developing climate transition plans. Practitioners can access the research for free by signing up for Verdantix Vantage.
