ecoveritas is urging businesses to put sustainability road mapping procedures in place, following the announcement that listed UK companies will be required to publish their net zero transition plans from 2023.
At Finance Day, held during COP26 earlier this month, Chancellor Rishi Sunak set out the UK’s plans to become the world’s first net zero aligned financial centre. Under the proposals, financial institutions and listed companies must publish net zero transition plans that detail how they will adapt and decarbonise as the UK moves towards to a net zero economy by 2050.
To guard against greenwashing, a science-based ‘gold standard’ for transition plans will be drawn up by a new Transition Plan Taskforce, composed of industry and academic leaders, regulators, and civil society groups.
Kathy Illingworth, Head of Sustainability Consulting, ecoveritas, said, “We recognise that many companies will already be taking action to become a more sustainable operation or at the very least have a plan in place. However, this latest announcement from HM Treasury brings listed companies and financial institutions in line with the government’s ambitions to achieve carbon neutrality. To be able to comply with these new requirements and ultimately achieve net zero, companies must understand their position now in order to create a sustainability roadmap that aligns with their overall business model and strategy. Furthermore, if businesses want to strive to be recognised as leaders in innovative sustainability, they need to seek to develop a long-term strategy and roadmap to achieve this, whilst maximising employee and customer engagement and proactively complying with legal requirements in this area.”
According to HM Treasury, a transition plan should set out high-level targets the organisation is using to mitigate climate risk, including greenhouse gas reduction targets, e.g., a net zero commitment; interim milestones; and actionable steps the organisation plans to take to hit those targets.
Illingworth added, “With this in mind, there are a number of steps that businesses can take. They should identify new opportunity areas to improve sustainability, develop a long term (5-10 year) sustainability strategy and produce an actionable roadmap to realise the strategy developed. This begins with undertaking an ‘inside out’, essentially setting a baseline, and ‘outside in’ – a market analysis and developing options – approach, in order to create a sweet spot where we believe the strategy should sit and can be realised.”