Hello everybody and welcome to the latest edition of C&F Talks. Today it's a pleasure to have with me Kate Levick, who's the Founding Director of the International Transition Plan Network, the ITPN. Kate's also an Associate Director of Finance and Resilience at E3G. And Kate's going to be speaking at our forthcoming event, the Third Annual Transition Plan Summit, which is being held in London on the 24th of March. Kate, welcome.

Thank you very much, Maurice.

It's great to have you with us today.

Perhaps you could just start by telling us a little bit about the ITPN, the rationale behind setting it up, and what it is you hope to achieve.

Thank you. So E3G, we're headquartered in London and we're a think tank that focuses on the politics of climate change and within that I lead their work on finance. We were very pleased to be asked to co-host the Secretariat of the UK's Transition Plan Taskforce, which was asked to set out what a gold standard climate transition plan disclosure would look like for a financial firm or for a real economy firm.

And we were very successful with that work, which has now passed through into the sphere of international standards. During that work, supporting the TPT, it was clear to us in E3G that there were, you know, conversations going on between different jurisdictions about how they would approach transition plans and what kind of regulations or policies they might create, and that there was lots of exchange and dialogue going on, but there was a useful opportunity to create more space for that exchange and dialogue. So that's what we're looking to do with the ITPN.

It's a forum in which public sector bodies such as finance ministers or financial regulators can engage with each other, but also with a wider community of practice, which involves, for example, some of the key thought leaders or alliances of private sector organisations.

So that's very helpful, Kate.

So, are you trying to establish international standards so that things are equal in terms of the quality of transition plans across jurisdictions? Is that the aim that you take, perhaps the TPT standards and guidance and advice, and that's sort of universally applied, or do you allow for variations?

Oh, no, this is an open forum that jurisdictions and other actors can participate in whatever policy starting point they're coming from, and part of the reason why it's a useful contribution is that actually, you know, approaches to transition plans and transition planning have developed in different ways in different jurisdictions, and sometimes in different ways by different kinds of regulators, depending on what their mandate is.

So, some might be more focused on the risk element of transition plans, for example, and others might be more focused on anti-greenwashing or on trying to support 1.5 and Paris goals. So, there are all these different perspectives, and what we're doing is creating a space to bring those together. I think the one sort of common thing maybe of organisations that are participating in the ITPN is that they are interested in creating that international coherence and interoperability and to get to global norms.

Yeah.

And as we're all aware, everybody's pushing for transition finance to move forward. You know, here in the UK, there's been a review that was organised at the behest of the government, and clearly transition plans play an important part in that. Could you just elaborate on that a bit, the relationship between transition finance and transition plans?

Absolutely. So, transition plans are just one tool that can be part of a wider suite of policy tools around transition finance, and when we talk about transition finance, we're talking about how to mobilise finance and investment into the economic transition through to meeting Paris goals, including not only decarbonisation but also adaptation and resilience. So different countries around the world are taking slightly different approaches.

In some, it's more popular, for example, to have a transition taxonomy. We're also seeing increasing use of instruments like transition bonds, transition loans, but transition plans and planning for transition play an important role in that. So, the UK created a Transition Finance Market Review, which reported last year.

I was on the expert group for that review, and E3G also provided some support for the work, but there were a wide number of stakeholders contributing to that. So, they made a number of recommendations about how to make the UK a champion of transition finance. They did include in that, you know, a strong focus on the value of transition plans.

Okay.

And when you look at transition plans, what would you say are the key elements that companies need to have at front of mind when they are preparing these? What are the key things that they really should all have, thematically, in terms of transparency, accountability and so on?

Absolutely. So, in the TPT framework, we tried our best to integrate and be interoperable as much as possible with other key frameworks that were already out there, such as the TCFD and such as GFANZ. And, you know, for that reason, we have the same five core elements to the TPT framework that you also see in the GFANZ transition planning framework that so, you know, a lot of actors in the market are familiar with that.

And, you know, it goes through some foundations where you're really setting your strategy and your goals, and then through to the planning, the operationalisation, how you're actually going to do it, and the metrics and targets that are going to be set, you know, the governance around that and the reporting. So, there's this overarching five element framework, which I think, you know, we're setting out that a robust and credible transition plan should have all these elements within it. And actually, if a firm goes through a comprehensive transition planning process and has those conversations internally, those things should naturally fall out of that process.

Maurice

And do you feel, I mean, there's been across the world, to some extent, at least a bit of a backlash against ESG and what people regard as woke. Has that, so far in your experience, has that affected a company's willingness to go ahead with things such as drafting transition plans? Or do you think that everything continues beneath the surface and progress has been made?

Well, obviously, some of the political changes that we're seeing have been very recent in terms of the changeover in government in the US, for example. And there's also a very live policy process happening as we speak in the EU in relation to simplifying sustainability reporting requirements. So, there is a watch this space about all of that.

However, I would say the dramatic sort of market uptake and market momentum we've seen around transition plans and planning, you know, has absolutely been there to date. And I would be surprised if that really changed a lot, because a lot of what gets discussed in terms of being, you know, that some of the anti-ESG backlash is much more about sort of vibes and perceptions. But when we're talking about transition plans and planning, we're talking about real concrete business strategy processes and actually getting the hard data that investors are asking for.

So, I would say that this is something that is more likely to survive the current turmoil.

Yeah, yeah, no, I think that's absolutely right. And of course, there's the reality of global warming, and no amount of sentiment and talk is going to change that. So yeah, that's a very positive note to end on.

And Kate, we're very much looking forward to seeing you at the event on the 24th of March. And for our viewers, I hope you'll be able to join us in person at the event, being held in London on the 24th of March. More information available at the website www.cityandfinancial.com.

So, it just remains for me to say, thanks for sharing those thoughts, Kate.

It's been a pleasure. Looking forward to the conference.