Transition Plans: How to turn ambition into action on the road to net-zero

The net-zero movement has been unwavering since businesses and governments started responding to the Intergovernmental Panel on Climate Change’s (IPCC) warnings that net-zero emissions needed to be achieved globally by the 2050s.

Indeed, a survey of 1,200 large businesses with net-zero ambitions has showcased a huge uptick in the number of companies aiming for this ambition.

Conducted by consultancy South Pole, the survey provides a snapshot of the corporate net-zero movement on a global basis. 72% of the businesses covered by the survey this year have stated that their emissions reduction goals are with the Science-Based Targets Initiative (SBTi).

However, South Pole raised concerns around ‘greenhushing’ – the practice of taking sustainability action but then not communicating this with key stakeholders or the general public.

One in four (26%) of the companies who had applied to the SBTi had not published information about the new targets on their own websites or reports. This trend was particularly pronounced in heavy-emitting industries, with a significant minority (24%) of companies only publishing the climate milestones that are mandated at a national level.

In an era of heightened media coverage around sustainability and more green groups willing to call out cases of corporate greenwash, it can feel daunting to put a transition plan – essentially a company’s new regime for the next few decades – out into the public domain.

For British American Tobacco’s group head of environment, social & governance, Edward Butt, however, a transition plan provides some much-needed confidence that the net-zero trajectory can be lined with opportunities, rather than just stumbling across a plethora of challenges.

“I find it personally quite interesting that a lot of people and organisations jumped on the net-zero target train, but they’re a lot quieter on exactly how they’re going to achieve their goals,” Butt told edie as part of Net-Zero November.

“It’s less interesting what your destination and deadline is, but rather how you’re going to get there. 2050, 2040 or earlier, they’re all a long time in the corporate world and if you fail to plan then you’ll plan to fail. If you don’t have a programme in place to get to your destination, that outlines the short and medium term aims then it’ll be a lot more painful because the science shows we need to decarbonise now.”

Low-carbon transition plans

Last month, BAT published its Low-Carbon Transition Plan, detailing the actions it will need to take in order to create a net-zero value chain by 2050.

The plan utilises scenario analysis from the TCFD recommendations to highlight climate-related opportunities and risks of its low-carbon transition. Scenarios included a “sustainable transition” where governments and the private sector deliver the 1.5C pathway, and an “inaction” pathway of a more than 3C temperature rise.

As such, the transition plan outlines the steps that BAT can take to reach net-zero. The company will source 30% renewable energy in direct energy use by 2025, rising 100% across sites and facilities by 2030. This, in turn, would help deliver carbon-neutral operations by 2030.

Site-specific decarbonisation roadmaps will be created and electric vehicles will be introduced across the fleet. For scope 3 emissions, which account for more than 90% of the company’s emissions, a new partnership approach will be introduced to phase-out coal use, improve sustainable farming and increase circularity.

For Butt, the publication of the Transition Plan will allow the company to stretch itself and its approach to innovation in order to meet net-zero. He claims that a plan in the public domain is different from internal plans, especially as more of the investor community are now seeking to work with companies that are showing how they are decarbonising in line with climate science. The key to delivering the plan now, he says, is to embed climate action as part of a cross-functional approach to business.

“One of the reasons that we signed up to Race to Zero was that it forced us to have a public plan in place, and that’s different from a plan internally,” Butt said. “This is deep, deep work over a long period of time, so it needed to be cross-functional.

“Whatever size your organisation is, sustainability needs to be cross-functional. You need to be working hard with your operations teams, your supply chain and with your market team in terms of your product. You obviously need some idea of how you’re going to achieve net-zero, but getting a plan in place, with science-based targets helps to challenge the organisation and drive performance. I’m excited to see how we’re tackling the problem of decarbonisation, because we need to accelerate our programmes.”

One such area of focus for BAT is that of the supply chain.

With more than 30,000 suppliers globally, BAT calls on firms to meet its Supplier Code of Conduct which outlines minimum expectations for all suppliers, including “specific elements related to environmental impacts and carbon reduction plans”.

However, BAT estimates that more than 70% of its direct material emissions are attributable to just 30 suppliers and that engaging with these firms through systems such as the CDP Supply Chain Programme can help deliver “significant reductions”.

Some will argue that a tobacco company can’t be part of a just transition while it is still selling the products that it sells. But BAT is moving to not just decarbonise products from a value chain perspective, but one that also focused on the circular economy and human health. Although the firm has stopped short of stopping selling cigarettes altogether. 

External expertise 

Butt expresses the importance of involving an organisation with initiatives and programmes like CDP and indeed the Task Force on Climate-Related Financial Disclosures (TCFD), as it helps gain external examples of best practice and strengthens engagement with investors.

“I think increasingly, the more savvy stakeholders are going to be looking at decarbonisation and looking to see that you’re joined up in your approach,” Butt adds. “It’s quite good to get some external examination of your targets and plans, because its easy sometimes as a sustainability professional to get caught in a bit of an echo chamber. So we’re open to constructive criticism and reviewing our plans based on that [external feedback].

“That’s not to say we don’t already have a lot of good things in place, but we’re seeing why its important to act now. Some of the transitional risks in the short-term are actually bigger than the physical impacts of climate change. In terms of having an immediate impact on an organisation, you’ll see that the finance sector wants to know how you’ll achieve net-zero and what kind of mapping aspects you’ve done. The big risk is that of inaction.”

And yet inaction seems commonplace across the corporate sphere.

The latest analysis from Net-Zero Tracker was published at COP27 this week. The analysis looks at the public commitments of the world’s 2,001 largest companies, as well as 713 regions and 1,177 cities.

When it comes to the deadline of corporate targets, most companies with net-zero commitments (59%) have set a deadline between 2041 and 2050. 21% have a target on or before 2030 and 16% have a target between 2031 and 2040.

Net-Zero Tracker warns that “pledges alone are not a sign of climate leadership – they must be accompanied by a deep emission reductions commitment to be meaningful.” The document states that “not all net-zero pledges have to be created equal, but most still lack the most basic of details necessary for delivery”.

So, as one of the few companies with a publicly available transition plan, what advice does Butt have for sustainability professionals who are trying to get sign off on action plans for net-zero?

“One piece of advice would be to work in partnership with others,” Butt says. “I would also say, when developing plans, work in partnership across the business, so that you’re exploring this from all angles and with a different set of knowledge. Look at the best practice, like the CDP technical guidance and find out what the key ingredients are to a successful plan. It doesn’t need to be perfect.

“Don’t be scared to grasp the nettle and get on with this. I think it’s right to be examining what you’re doing with a critical eye, but overall we just need to be brave, take the step and work together to get on with this. So put your plans out there and don’t be scared, because you can revisit them on your journey.”