December 19

Transition Plans for Net Zero organisations

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There has been a wave of companies and organisations announcing their ambitions to transition to Net Zero emissions.

Transition plans detail what actions are required to deliver on climate objectives. Strong plans allow investors, governments, NGOs and other to hold the organisational leadership to account and support the best allocation of resources and capital to support the transition.

A transition plan is integral to an organisation’s overall strategy. The transition plan sets out how an organisation will contribute to and prepare for a rapid transition to a low GHG-emissions economy.

The Transition Plan Taskforce (TPT) best practices framework

A best practices framework was developed recently in the UK by the Transition Plan Taskforce, who released their disclosure framework in late 2022.  (The Transition Plan Taskforce Disclosure Framework NOVEMBER 2022).  The Transition Plan Taskforce (TPT) was launched on 25 April 2022 in the UK. It is developing a gold standard for transition plans, encouraging entities to back up their targets with rigorous and credible short-term actions. The TPT has a two-year mandate, bringing together leaders from industry, academia, and regulators, and coordinating with international efforts, such as the International Sustainability Standards Board (ISSB) and the Glasgow Financial Alliance for Net Zero (GFANZ). The TPT framework, the Terms of Reference and information on the membership of the TPT’s Steering Group and Delivery Group and their responsibilities can be found on the TPT website.

According to the TPT, there are three guiding principles to developing a best practice transition plan. These are Ambition, Action and Accountability.

Ambition

Ambition is about preparing for and playing a leadership role in the orderly but rapid and economy wide net zero transition. A transition plan should outline ambitious actions and priorities for contributing to, and finding the opportunities in, the zero-carbon transition. The plan should cover the whole organisation, considering the full range of influence and levers an organisation has available. The ambition should emphasise the significant contributions the organisation can make to an economy-wide transition. Ambition implies that emissions reduction targets include Scope 1 (onsite), 2 (direct offsite) and 3 (indirect and embodied) emissions. Ambition should prioritise decarbonisation through direct abatement in operations and supply chain, over just purchasing carbon credits. The ambition should reflect the urgency to act. It needs to be informed by the latest international science, as well as national and state decarbonisation targets, and local climate emergency declarations.

Action

A transition plan should translate long term ambition into practical short- and medium-term steps to practical and achievable goals. The transition plan becomes integral to the organisations overall strategic planning. The transition plan should be connected to the organisation’s wider business and operations planning, and the financial accounts and goals. This needs to be backed up by clearly articulated resourcing plans, and a deliberate research and development budget. Best practice plans outline assumptions, and provide analysis of dependencies and uncertainties, while assessing the sensitivity its of the plan to changes in these assumptions to seek to mitigate delivery risks where possible. Ideally the plan should inform existing continuous improvement and environmental management systems.

Accountability

Delivery of a transition plan should be supported by robust governance and accountability mechanisms at the highest levels in the organisation. There should be relevant targets and incentivisation, reporting and accountability structures. Actions need to be stated as SMART goals, underpinned by traceable metrics that are monitored and reported on regularly. The goals should be integrated as part of the general-purpose financial reporting and operational indicators. Organisations should be transparent about the degree to which translation plans are subject to external verification, certification or assurance, and should seek to take account of feedback from stakeholders as part of a continuous improvement process.

What’s in the plan?

The scope of a transition plan should examine all material interdependencies with stakeholders and the natural environment, including workers, suppliers, industry organisations, communities and customers. For companies, the plan should include any transition relevant actions which are significant for an organisations long term profits, growth, market position and share value.

Net Zero TPT disclosure framework
Net Zero TPT disclosure framework

Why a Net Zero Transition Plan is urgent

Commitments and good intentions will only take us so far. It is important that a high quality plans are developed to show how an organisation will meet their commitments. Transition plans are a key building block to show how a Net Zero future will be delivered.

Net Zero transition plans support leadership teams through complex transformation. They support dialogue with stakeholders – whether they are internal, or with government or customers.

They also articulate a positive vision for the future, and how the organisation will survive and thrive the coming technological disruptions.

About Organica Engineering

Organica engineering has been helping organisations and large projects with their sustainability transitions for over 15 years. Organica Engineering has a strong technical and practical focus on making sustainability ideas work. We support industry leaders to realise their future focused vision.

Contact us if you would like a discussion about Net Zero transition plans.


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