Smooth your path to net zero

Climate transition plans are crucial to meeting net zero targets. They signal to stakeholders that you’re committed to a 1.5-degree pathway, and make sure that your business model will remain relevant and profitable in a low-carbon economy. Here we take a brief look at what formulating a transition plan involves.

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The transition to a low-carbon economy is a global challenge requiring immediate action from governments, institutions and market players in every sector worldwide. Companies in every industry, financial and non-financial, play a crucial role in achieving net zero targets. In this landscape, climate transition plans play a crucial role. They signal to capital markets and stakeholders that your organisation is committed to aligning with a 1.5-degree pathway while making sure that your business model will remain relevant and profitable within a low-carbon economy. They serve as a structured guide, helping you move towards more sustainable practices and decarbonise your operations to create a business that is resilient to upcoming challenges and contributes to the global fight against climate change. In other words, a well-founded transition plan will smooth your path to net zero.

Climate transition plans are essential forward-looking tools for strategy, operations and business models to meet the climate-goals and build a better future.

Dr. Antonios KoumbarakisPartner, Sustainable Capital and Sustainability & Strategic Regulatory Leader, PwC Switzerland

How to craft a resilient Net Zero Transition plan

The task of formulating a plan is both urgent and demanding. In response to the challenge, we at PwC have published a paper, Navigating the transition to net zero, explaining what can be gained with a good climate transition plan and outlining the steps in formulating and implementing one.

They can be summarised as follows:

Assess your current situation and carbon exposure across the value chain, identifying both risks and opportunities related to the shift to a low-carbon economy. Align your assessment with your business needs.
Choose the transition plan framework that best fits your organisation, whether local regulatory guidelines or internationally recognised disclosure standards.
Set short- and long-term targets based on your overall goals and legal requirements. Use quantification tools to guide your decarbonisation strategy.

Ensure accountability for Scope 1, 2, and 3 emissions across your value chain. Favour decarbonisation via direct abatement rather than purchasing carbon credits.
Use reliable quantification methods to evaluate your carbon exposure, making sure your plan addresses risks and opportunities and builds enterprise resilience.
Develop a financial and resource plan to ensure your actions are actionable and feasible.

Incorporate your transition plan into your broader corporate and risk management strategy, internal organisational processes, financial planning and governance.
Assign roles and responsibilities for the successful execution of the plan, ensuring internal alignment.
Prepare and disclose your transition plan in a standalone report or as part of your sustainability-related disclosures.

Summary

A solid climate transition plan will help smooth your path to net zero, helping you not only meet the relevant reduction targets but also to create a more resilient and profitable business going forward. If the task appears daunting, there is plenty of guidance and examples of best practice to help you formulate and implement a credible, compliant and effective transition plan. Check out our paper and reach out if you’d like to discuss the matter in more depth.

Integrated financial modelling of transition plans underpins the credibility for transformation to a net-zero business strategy and demonstrates management’s opportunities for competitive advantage while contributing to global climate targets.

Dr. Harald DornheimPartner, Actuarial and Climate Risk Modelling Solutions, PwC Switzerland