The Situation: COP26 marked a shift from ambition to action. But less than 20% of organizations have the transition plan they need. Time is running out to roadmap and move toward net-zero, beyond, and all 17 UN Sustainable Development Goals.
To address sustainability, organizations and governments need transition plans. That means roadmapping: Where are you now, where do you need to go, and how will you get there? It sounds simple, but our experience and the Sustainability Services Ecosystem Mapping study are proving otherwise. More than 80% of organizations don’t have the plan they need. Here is a heavily summarized start for moving toward a universal sustainability transition plan “blueprint.” We can’t all afford to start from scratch.
- Start with the global context and overarching goals: A big advantage in addressing sustainability is having goals. We need to decarbonize and meet net-zero by 2050 (at the absolute latest) and have 17 UN Goals covering all environmental, social, and governance (ESG) factors that sustainability encompasses. Leadership teams must set formal organizational goals based on detailed transition plans. Organizations like the SBTi (Science Based Targets Initiative) can help, but more on that later.
- Understand and measure your starting point: The data and means to map and monitor organizational footprints across ESG are becoming clear, but they remain challenging. Services, technologies, and standards like Greenhouse Gas Protocol (GHP) are developing at pace to address this.
- Plan the transition roadmap and formalize your targets: Make a point of addressing quick wins. Set interim targets for 2025 and 2030; COP26 highlighted these as critical milestones to stay within a 1.5-degree global warming limit. COP27 in 2022 will challenge governments to produce 2030 targets and more detailed plans. Throughout ecosystems, organizations must collaborate to align data, roadmaps, and best practices. This effort must create the credible but ambitious goals and transition plans that organizations—and all of us—need.
An underreported announcement at COP26 could be the most important
See more in our presentation of new research at COP26 and separate take on the summit.
Despite most agreeing that COP26, the recent UN climate summit, marked a shift from ambition and goal setting to transition planning and action on decarbonization and broader sustainability, the UK’s announcement that public and large firms must disclose transition plans from 2023 onward got little attention. It’s not surprising. Coherent roadmaps make for less-gripping headlines than tree planting, large sums of money, and bashing fossil fuels—whether in media or selling them politically. But given that more than 80% of organizations don’t have the plan they need for sustainability (see mapping study, referenced above)—transition plans are crucial.
The disclosure and scrutiny of transition plans must become the norm in 2022
Transition plans outlining how an organization will decarbonize and address sustainability across ESG must become a standard in both regulation and best practice—and governments should adopt the same roadmapping-based approach. Put overly simplistically: If every country and organization aligned their transition roadmaps to the global context of decarbonizing to net-zero by 2050 and addressing all 17 UN Goals, in theory, we might see the change we need.
We’re moving from goal setting to action, but well-designed targets remain important
It cannot be overstated how vital goals are for sustainability—and how they offer a huge advantage over the last 10 to 15 years when organizations were (and often still are) chasing a horribly vague specter of digital transformation.
Many consider the gold standard of goals to be the Science Based Targets Initiative (SBTi), a partnership between CDP (which we’ll touch on later), the United Nations Global Compact, and others. Its purpose is to help organizations set science-based emissions-reduction targets underpinned by credible roadmaps. Best practice guidance and technical expertise are also available. A recent announcement sees a continued SBTi focus on sector-based guidance.
Few firms have enough visibility of their ESG footprint or ecosystem
ESG reporting remains a heavily manual process for most. In very few areas are CEOs giving speeches built from information collected on spreadsheets by junior employees. Even the most senior staff member responsible for sustainability often has other roles alongside sustainability (the case in 60% of large organizations, our COP26 study found). Getting a full-enough picture of the organizational ESG footprint is key—especially throughout supply chains—to nailing down a starting point for a transition roadmap and making better strategic and day-to-day operational decisions.
Collaborating throughout ecosystems is a must to overcome these challenges, whether by developing more open and trustworthy data-sharing relationships with stakeholders or investing in monitoring technologies and collaborative platforms where multiple parties (including competitors) can access data in a standard form. Service and technology providers are developing these capabilities alongside frameworks and standards. A good starting point is the Greenhouse Gas Protocol; it provides standards, tools, and training for emissions reporting used by 9 out of 10 Fortune 500 companies that report to CDP. Speaking of CDP…
Organizations are being judged increasingly on transition planning rather than their goals alone
CDP, a non-profit running a disclosure system for organizations’ environmental performance that also produces an “A list” of companies, outlined at COP26 that it would increasingly base its ratings on detailed transition planning and less so on goals. The growing need to be publicly competent when addressing sustainability is clear: In 2021, more than 13,000 companies representing more than 64% of global market capitalization disclosed through CDP—35% more than 2020 and at least 140% more than when the Paris Agreement was signed in at COP21 in 2015.
But an organizational-level roadmap alone isn’t enough. Yes, the overarching strategy is crucial, as is championing at the CEO and board levels, but it must break down throughout the organization and manifest in concrete metrics and targets for every function and manager. Refer to our COP26 presentation for more information.
The Bottom Line: Organizations must collaborate. Service and technology providers must standardize the transition planning process.
We’ve outlined pertinent elements of transition planning, goal setting, ESG data, and some of the key organizations involved. Mostly, it boils down to collaboration with the right members of an ecosystem at the right point.
A last note to consulting, services, and technology providers for 2022: In addition to transition planning, focus on developing industry blueprints. We can’t afford to have organizations all starting from scratch.