Businesses have done well to get to grips with the acronym soup of sustainability frameworks and disclosure rules, but one of them – Transition Planning – is still relatively unknown despite its increasing importance.
The UK Transition Plan Taskforce (TPT) was put together by the UK Treasury to develop good practice guidance for corporate climate transition plan disclosures. The Framework it produced in October 2023 was designed to create clear time-bound action plans to provide confidence that net-zero commitments will be delivered in the real world.
ITV is one of the first to publish a Transition Plan, and last week the TPT launched tailored sector guidance for food and beverage companies, electric utilities and power generators, asset managers, asset owners and banks. These build on the general framework to encourage joined up thinking that integrates climate issues with other natural resources that businesses rely on like nature, water, and clean air, as well the need for a just transition.
Whilst Transition Plans are not yet compulsory, we expect them to become the norm, if not mandatory. CDP has already aligned with the TPT Framework, and Labour’s Plan for Financial Services commits the Party to “determine a clear timeframe for instituting voluntary and mandatory transition planning and disclosure requirements” for public and private businesses.
It would be easy to underestimate the implications of transition planning, so here we outline what corporate affairs, communications and sustainability teams should know about climate transition plans and the questions and opportunities it presents on everything from company purpose, values and culture, to public affairs, thought leadership and reputation.
Transition plans and reputation risk
Companies without robust plans to meet their climate goals (and there are many) are already facing increased stakeholder and media scrutiny. The TPT Framework sets a new benchmark for the delivery of climate strategies, which will lift standards across the economy. As a growing number of companies report in line with it, scrutiny for those left behind will become more intense.
To de-risk or find opportunity in moving early, corporate affairs teams should lead the charge internally, agitating for meaningful action where there is a gap in how stated targets will be met. At the same time, they should ensure clear, regular and transparent climate communications to all stakeholders framed by the three principles of the TPT Framework – ambition, action and accountability.
Purpose and employee comms
The Framework requires companies to outline steps being taken to align company culture with climate goals. This will cover many areas often the domain of corporate affairs teams including company values and purpose, communications systems and processes, and employee engagement.
Internal communicators should be factoring this into strategic thinking in collaboration with colleagues in the people team, who will want to consider TPT through the lens of employee value propositions, incentives structures and training.
Public affairs
The Framework requires disclosure of how the company is engaging directly and indirectly with government, regulators, communities and civil society. This should drive companies to closely align public affairs and stakeholder engagement strategies with climate transition plans, principally on where the company is relying on action from others to enable their goals. A recent example would be successful corporate lobbying to prompt the UK Government to reform and speed up the process for allocating grid connections, which is blocking net zero progress.
Thought leadership
Linked to public affairs, the Framework provides a vehicle to focus minds on the external factors that pose barriers to achieving climate goals. It does this by encouraging conversations, action and reporting on where companies’ transition plans require change externally, covering areas including: policy and regulation, technology changes, shifts in consumer demand, and microeconomic factors like labour availability or the cost of borrowing.
This is rich territory for thought leadership campaigns grounded in action, providing fresh impetus for companies to collaborate with any and all stakeholders who share the same issues. There is a collaborative advantage to be gained here as we identified in our recent research report, The Collaborative Corporate.
Internal collaboration
Climate Transition Planning can be a catalyst for a mindset shift, a galvanising force to change how teams collaborate internally to turn strategy into action.
Net zero plans are not the sole responsibility of the sustainability team. That is now everyone’s job. Sustainability teams are becoming enablers of action across the entire company and value chain; on strategy, culture, governance and risk. As natural collaborators, corporate affairs teams have a big opportunity to join sustainability colleagues as partners.
From a strategic and long-term perspective, that partnership should be about how to build the reputational capital a company needs to deliver its climate transition across a complex stakeholder ecosystem. That’s a big question and it can be hard to know where to start.
An initial first step could be a simple as a review of a company’s existing climate strategy with the application of a reputation risk and opportunity lens. Transition Planning provides the roadmap for such a review and is a valuable new part of the corporate sustainability landscape.
To talk more about TPT contact Andy and Tom.
Read more Insights & News