News and Insights
Climate transition planning: from aspirations to action
August 23, 2023
London aims to lead the way in the fight against climate change – this much was clear from a day spent at this year’s London Climate Action Week (LCAW) in June. In the opening address for the day, Shirley Rodrigues, London’s Deputy Mayor for Environment and Energy, went so far as to highlight the city’s position as the ‘world’s capital’ for green finance. The sentiment is certainly aligned with LCAW’s core goals: to promote cooperation between key parts of the London climate ecosystem and improve the impact of London’s global climate action networks.
High on the 2023 agenda was the growing need for global and London-based companies alike to confirm their commitment to helping limit global warming to below 1.5 °C. And if companies create ambitious plans and targets – then subsequently act on them – they will reduce their own emissions while simultaneously encouraging governments to take stronger action. In other words, every business needs to establish a comprehensive climate transition plan.
But what exactly does it mean to have a climate transition plan, and how are companies moving from plans to action?
Backed by science – and the law
According to the Carbon Disclosure Project (CDP), a not-for-profit charity that specialises in climate disclosure: “A climate transition plan is a time-bound set of actions that clearly outlines how an organisation will pivot its existing assets, operations, and entire business model towards a trajectory that aligns with the latest and most ambitious climate science recommendations.”
While we should not need reminding, the key motivation for actioning a climate transition plan is found in the science. The recent Intergovernmental Panel on Climate Change (IPCC) synthesis report served as yet another bleak reminder that climate change is continuing to impact ecosystems, biodiversity, and human communities alike at both a global and regional level.
Having a transition plan in place does not just make climate sense for companies; it makes business sense as well. Organisations must ensure that their business models will remain robust and profitable in the net-zero economy of the future. And putting a solid climate transition plan in place is the best way to do this.
Even the most apathetic businesses will not be able to slip through the net for much longer: the UK government recently legislated the decarbonisation of all sectors of the UK economy to meet net-zero targets by 2050. Inevitably, this will increase climate disclosures (like the Task Force on Climate-related Financial Disclosures (TCFD) and drive change across the whole economy towards net-zero.
Powering action
As it stands, few companies have credible and actionable climate transition plans in place. In an attempt to turn the tide, the UK Transition Plan Taskforce (TPT) announced at COP27 that it had launched a gold-standard ‘Disclosure Framework’ in conjunction with ‘Implementation Guidance’, as part of the UK’s plan to become the world’s first net-zero financial centre.
One institution ahead of the curve – and fully committed to turning its climate ambitions into a reality – is the Bank of England (BoE), which laid out its Climate Transition Plan (CTP) at LCAW. The bank’s overall target is to reduce its greenhouse gas emissions from its physical operations by 90% by 2040 (compared with 2016), with interim milestones in place for every five years – with 40% by 2025 being the first. For all businesses, emissions reductions should include both direct (Scope 1) and indirect (Scope 3).
In general, Scope 1 emissions are much easier to address. For example, the BoE announced that it will be changing the system that cools its data centres, which should save roughly 150 tons of direct emissions per year. On the other hand, Scope 3 emissions will be much trickier to tackle. Businesses will have to engage with their supply chains to make sure that they can mitigate their own emissions. The BoE is changing the way it tenders for the supply of polymer used in the production of its bank notes, so concerns around climate disclosure and traceability will undoubtedly cause issues.
Communicating climate plans
With so many companies being accused of greenwashing, having an efficient communications strategy is invaluable as businesses look to implement their climate transition plans. Every climate action plan must have an equally resilient and considered climate action communication plan. As calls for further disclosure grow louder and regulation looms on the horizon, businesses are being left with few excuses: either hold yourself accountable or risk being exposed.
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