Welcome back to C&F Talks, everyone. It's great to have with me today, Amelia Ransome. She's a Principal Consultant – Climate Transition Plans at South Pole. Amelia is going to be joining us to speak at the Third Annual Climate Transition Plan Summit, which we're holding in London on the 24th of March. Amelia, welcome.

Thank you. Thank you so much for having me today.

Great to have you with us, Amelia. Let's turn to our first question.

We've noticed that a number of companies have mapped their transition plans against the TPT recommendations, which now of course, have been integrated into the ISSB's workflow and the GFANZ guidance. EFRAG has also published its transition plan implementation guidance. So, when drafting their transition plans, which regulations should companies map their plans against in terms of content?

Yes, I think it's a very consultancy answer, but it depends on the business. So, I suppose more generally, companies must always first ensure compliance with their regulatory requirements. And so, while there's significant overlap between a framework such as the TPT or the CSRD disclosure requirements, there's still nuances between them.

So, something like locked in emissions, for example, which features within CSRD, but not more broadly. Beyond that, I think, yes, compliance is always an important foundation, but companies should really consider their broader objectives. So, I think rather than asking, you know, just what framework should I align with, a helpful question can be, why are we disclosing?

So, data collection alone won't future-proof a business from, you know, climate-related risks like investor scrutiny or supply chain disruptions, changing consumer preferences. I think what matters is more how companies use this data, and that's where a transition planning framework is really helpful. So, effective disclosure kind of generates standardised and comparable and ultimately investor-grade data, and then that should in turn be decision-grade data.

So, taking a very strategic approach to compliance can then really enhance your business resilience and embed sustainability into kind of the core day-to-day strategy. So, once you have that why, then selecting a right framework becomes a bit easier. But I suppose for a short answer, I think the TPT is just fantastic.

I think it's really useful. It offers a structured, comprehensive, and practical guidance, especially kind of alongside the transition planning cycle disclosure guidance as well.

Yes, I think that's absolutely right, and the detail and the sectoral guidance and so on.

What are the common challenges that businesses face when aligning their transition plans with multiple regulatory frameworks? And maybe you want to say, have a few words about the Omnibus package that the EU has launched recently as well.

Yes. So I think the biggest challenge is, yeah, just this kind of rapid evolution of different regulations and disclosure standards. I think, you know, the complexity of these disclosures really stems from different investor and stakeholder expectations and ultimately kind of results in quite a fragmented reporting approach, I think we see sometimes with organisations. So Omnibus is a good example of that.

We're kind of going back to the why, what's the purpose of sustainability reporting? Is it to, you know, help competitiveness by really ensuring kind of long-term business resilience? Or is it a bit of a, you know, it's a barrier to it?

So generally, I think that level of uncertainty is very challenging for organisations. It leads to a lot of analysis paralysis, I suppose, and that kind of prevents action. I think more generally, when you kind of take an isolated approach to aligning with reporting frameworks and transition plans, you then, yeah, risk treating them in isolation.

So, then that can be kind of data inconsistencies across different reporting frameworks, so things like TCFD or CDP disclosures. There's risk of having kind of high-level narratives that lack really kind of clear quantitative evidence beneath them, if you're trying to kind of manage two different stakeholder perspectives in one approach. And I do think that, yeah, a strategic approach to compliance can really help simplify this complexity.

So again, like, instead of seeing reporting as a challenge and a burden, companies should try and view this as a source of really valuable insights that they can help drive decision making.

Yeah.

You made reference to having a really good objective and understanding why you're doing things, which I think is very, very important. What are the critical components of a well-structured climate transition plan, or, you know, does that depend on the objectives of why you're doing it? How does it work?

No, I think, in general, there is definitely a number of, kind of, key components that we see across, you know, consistently across well-structured climate transition plans, be it either in early UK disclosures or this, kind of, first wave of CSRD disclosures. And so, at South Pole, we emphasise kind of five key principles of credible climate transition plans. The first is very much that it's aligned with climate science and aligned with the Paris agreements, you know, covering scope one, two and three emissions.

The second is data driven. I think that's a big indicator between different climate transition plans that we've seen so far is, you know, those that really stand out are really clearly driven by robust quantitative data on climate related impacts, risks, and ultimately the strategies. Again, it should be integrated within to the business strategy.

So, you know, detailing how these kind of decarbonisation or resilience ethics really affect operations, products, supply chains, customers, more. I do think a lot of transition plans will be judged on, you know, the resource allocation, so specifically being, you know, financially credible, whether there is this focus on CapEx, OpEx, R&D, more.

And then finally, I think we see a standout in those organisations that really recognise it as being something that is dynamic and monitored. So, you know, having governance structures that will oversee the progress, but review milestones and adjust as needed.

Yeah.

Linked to that, there is a danger that people are going through this fight by roads. How can businesses ensure that their transition plans are realistic, that they're actionable, and they're measurable rather than just aspirational?

Yes, I think the most helpful way that I've seen it approached is really treating your climate transition plan as if you would your corporate strategy. So, in terms of a corporate strategy, you have a business purpose. So, your company's, you know, core mission, that's very similar to your climate transition plan ambition as well, you know, your long-term net zero ambition.

Just as a business would have a near term strategy, kind of strategic priorities for growth, you would expect the same for developing their climate transition plan. So, very clear kind of measurable outcomes that they want to achieve in three to five years and practical tangible steps that they can take in that near term timeline to get there. Within there, you then start to see this kind of trickle on effect of the business planning.

So, what needs to change in terms of business model, in terms of, you know, the enabling conditions, all those elements that you would see, you know, any other strategy. And I think that can make it very tangible for companies, and especially stakeholders within the companies, which in turn can make it a bit more realistic.

Yeah. So, really, it should be part of the overall strategy, not a standalone piece of work that they've done.

I mean, in terms of making it inclusive, how can businesses engage with the stakeholders, investors and employees effectively in their transition journey?

I think, yeah, I agree, you know, effective stakeholder engagement is going to be really crucial, not only in developing, you know, the climate transition plan, but indeed, this kind of journey as you go through implementation. I think maybe kind of one step right, yeah, again, just transparent communication, regularly sharing progress and the challenges that you're facing in doing this to build trust is really impactful. Beyond that, having a really core understanding of your different stakeholders and tailoring the messaging towards them with, you know, the different relevant insights, be it your investors, be it your customers is also going to be really impactful.

I think it's important to engage them, I guess, across all three different stages. So, during planning, making sure that you're really aligning with them on their expectations, during implementation, working with suppliers, working with employees for execution. And then, I guess, during communication, really clearly being able to articulate just how your climate initiatives, you know, support your broader business goals using that kind of investor grade, decision grade data.

Very interesting. I mean, for our viewers, if you want to hear more on this topic and related subjects, please do book to attend in person at the Third Annual Climate Transition Plan Summit. As I said, in London on the 24th of March. Further information available on our website, www.cityandfinancial.com.

Amelia, thank you very much for today's interview and looking forward to seeing you at the event itself.

Yeah, very much looking forward to it. Thank you.