Driving Value with Transition Planning
Photo by Javier Gibert on Unsplash
Authors: By Laura Robichaux Senior Associate - Climate Adaptation, Tania Hyde Technical Director and Circular Design Lead & Kristin Renoux Senior Associate - Sustainability - Climate & Nature, Beca
Climate change is undeniably reshaping our world. The impacts can be seen in the more frequent and severe weather events, changes in societal behaviour and expectations with decarbonisation, as well as evolving legislation and shifts in markets. These changes create disruption and uncertainty that are difficult to plan for and put pressure on organisations, their business models, strategies and objectives to be resilient and sustainable.
Governments around the globe are introducing legislation requiring entities to report on the climate risks they face and how they are responding. It is mandatory for some medium to large organisations to report under the Climate-related Disclosure (CRD) framework in New Zealand, and Australia is following suit. We see the influence of this mandatory reporting rippling out to entities in their value chains, driving voluntary climate reporting efforts and necessitating business transformation in response to climate realities.
Climate scenario development and analysis is required under the CRD framework and supports an entity to assess how climate-related risks and opportunities could impact its business strategy. By considering different plausible but challenging futures, an entity can gain a deeper understanding of their risks and opportunities. But what comes next?
Under the CRD framework, entities will need to disclose the transition plan aspects of their strategy. This includes how their business model and strategy might change to address climate-related risks and opportunities, and the extent to which these transition plan aspects are aligned with their financial planning processes, including capital deployment and funding.
There is no “one size fits all” way of doing transition planning and the approach should reflect the strategy and objectives of the organisation. In our transition planning masterclass, we will explore three varieties of transition planning - compliance based in alignment with organisational strategy, planning using adaptive pathways approaches to actively monitor and respond to changing conditions over time, and transition planning towards circular systems to enable economic resilience.
Transition planning is not new; however, the requirements of the CRD framework for climate transition planning will be new for many. Therefore, we will cover what is required under that framework and how you can deliver transition planning that aligns with the requirements and guidance and delivers value beyond compliance and supports pragmatic updating of plans.
Transition plans can be developed which go beyond “tick the box” compliance, to more effectively inform strategic decision making, provide pathways when change occurs and drive cost-effective outcomes using a range of tools, including with Dynamic Adaptive Planning Pathways (DAPP). DAPP provides a scalable way to flexibly plan for investments in climate adaptation for assets and communities. Pathways chart a series of actions in the short, medium and long term, with signals and triggers to indicate the points in time at which decisions are required.
DAPP allows for the development of transition plans that enable dynamic decision-making as circumstances change, providing more investment certainty for organisations. The DAPP approach is practical for aligning transition plans with business strategies and objectives that may need to pivot in the face of a changing world and are easily updated within the annual CRD cycle. Monitoring identifies how conditions change and can streamline updates to scenarios, risks and opportunities, or actions clearly tracking external changes as well as organisational action to evaluate progress. As you continue through subsequent iterations of the DAPP process, you begin with understanding what has or has not changed since the previous iteration reducing rework required.
Recognising that transformational change is essential to thrive amid the challenges posed by climate change. Integrating the principles of a circular economy is an effective way to create transformational change, as it advocates for systemic shifts beyond existing structures. Instead of merely adjusting within current systems, transformational plans address the broader value chain and leverage social, political, and economic drivers to foster sustainable, closed-loop systems. This approach reduces waste and enhances resource efficiency while promoting regenerative practices.
By doing so, circular transition planning contributes to sustainability and environmental impact reduction, boosts economic resilience through decreased reliance on volatile external supply chains, and encourages innovation and competitiveness by inspiring new product designs and business models. Additionally, it aids in regulatory compliance and risk management by aligning with sustainability legislation, enhances stakeholder relationships by demonstrating a commitment to positive environmental change, and ensures long-term viability by embedding sustainable practices into core operations.
In our master class (Wednesday 14th May 0800-0915 at The Value of Purpose) we will provide three takes on the “how” for transition planning in response to differing organisational objectives drawing on case studies and our experience. We will then open the floor for a panel discussion.
