Supporting COP outcomes with transition plans

At this year’s COP28 climate conference, the TPT Secretariat along with many of its partners in the Taskforce, put the spotlight on transition plans through its activities. With several workshops and events on Finance Day and throughout the two weeks, and related announcements from major partners, momentum continues to build for transition plans across public and private sector audiences. Here we share some of our thoughts post-COP.

An increasingly wide range of organisations, professions and sectors are thinking about transition planning and transition plan disclosures: This was demonstrated through the breadth of activities that took place at COP28, including transition plan-related events hosted by the UN Secretary General, GFANZ, the Monetary Authority of Singapore, Accounting for Sustainability and ICAEW, the City of London, EY, KPMG and more. We are seeing momentum in the UK, EU, US, Japan, Singapore, Australia and many other countries, and the TPT is further considering the opportunities and challenges in emerging markets and developing countries.

Transition plans are a key part of the enabling environment. By bringing in transition plan requirements, jurisdictions can create the enabling conditions of transparency and standardisation, allowing investors and lenders to allocate capital into areas needed for the transition and allowing regulators and governments to understand how markets and firms are enabling the transition, and supporting national ambitions.

There is continued strong backing for the ISSB to act as the global baseline or ‘common language’ for sustainability-related reporting: The ISSB released a COP28 Declaration of Support with close to 400 organisations from 64 jurisdictions committing to advance the adoption or use of the ISSB’s climate-related reporting, which includes transition plan related requirements. The TPT Framework complements and builds on the ISSB’s reporting standards. Jurisdictions can now adopt global ISSB Standards as the first step, and bring in TP requirements alongside them to give markets the guidance they need to create robust plans. The TPT has supported global regulators, supervisors and governments to consider how they can do this in a globally aligned way.

Momentum is building for ensuring that transition planning works for all jurisdictions and regions, particularly emerging markets and developing economies (EMDEs) where plans can potentially be an important tool to mobilise investment. As transition plans become a more commonly used tool internationally it will be important to converge around norms for best practice. The role for credible transition plans to underpin transition finance was a common point among discussions at COP28 and was the theme of TPT’s own event in the UK Pavilion. We intend to publish a further output on this theme in 2024.

Discussions on private sector accountability also included a strong focus on the importance and different use cases of transition plans across financial and real economy sectors: This included at the launch of the Taskforce on Net Zero Policy, implementing the final recommendation of the UN High Level Expert Group on non-state net zero commitments, and during the COP28 Presidency’s roundtable on Accelerating Action: Private Sector Accountability and Regulation for Net Zero Transition.

The Global Stocktake GST decision text highlights several points of relevance for transition plans.  The headline finally gavelled through at COP28 of Parties transitioning away from fossil fuels (para 28.d) is an explicit sign that every financial institution and company will need a credible transition plan to explain how they fit into this global imperative. The TPT supports them in this challenge by giving companies the tools to build credible transition plans, and a credible transition lays out how an organisation plans to meet the targets it has set itself. The TPT’s sector-neutral Disclosure Framework provides the tools needed to develop and communicate credible transition plans, with supporting sector specific deep dives currently out for consultation.

In addition, Global Stocktake text in paragraph 16.b and paragraph 70 notes that sufficient capital exists for the transition but there are investment barriers, noting the role of Governments and regulations in unblocking these. It also recognised the importance of “policy guidance, incentives, regulations and enabling conditions to reach the scale of investments required to achieve a global transition”. Paragraph 63 further notes the role of non-state actors in adaptation, something that the TPT’s ‘strategic and rounded approach’ can help companies to do as part of their strategic climate transition plans.

TPT was well represented at COP by many of the 150+ organisations which have been directly involved in creating its outputs, as well as by a delegation from the Secretariat. We look forward to further contributing to the international conversation on climate transition in 2024.

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Relevant paras from the GST decision text

  • Para 28. d) “calls on parties to…transitioning away from fossil fuels in energy systems in a just, orderly and equitable manner, accelerating action in this critical decade, so as to achieve net-zero by 2050”.
  • Para 16. b) “That both adaptation and mitigation financing would need to increase manyfold, and that there is sufficient global capital to close the global investment gap but there are barriers to redirecting capital to climate action, and that Governments through public funding and clear signals to investors are key in reducing these barriers and investors, central banks and financial regulators can also play their part;”
  • Para 70. “Also recognizes the role of the private sector and highlights the need to strengthen policy guidance, incentives, regulations and enabling conditions to reach the scale of investments required to achieve a global transition towards low greenhouse gas emissions and climate-resilient development and encourages Parties to continue enhancing their enabling environments;”
  • Para 63. “Urges Parties and invites non-Party stakeholders to increase ambition and enhance adaptation action and support, in line with decision -/CMA.5,4 in order to accelerate swift action at scale and at all levels, from local to global, in alignment with other global frameworks, towards the achievement of, inter alia, the following targets by 2030, and progressively beyond:” (followed by list of adaptation targets relating e.g. to water scarcity, food production etc.)

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