The negative impacts of climate change have been growing year after year. The frequency and severity of these climate-related impacts are also increasing. Historically, financial institutions have been able to diversify their portfolios to reduce their risk of exposure to climate change. However, given the systemic nature of climate-related events, it may not be long before that approach becomes untenable.
Now is the time for companies to adapt their organizations to the risk of climate change. A low carbon transition plan can help. We interviewed two experts from Antea Group USA that walked through the elements of a low carbon transition plan and where you can start. Below is a selection of the interview and you can view the full video and transcript of this discussion here. Let’s first meet the experts before diving in.
Charlie Quann leads carbon services at Antea Group USA. He specializes in helping companies set science-based targets and other carbon reduction goals, as well as defining the initiatives and strategies that need to be implemented to achieve those goals.
Allie Wiegel is a Senior PM at Antea Group USA on the carbon services team. She leads projects related to carbon accounting work. She helps companies set greenhouse gas emission baselines, helps define carbon reduction targets, and then draws the line in between – which is a low carbon transition plan.
What is a low-carbon transition plan?
Charlie: A low-carbon transition plan is a document that pulls together all the climate and carbon work that a company has done into one cohesive document that outlines the strategy as well as the baseline for achieving carbon targets. It’s how that company is going to operate in the future, in a world in which we do have a low-carbon economy. It pulls together both what has been done to date as well as what is the strategy moving forward on those topics. And often includes things like targets, science-based targets, and goals to reach this net-zero economy that we are shooting for in the next couple of decades.
Allie: A low carbon transition plan is the line that connects the baseline carbon footprint of a company, organization, or individual to their goal. When we think about how a company actually achieves a reduction target, say 50% by 2030, or net-zero by 2050, the low carbon transition plan is how we get to that target from where we are today. For us in our work, we are helping companies draw that line by looking at their baseline carbon inventory. So, the emissions that they have, or that they are responsible for, through their operations, and then helping them identify initiatives that are going to reduce those emissions over time and help them reach their target.
Why would a company need a low-carbon transition plan?
Allie: Low-carbon transition plans are imperative when it comes to defining a strategy around carbon reduction. They are the roadmap of how to actually reduce carbon emissions. You look at specific initiatives such as renewable energy, energy efficiency projects, or fleet de-carbonization if you have a fleet of vehicles that are using gasoline or diesel or other kinds of fuels. It’s really the list of initiatives that you are going to check boxes on to reach your carbon reduction target.
Charlie: A lot of companies set sail on their de-carbonization journey without a map, which is not something you want to do with either sailing or de-carbonization. A low carbon transition plan is the thing that shows your company, but also can show internal and external stakeholders, board members, investors, and the public, how you’re going to achieve your goal. This is becoming especially critical with investor pressure ramping up around this, and public sentiment around carbon targets has scrutinized those companies that set really ambitious goals and don’t have a roadmap to get there. A low-carbon transition plan, for a lot of companies, is that essential document that gives their goals and ambitions some credibility that they have thought this through.
What if we aren’t ready to dive-in deep? Where should we start?
Charlie: You see this a lot where companies are not quite ready to jump into really detailed work. It can be expensive and costly, and an organization might not be ready to commit the capital to achieve and invest in those initiatives. Oftentimes, the first place that a company will need to start with the low carbon transition plan is just outlining what we’re talking about in rough numbers. So, for example, leadership sometimes thinks of sustainability and de-carbonization as a cost and only a cost. Helping to, at least at a high level, reframe that narrative to show that there are real tangible returns on investment, that this makes good business sense, that’s really a starting point for this.
Allie: The other piece I would add to that is the baseline carbon inventory. Understanding where you are today will really help imply which initiatives are applicable and relevant to your company. The other piece that I think is beneficial is having a goal. Having that buy-in from the company and something to gather the company around in terms of reaching a specific target can help imply how quickly and how much investment you need to reach a specific number by a specific day. Those two pieces together – feasibility assessments and the risk piece – really can all be starting places. Understanding where you are and where you are going, and then filling in the gap in between, is critical.
Charlie: Companies come at it from all angles and start in very many different places. One of the most successful approaches that I have noticed is companies that start with a good baseline, as Allie mentioned, really understanding their own carbon footprint and own operations. Then they look at science-based targets as a guide for what a de-carbonization target might be or look like for them, but not necessarily committing to it yet. Then they do the low carbon transition plan with that science-based target end goal in mind, or net-zero, before a public commitment is made. You want to understand the economics of such a commitment, get buy-in from leadership to support that commitment, invest the dollars to achieve it, and then go public with the target and start implementing that plan.
What are the common elements of a low carbon transition plan?
Allie: A low carbon transition plan is really the line that connects your baseline inventory to the target that you’re hoping to achieve in terms of emissions reductions. When we think about that line, there are specific initiatives that we keep referring to. Every company is going to be different when it comes to what those initiatives are, based on the type of emissions that they have and the relevance they have within the company’s footprint. But some things that we see as common elements of most low carbon transition plans are things like renewable energy, so onsite and offsite renewable energy strategies.
Charlie: Also, the initiatives that a company might invest in are dependent on their operations and their current baseline footprint. An organization that has a larger refrigerant load, for example, may have a large portion of their footprint coming from refrigerants, and they might need more of a cohesive strategy around HVAC and refrigerant management using low global warming potential refrigerants. Also, a company that has a large exposure to climate risk or is in an industry that is potentially going to be hurt by this transition to a low carbon economy may need to be paying special attention to other elements. It might not just be about decarbonizing the operation. They may need to be looking at their product. How does Scope 3 factor in if they are getting a lot of pressure from that customer to de-carbonize as well? There are a lot of elements that can be variable, depending on what the current state is and what those external pressures are.
Additional Questions and Video Interview:
Read or watch the rest of the interview (https://us.anteagroup.com/news-events/blog/low-carbon-transition-plans) as Charlie and Allie answer the following questions:
- What is Scope 3 and how does it factor in?
- What if we do not hit our initial target/goal?
- Can you have gaps in a low-carbon transition plan?
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