Corporate transition planning is the missing link between setting and achieving net zero, nature-positive, and just transition commitments through their integration into business operations. While some companies have started drafting and disclosing transition plans, their credibility, and integrity need to be urgently improved. Many other companies haven’t started the process at all.
Insufficiently engaging with transition planning carries rapidly expanding risks, from conflict with regulators and reputational damage to higher capital costs and shrinking access to credit.
However, the advantages go beyond compliance. Embedding transition planning into business-as-usual processes, such as strategy and risk management, will promote value protection and creation and accelerate the transition to a just, low-carbon economy. It pushes companies toward a cross-functional strategy, bringing together commercial and sustainability goals under the same process, which is one of the challenges of putting broad goals into action.
This cannot be done without investing in the proper organizational infrastructure. Internal functions must collaborate, be supported by clear communication, targets, and investments, and be held accountable. Strategic planning is essential for alignment and achieving effective implementation. A robust transition plan provides the north star, or blueprint, to kick off this process.
This primer, produced by ERM and the World Business Council for Sustainable Development (WBCSD), serves as a practical guide and meets organizations where they are in their transition planning journey. It leverages the guidance from the Transition Planning Taskforce (TPT) and other bodies, as well as insights from engagement with WBCSD member organizations.
Organizations that are just starting out will benefit from examples and recommendations around engaging with stakeholders to develop a plan, as well as tackling data quality, availability, and management challenges. For organizations that have begun to evolve their business model, this primer offers examples and recommendations on framing how the business is changing and how to effectively disclose the critical climate transition plan elements.
Finally, the primer focuses on four priority areas for implementation that are relevant to both groups. In order to establish this primer’s priority areas, we surveyed a subset of WBCSD Corporate Performance & Accountability (CP&A) members who have joined a transition planning workstream. The four areas companies found most challenging are:
- Understanding and prioritizing climate-related risks and opportunities to enable strategy development.
- Initiating industry and value chain engagement and collaboration to mitigate risk hot spots.
- Accelerating innovation to develop low-carbon products and services.
- Transition plan resourcing and integration into financial planning.
By tackling these priority areas, companies can achieve resource efficiency, drive momentum, and show early wins that build stakeholder confidence and internal and external support for the broader transformation.
