There are a growing number of market references on how to assess and differentiate Transition plans for corporates
Key references include;
- CDP
- Climate Bond Initiative
- CA 100+
- ICMA Climate Transition Finance Handbook
- Transition Plan Taskforce, etc.
Some Transition Plans are less detailed than the classic tune ba ba black sheep. In our view, Transition Plans can be assessed using our assessment variables below:
- Targets: Short, medium and long term
- Scope of Targets: Scope 1, 2 and 3
- Commitments: Net zero, nature positive, SBTi
- Recent/historical decarbonization and whether its Aligned to a Decarbonization Pathway or how much over (when might the carbon intensity level be aligned to international benchmarks)
- Details on Governance structure to manage and be accountable for implementation
- Full details on “the how” – i.e. how will a Strategy be implemented
- Reporting: full details on when, where released and what cover
- Capex Alignment: Is this aligned to a low carbon future?
- Expenditures on R&D for low carb technologies
- Reliance on Technology not commercialized already
- Use of an internal/external Carbon Price
- Management Remuneration Linked to decarbonization targets?
- Extent of Reliance on Carbon Credits
- Incorporates Biodiversity & Nature (impacts and dependencies)
- Just Transition (plan addressed the social part of Transition)
When looking at a transition plan make sure its peppered with actions and not unrealistic promises.
Sheep are nice animals but is hard to analyse a transition plan while wearing a pair of sheep eyebrows or doing a hike with a mountain goat.
