Eleven Key Elements of a model Climate Transition Action Plan

Climate Transition Action Plans have become a must-have for companies that are serious about transforming their businesses to achieve net zero emissions. But what makes an effective Climate Transition Action Plan (CTAP) and how can you create one that works for your company?

Transform to Net Zero has combined its experience in different sectors and at different stages of implementing a CTAP to identify eleven key elements that should be included in a model CTAP.

The following eleven key elements are included in the Climate Transition Action Plans Transformation Guide being launched today at Climate Week NYC 2022 at an event entitled “What Makes an Effective Climate Transition Action Plan?”.

1. Near- and long- term science-based targets to reach 1.5°C-aligned value chains, including a target year for net zero greenhouse gas (GHG) emissions, and in line with Race to Zero criteria. Targets should be verified by a third-party to be consistent with the latest climate science, and should also be consistent with relevant sector-specific guidance, as available.
2. Robust governance structures that establish ownership and accountability to deliver targets, including: a. Board-level oversight b. Roles and responsibilities of management, with representation across all relevant business functions; and c. Elements to drive employee engagement through skill development, training and change management to align the business culture with a net zero transformation.
3. Information about how climate considerations are integrated into financial planning to demonstrate alignment between the CTAP and business strategy. This should include information on how climate considerations are integrated into capital allocation and financing decisions, expected changes in capital allocation and financing decisions, and high-level information on the impact of capital allocation and financing decisions on climate objectives.
4. GHG emissions accounting of complete and consistent scope 1, 2, and 3 emissions inventories that have been verified by a third-party, enabling measurement of progress towards targets. The CTAP should be underpinned by the emissions inventories but does not necessarily have to include the full inventory itself.
5. Low carbon and other climate-related initiatives to decarbonize business operations and value chains and implement the near- and long- term science-based targets. This could include the following types of initiatives: a. Innovation of low carbon products and services; b. Actions to address the portfolio of high emissions products and services; c. Integration of emissions considerations into decision making (e.g., use of internal carbon pricing); and d. Evolving business models to pivot towards lower carbon areas.
6. Net zero aligned carbon removal plans with time-bound KPIs. CTAPs should include information on companies’ general approach to emissions reductions within the value chain en route to net zero, and how removals will address residual emissions in the target year.
7. Value chain engagement strategy that articulates how the organization will encourage suppliers, peers, and customers to transition to a low carbon economy. This can include education and incentives offered to suppliers to reduce scope 3 emissions, and to customers to promote low carbon products and services. These strategies should be guided by time-bound KPIs.
8. Policy engagement strategy to create an environment that enables 1.5°C-aligned GHG reductions in the real economy. The strategy should highlight collaboration with industry peers intended to send joint market signals to policymakers. An organization’s policy engagement should be aligned with its CTAP.
9. Cross-issue evaluation of impact that adopts a systems approach to consider interlinkages between climate, nature, and society. Planned decarbonization activities should address concerns related to nature and biodiversity, and social impacts on communities.
10. Strategy to promote a just and inclusive transition that addresses the disproportionate distribution of climate impacts and climate transition costs on under-resourced communities. CTAPs can include opportunities for co-creation with affected communities that seek to counter injustices and build resilience.

11. Transparency and reporting covering all aspects of the CTAP. Organizations should disclose key assumptions including transition pathway uncertainties, possible implementation challenges, and respective contingency plans. Annual reporting should show progress against goals and targets. The CTAP’s activities, metrics, and targets should be periodically reviewed and updated, and organizations should be open about what is not currently included in the CTAP but will be addressed in the future.

In the Transformation Guide, five Transform to Net Zero members, Mercedes-Benz, Microsoft, Natura &Co., Nike, and Unilever share their approaches to developing their individual Climate Transition Action Plans.

The Transformation Guide answers the questions:

1. How did your company develop its transition plan?
2. Who is responsible for leading the efforts, and which functions are involved?
3. What are the key components of your transition plan?
4. How are issues like growth and climate justice integrated into your plan?
5. How does your plan incorporate transparency?

Download the Climate Transition Action Plans Transformation Guide here.