Transition plans: Firms warned of ‘fine line’ between acknowledging obstacles and making excuses
Consultancy SB+CO points to best practice in new guidance on corporate transition planning
Companies have been warned of a “fine line” between acknowledging external factors in their climate transition plans and “simply making excuses for a lack of progress”.
New guidance on transition plans claims it is now a hallmark of credibility for a firm to discuss its reliance on elements beyond its control to achieve its decarbonisation goals, but that it should namecheck the specific actions or policies it dependents on, along with steps that can be taken to address them.
SB+CO, the sustainability consultancy behind the guidance, advised firms to map and prioritise their dependencies based on the level of control or influence they have over them. This is a strategy already common when assessing enterprise risk, it noted, “where a business chooses to avoid, mitigate, accept, defer, or monitor each risk depending on [its] respective potential impact and likelihood”.
This week also saw academic journal Science Direct publish a paper proposing ways to identify, quantify and manage transition-plan dependencies.
The research, authored by researchers at the University of Oxford, gives sectoral examples and next steps.
It echoed SB+CO’s concerns about firms using dependencies to justify inertia, noting that this was a common theme raised in interviews with “non-corporate transition experts”.
Last week, REP reported that National Grid had blamed factors beyond its control for being off-track in the first year of its climate transition plan.
SB+CO’s guidance provided examples of good practice, including US packaging firm Ball’s use of scenarios to “create a transition plan that can flex based on the external landscape”.
Danish shipping and logistics company Maersk was also praised for disclosing its work with the International Maritime Organisation, which will be a key lever to help it address some of its dependencies.
The Science Based Targets initiative (SBTi) recently closed a consultation on a draft of its corporate climate standard, which includes more emphasis on transition plans.
SBTi wants companies to publish transition plans within a year of getting their climate targets validated, and says they should include an explanation of how firms plan to achieve them.