Sustainability Community Insights: net zero transition plans

In October, the CBI's Sustainability Community (‘the Community’) met to discuss net zero transition plans. From 2023, asset managers, regulated asset owners, and listed companies will be required to publish their net zero transition plans which will outline how they will become net zero by 2050 or before. The Community, with the discussions led by BT, Aviva, Schneider Electric, and Barclays, shared practical insights, and best practices around preparing for transition plans reporting as well as wider net zero opportunities and challenges for business.  

Below are the top themes emerging from the discussions.

1. Setting a transition plan will help identify the gaps in your journey to net zero

Whether you are required to set a transition plan by law or not, the process of planning for your transition to net zero can show where your biggest challenges lie and help you understand if your business is equipped to overcome them. The advantage of undergoing this process now, in advance of the 2030 and 2050 targets, is it gives time to action plan, space to overcome challenges and if needed, the opportunity to innovate something new.  

Furthermore, setting a transition plan (whether in response to a mandatory requirement or voluntarily) moves businesses from a culture of setting an ambition to delivery. Through prioritising transparency and reporting on your business’s progress, a company-wide commitment is created and embedded across your organisation.

Many businesses note that undergoing the process to become a Science Based Targets Initiative (‘SBTi’) accredited is the ‘gold standard’ in transitioning to a decarbonised business.

2. Even if you don’t have to set a mandatory transition plan by law, you will have a lot to gain by setting one

The requirement for listed and financial companies to set a transition plan will have wide-reaching impacts when it comes into force in 2023.

Even if your business is not required to report on the transition plans, the knock-on impact will likely require you to gain a greater understanding of your emissions profile, and how you are seeking to reduce these emissions. This is because you are likely to fall under scope 3 of the companies that must submit mandatory transition plans.

3. Act now on your scope 3 emissions

Reducing scope 3 emissions will likely prove to be the most challenging part of your business decarbonisation journey. 50% by 2030 and net zero by 2050 may sound like a long time away to begin thinking about reducing emissions in your supply chain, but leading companies are planning and working to reduce their scope 3 emissions now.

For many businesses, particularly those with large and complex supply chains, reducing scope 3 emissions will be the biggest challenge to reaching net zero. For some businesses in our Community over 90% of emissions come from their supply chain. 

It will require a commitment to innovation, actioning operational changes, and embedding change to entire business models to meet the 2050 targets. 

The businesses which are leading the way understand that this scale of reform does not happen instantly. Leaders in this space have already set net zero targets, and are already mapping out their scope 3 emissions and engaging with their supply chain to identify ways to cut the emissions.

4. Bring your supply chain with you

Those that are making progress in reducing their scope 3 emissions are working to innovate new ways to include their supply chain in their plans to reduce emissions. This includes innovating better ways to encourage data sharing on emissions, identifying which suppliers need the most support (and which suppliers, sectors, or regions, have the largest potential to reduce emissions) and taking steps to support suppliers on their journey to set targets and reduce emissions. For example, one member works with their top 1000 suppliers to support their progress towards more conclusive data on their emissions to better inform how the business in question can reduce their scope 3 emissions as a result.

5. Early buy-in from across the business is important 

Sustainability cannot be isolated to one division of a business; every department and employee must be plugged in. To make this a reality, many members are innovating ways to embed reform across their business. For example, some are creating new governance structures that link buyer’s bonuses to sustainability outputs. Others are implementing new processes such as creating innovation labs for staff to feed in new ideas and working to create structures to support board members and in the long term, guarantee that they are confident with the challenges that climate change will pose to the business. 

6. Partnerships are crucial to deliver net zero 

Leading sustainable businesses are engaging their sector and leading the way for others to follow. This includes engaging in the UN’s Race to Zero, inviting your strategies to become externally accredited (by organisations such as SBTi) and working to share insight with others through taking part in peer-to-peer learning platforms, like the CBI’s Sustainability Community.

7. Carbon offsetting is not a replacement to reducing carbon at the source

Leading companies are seeing offsets as a tool to compensate for their environmental impact in the short term, whilst in many cases the availability and commercial feasibility of alternative solutions is limited. However, there is a clear understanding among leading businesses that carbon offsets are a temporary solution only and they are working towards longer-term solutions focused on cutting emissions. 

The Transition Plan Taskforce launched a draft disclosure framework and implementation at COP 27 which is available here. To the CBI’s analysis of how this impacts your business, see our article on “Climate transition plans: how do they matter to your business?”.

If you are a CBI member and want to join our next Sustainability Community event, email Sophie to join the Community.