The Ideas
The discussion opened with an introduction to Transition Plans, defined as a plan laid out by a company for it to achieve their threshold of CO2 emissions for a 1.5°C world which requires yearly updates on progress. Such plans demand high integrity and transparency from companies and institutions, eliminate potential greenwashing, and catalyze essential economic transformation.
In addition, the reasons for the establishment of transition plans were explored. Specifically, following COP26 in Glasgow, the general population had seen that, overall, the ambitious net-zero commitments promised by organizations, companies etc. were regularly not being met. Therefore, to answer questions like: "Are these commitments credible?" and "How can we make sure they're delivered?” transition plans were developed, alongside the Transition Plan Taskforce (TPT).
The TPT was created to determine what a good transition plan looked like, and has identified three key components: firstly, ambitions - focusing on targets and levels of ambition; secondly, action - what actions will be made and how effective will they be; and thirdly, accountability - making sure there’s appropriate accountability and metrics during the process, appropriate governance.
Other key themes revolved around the challenges imposed and general solutions. Our world continues to develop, and our economy must change with it - but altering such an enormous body of complex, interconnected systems is not an easy task. We need stronger, faster alignment throughout the global economic network for maximum efficiency. High-emitting sectors must transition, and the introduction of regulators is vital to ensure cooperation and to help with the understanding of models for decarbonization since companies seem to find it confusing to grasp and implement these concepts.
Furthermore, focus so far has been on the overlap of Net Zero (carbon-focused) and Nature Positive (biodiversity conservation) in their respective “Venn diagram”, so we’re missing out on a big chunk of the story - the two independent ends need to be addressed. This requires systems thinking and leadership. Additionally, different sectors (including oil and gas, metals, banks and more) have different limitations, targets and needs requiring a more holistic approach. So, sector specific guidance has now been published and users need to be cooperative and develop the capabilities to adopt these recommendations. Also, it is essential that financial institutions etc. learn to work together - they must ask themselves “who has the best transition plan and how can we learn from them”?
Nevertheless, progress is underway. The UK became the first nation to require transition plans, and China and Japan will soon follow suit. The Corporate Sustainability Due Diligence (CSDD) is working on putting transition plans into effect in companies. Also, emerging markets have been found to be invaluable as it’s easier to approach new assets with transition plans because there’s more space for creativity, we can design their structure around the transition plans and not the opposite.
The Perspectives
Participants covered the importance of regulatory consistency and emphasized the system’s complexity, further challenges regarding Transition Plans and more.
An example touched upon at the beginning was related to aviation. Fundamentally, in aviation there are international agreements that aviation companies must comply with, however certifiers in the private sector will contradict these requirements, resulting in unnecessary and hindering restrictions being imposed. This example can apply to other areas as well. Also, it raised the question of who is responsible for certifying the certifiers?
Later in the discussion, participants spoke about certain approaches to achieve Net Zero. Firstly, people are setting impossibly high standards that aren’t achievable. They need to recognize a mitigation hierarchy, and identify which sector they are in. In a sector directly related to fossil fuels, they should focus on the more effective carbon offsetting - and not set unimaginable standards - whereas other companies can eliminate certain factors before considering the most straightforward solution of carbon offsetting.
In addition, participants addressed the debate between transition plans being mandatory or voluntary and concluded that they must be mandatory to be most effective and to have the highest chance of reaching net zero emissions. Also, a big problem is the alignment and communication between goal setting, expectations, regulations, and how CEO’s and other people in important positions must take action and empower and implement agents of change into their company. As a result, pushes are coming to align and reshape companies’ particular pathways to then align the economy.
One final challenge that emerged was the tremendous barrier regarding data; specifically, the accessibility, inconsistency, viability and other key factors related to data that must be considered to judge if a company has held through with their promises which introduces greenwashing into the scenario. Therefore, it is essential that each and every company abides by the principle of total transparency.
In closing remarks, the participants along with the experts concluded that half-hearted promises will not cut it anymore, and in the future transition plans will be 100% mandatory - a license to work of sorts. In this manner, transition plans will be vital catalysts in the transformation of our economy and will entirely reshape our complex global systems - so it is up to the companies and financial institutions whether or not they will comply, and whether or not they are truly committed to take action and reach their goals or settle on a path towards collective destruction.
