As COP29 convenes, a clear call resonates across governments, industries and communities alike: we must harness and transform available data into meaningful action to reach net-zero carbon emissions.
In a business context, while many organisations have committed to reducing emissions, the real challenge lies in creating transition plans centred around ambition, action and accountability – the three guiding principles of the Transition Plan Taskforce (TPT) Framework launched at COP26. Moving beyond pledges requires a systematic approach to data, policy alignment and technological innovation, and solutions lie in how companies harness their data, collaborate and leverage incentives to make meaningful strides toward a more sustainable future.
The state of play with data
As it stands, the lack of standardised and comprehensive data collection methods remains a significant barrier to achieving transparency in net zero efforts. This is particularly problematic for Scope 3 emissions, which, according to the CDP, can account for up to 75% of a company’s total greenhouse gas emissions across sectors. For smaller organisations, the high cost and complexity of obtaining accurate emissions data from value chains often lead to reliance on estimates rather than primary data.
To capture the real emissions footprint, companies should foster data collection practices by engaging with their suppliers and actively requesting primary data. Companies can also engage in responsible sourcing assessments, such as LRQA’s ERSA assessment programme, to obtain a holistic and comprehensive overview of supplier performance. This data can then feed into real-time risk monitoring tools, such as LRQA’s supply chain software – EiQ – which can aggregate vast amounts of information from supply chain audits, environmental data, carbon emissions, plus publicly-available sources to provide actionable insights. Whilst such practices can improve data availability, there is also more to be done.
Transition plans: From data collection to action
Data is essential, especially for action and accountability, but we must combine data with an overarching transition plan for a company to achieve its goals. They must serve as a bridge between ambitious net-zero goals and the steps needed for credible implementation.
Whilst transition plans are long-term strategies, they can go beyond high-level plans to integrate climate action into daily operations, business processes and decision making. Effective plans outline concrete, short-term actions, focusing not only on internal changes across operations, products and policies but also on collaborative measures with value chain partners, industry peers, government bodies, communities and civil society.
A well-rounded transition plan also takes a ‘just transition’ approach, carefully considering the impacts on various stakeholders, including employees, supply chain partners, customers and local communities, as well as the broader economy and natural environment. This ensures that the pathway to net-zero is equitable and inclusive, benefiting people and the planet alike.
Further, credible transition plans are structured to ensure accountability, featuring clear metrics, targets and governance frameworks to monitor and measure progress. Recognising that a net-zero economy requires flexibility, transition plans should adapt to recent developments and refined over time to stay effective. A prime example of such developments includes evolving regulations, legislation and incentives.
How to adapt transition plans against policy changes and incentives
Businesses need to factor policy changes and incentives into their transition strategies. Carbon pricing mechanisms, such as the European Union’s Emissions Trading System (EU ETS) and the new Carbon Border Adjustment Mechanism (CBAM), are just two examples that impose financial obligations that encourage industries to reduce emissions. These carbon pricing frameworks are being mirrored in countries like Canada and Japan, where penalties for emissions intensify the need for efficient data tracking and actionable reduction strategies.
Incentives also have a role to play. The U.S. Inflation Reduction Act (IRA) and the EU Green Deal, for example, offer subsidies and tax credits for low-carbon technology investments, helping businesses overcome the financial hurdles of adopting renewable energy and reducing emissions. As regulatory landscapes evolve, forward-thinking companies can seize these opportunities presented by incentives to finance clean energy projects, future-proof their operations and enhance their standing with environmentally conscious investors and consumers.
Leading by example: Lessons from global regions and sectors
Some regions and sectors stand out in their approach to transition plans. Japan, for instance, has set a high bar in disclosing climate transition plans due to a well-established regulatory frameworks and strong corporate engagement in sustainability. Europe, South Korea and the UK are also making notable progress. In these regions, mandatory climate disclosures are increasingly required for publicly traded companies, with frameworks like the European Corporate Sustainability Reporting Directive (CSRD), prompting transition plans that are driving transparency and action.
Sector-wise, power generation, financial services and infrastructure are leading the way. Power generation companies are aligning long-term transition planning with renewable energy goals, facilitating a gradual shift away from fossil fuels. Financial services firms are increasingly disclosing climate risks and aligning their portfolios and lending practices with net-zero objectives, often through frameworks like the Task Force on Climate-related Financial Disclosures (TCFD)’s disclosure guidelines in the UK. Sector-specific guidelines from initiatives like the Science-Based Targets initiative (SBTi) further support these industries, providing actionable guidance for achieving credible, measurable emissions targets. These leaders also offer valuable insights for other sectors and there are often cross-over and collaboration opportunities.
A cross-over between collaboration and innovation
Transition plans will continue to rely on collaboration between governments, financial institutions and businesses. Governmental regulatory frameworks, such as carbon pricing and mandatory climate disclosures, will need to be woven into transition plans, whilst financial institutions will be key for mobilising funds and directing capital toward green projects. Closer collaboration may also yield benefits for global businesses when we reach more consistent data standards, emissions reporting and ensuring comparability across industries and regions.
Looking ahead, transition plans will also need to embrace new technologies geared towards enhancing efficiency, reducing emissions and improving accountability. Digital twin technology, for instance, allows companies to simulate the impact of potential operational changes, enabling data-backed decisions that reduce emissions. Similarly, AI-driven analytics in energy management can optimise consumption. These are powerful tools that not only help reduce carbon emissions but also form a key pillar of effective transition plans.
From data to impact
Achieving net zero goes beyond data collection, it requires actionable transformation. Transition plans are the roadmap, turning climate commitments into measurable actions with clear milestones and governance structures. These plans guide companies in aligning with regulations, leveraging incentives and ensuring continuous improvement. They also highlight the broader impacts on people, communities, and nature, supporting a just transition. As COP29 highlights the urgency of climate action, businesses have a unique opportunity to embrace transition plans and shift from pledges to measurable outcomes, driving meaningful change across industries and beyond.
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