On 26 March, we hosted our sustainability professionals’ roundtable about transition planning. The lively discussion and clear engagement from participants clearly showed how timely it was to explore this topic.  

The rise of transition planning 

To understand the current focus on transition planning, we need to go back to the Paris Climate Agreement in 2015. The Paris Climate Agreement was not just a milestone of global agreement between countries on a common climate goal. It was also the moment that the business community was brought into the global climate agenda.  

The Science-Based Targets initiative (SBTi) was launched in December 2015 just after Paris, with the recognition that global climate goals could only be achieved if the business community was on board. At the launch, the SBTi was backed by 114 companies that had committed to an SBT. Since then, the number of companies with SBTi-commitments or targets has surged to over 10,000 and its Net Zero Standard has become the gold standard for credible corporate net-zero target setting.  

 Setting a net-zero target and getting it validated by the SBTi is an important step. The process of setting a target makes a company think through what is required to get to net zero emissions. As we approach the near-term milestones of these net-zero strategies, it is increasingly important to have a clear plan also beyond 2030. Companies are beginning to recognise that incremental emission reductions will not be enough to achieve their long-term climate goals.  

Our roundtable discussion explored multiple aspects of transition planning, summarised in three words: credibility, dependencies and honesty. 

Credibility 

Credibility was the most mentioned word when we asked why their organisation would publish a climate transition plan. Participants also emphasised the importance of transparency and setting an example to inspire and motivate others in their value chain to follow suit. 

Dependencies 

Much of the discussion revolved around the areas where companies rely on external factors to achieve their emissions reduction targets. Transition plans often include expectations that demand for certain high-emission products will fall in order to meet net zero. Getting suppliers to commit to and deliver net zero is challenging. These types of dependencies make it hard for companies to confidently develop a concrete transition pathway all the way to 2050. 

Honesty 

Given the complexity of fully eliminating emissions, the uncertainties that come with projecting 25 years into the future, and the dependencies described above, a transition plan is not about describing the exact pathway to net zero. Good transition plans state clearly how a company will address the emissions in its direct control, and how it will drive change in areas where it merely has influence. Rather than specifying the exact outcomes of business decisions, it describes how the company will make sure that decisions are aligned with its net-zero targets. 

Creating a virtuous cycle and accelerating progress towards net zero 

The engagement of the business community with transition planning is a positive development, and essential for achieving net zero by 2050. Recently published transition plans show that guidance is being implemented effectively, and a strong body of good practice is emerging. The more companies that adopt transition planning, the more the mutual dependencies turn into a virtuous cycle in which everyone benefits from each other’s actions. 

To discuss how you can begin implementing a business transition plan, book a call or meeting with our expert, Sytze Dijkstra today.

Author: Sytze Dijkstra, Netherlands Country Manager