Transition plans for climate change need to address a number of important issues. Among these issues are the lack of measurable emissions reduction targets and the lack of just transition. Furthermore, investors need to be vocal about their concerns and make their voice heard to their peers. To do so, investors should use exempt solicitations for US companies.
Just transition
Just transition plans for climate change are gaining traction in a number of sectors, from workers’ organisations to governments and business. This growing interest is encouraging, but it should not result in a proliferation of different understandings and commitments, which may compromise the effectiveness of the process. Rather, they should be used to inform and inspire action by stakeholders in the climate and energy sectors.
A key part of successful planning for a just transition is continuous consultation with stakeholders. As technology improves and regulations change, the pace of action must be adjusted to meet these new requirements. As a result, the process of assessing companies for climate action needs to be refreshed regularly. The Climate Action 100+ initiative has released the second round of its Net Zero Company Benchmark assessments, which measure how companies are reporting on climate change and their actions to reduce emissions.
Just transition plans require upfront planning and investment. However, the long-term benefits of implementing them are significant. Ultimately, governments will play a role in funding them, but they must also work with businesses to make sure they are equitable and sustainable. For this, conversations should start years or decades in advance. In addition, a robust government plan is essential to promote clear policy signals and stimulate investments.
The development of national plans should be inclusive, comprehensive, and take into account the structure of economies and labour markets. They must also incorporate gender equity and inclusion. Ultimately, a just transition should be inclusive and achieve net zero emissions. In addition, a just transition should also provide opportunities for social justice and decent employment.
A Just Transition Plan can provide a framework to support policy makers and publics worried about the economic effects of climate change. Its objective is to create a climate that is as close to nature as possible while ensuring that people and economies do not suffer unduly. Just transition plans can also serve as a catalyst for broader social change and action.
Despite the importance of just transition, the concept is not yet well-defined. However, some international instruments exist to help governments implement just transition plans. In particular, the ILO has developed a set of guidelines for just transition. These guidelines highlight the need for social dialogue in policy formulation. It is also important to recognise that no one actor can deliver the transition alone.
Interim milestones
Climate change transition plans should be time-bound, and outline every aspect of an organisation’s operations and business model. These plans should be aligned with the latest climate science recommendations, and include actionable steps to achieve net zero emissions and limit global warming to 1.5 degrees Celsius. To achieve these goals, the transition plan should include high-level targets, such as net-zero emissions by 2050.
These transition plans must be comprehensive, global, and market-based. Companies must recognize that the transition will alter their business model and consider changes to products, production, and distribution methods. They must also make important decisions on CAPEX and OPEX. In addition, boards must make strategic decisions across all aspects of the business to make the transition as smooth as possible.
In addition to establishing targets, transition plans can serve as a tool to demonstrate to investors and stakeholders that a company is serious about pursuing a net-zero economy. To help organizations create these plans, CDP has produced a discussion paper for organizations that outlines best practices for transition pathways and net-zero economies. The paper draws on existing benchmarks and frameworks and summarizes recent thinking.
Some transition plans do not include measurable interim goals to measure progress. The absence of interim goals for emissions reductions is a major source of concern for civil society groups. In addition, most signatories have not ruled out significant reliance on carbon offsets and unproven carbon dioxide removal technologies. Additionally, most have issued new loans for fossil fuel infrastructure in the years since becoming a signatory. Furthermore, the European Central Bank has voiced its concerns about transition plans and has called for a greater focus on intermediate milestones.
While many countries have updated their plans to include measurable interim milestones, many countries are still struggling to meet the ambitious goals set forth in their NDCs. China, India, and Brazil are among the countries that have not increased their ambition. These countries are also battling a severe power crisis, which may result in less ambitious climate plans.
The UK has also announced mandatory transition plans by 2023 and net zero targets by 2050. This means the financial sector will have to publish its transition plans as part of their sustainability disclosures. This is essential to private sector leadership in net zero commitments. It is hoped that this will help make the UK a Net Zero Aligned Financial Centre.
Lack of measurable targets for emissions reductions
Lack of measurable targets for emissions reductions is a key concern, a common criticism of climate change transition plans. According to the UN Framework Convention on Climate Change (FCC), climate change plans must balance emissions from human activities with emissions from natural climate sinks by the second half of the century. These natural sinks include forests, wetlands, and carbon removal technologies. However, quantifying these benefits and protecting them from human impacts is not easy.
Kyoto Protocol is an international treaty that entered into force on 16 February 2005 and has a list of 192 Parties as of May 2018. The European Union is a signatory to the Kyoto Protocol. The Doha Amendment to the Kyoto Protocol, agreed at COP18 in December 2012, requires a new set of Parties to reduce GHG emissions by at least 18% below 1990 levels by the year 2015. Sadly, the Doha Amendment to the Kyoto Protocol has not yet received the requisite number of ratifications for entry into force.
Lack of a holistic approach
We need to develop a holistic approach to climate change transition plans to address the many problems associated with them. One of these is a lack of sufficient capital to invest in low-emissions assets while retiring existing high-emissions assets responsibly. Without sufficient capital, the transition to a low-carbon economy may fail.
We also need to communicate the risks and consequences of runaway climate change and build consensus among key constituencies. Leaders must communicate the consequences of a slowed transition, while emphasizing the need for system-wide changes and integrating climate change into strategy, capital allocation, and supply chain decisions.
