Climate Action

Stuart Lemmon on the urgent need for businesses to adopt effective transition planning

Climate Action caught up with Stuart Lemmon, EcoAct CEO and Managing Director of Net Zero Transformation Practice at Eviden, an Atos business, to discuss the urgent need for businesses to adopt effective transition planning.

  • 11 October 2023
  • Rachel Cooper

Climate Action caught up with Stuart Lemmon, EcoAct CEO and Managing Director of Net Zero Transformation Practice at Eviden, an Atos business, to discuss the urgent need for businesses to adopt effective transition planning.

Why is there an urgent need for businesses to adopt effective transition planning as part of their corporate-level transformation towards net-zero?

Climate action, biodiversity protection and nature regeneration are now high on investors’ agendas. Beyond carbon emissions reduction, investors seek to assess companies’ transition plans to understand where to allocate their capital. Likewise, consumers are increasingly prioritising sustainability in their purchasing decisions. Recent research by GlobeScan’s Healthy & Sustainable Living found that people around the world are concerned about climate change and nature. 63 percent globally across 17 tracking countries say that climate change is “very serious” and demand more action from governments and companies to promote and facilitate a healthier and more sustainable lifestyle.

In recent years, we’ve witnessed a surge in corporate climate pledges. Yet, the translation of these aspirations into concrete action has been uneven and insufficient, underlining the growing need for credible climate transition planning to bridge the gap between intention and implementation.

Transition planning goes beyond simply recognising the urgency of addressing climate change and biodiversity loss. It enables organisations to outline concrete actions aimed at minimising their environmental impact and restoring natural ecosystem health while fostering long-term economic growth that benefits both the planet and people. It facilitates gradual transformation that enables organisations to anticipate and address the changing regulatory landscape, helping them align with the expectations of investors, stakeholders, customers, employees, and society at large.

Understanding emerging climate change and sustainability regulations empowers organisations to navigate the complex economic, social and technological transformations needed to decarbonise and adapt to the impacts of climate change while remaining profitable and resilient. It’s increasingly integrated into the routine regulatory oversight of industry leaders, serving as a valuable monitoring mechanism to assess organisations’ climate and sustainability strategies.

Furthermore, transition planning aligned with climate science recommendations enables organisations to conduct a thorough inward analysis of their environmental impact while assessing their potential for transformation. By aligning with climate science and industry standards, companies can identify areas for improvement and develop strategic initiatives to accelerate their transition. These initiatives not only reduce environmental impact and contribute to environmental regeneration but also enhance competitiveness by building business models that are fit for purpose in a low-carbon economy and post-transition world.

Why must businesses embrace a holistic, data-driven approach to net-zero, with nature, climate resilience and social impacts at its centre?

The traditional linear production model (take-make-waste), rooted in the assumption of nature’s boundless resources, is now clashing with the stark reality that economies and human life depend on the health of ecosystems. In 2020, an analysis of 163 industry sectors and their supply chains found that half of the world’s GDP (US$44 trillion of economic value generation) is moderately or highly dependent on nature and its services. Recognising the intrinsic interplay between climate change and nature loss is therefore paramount, as these challenges are intricately intertwined and exacerbate each other’s effects.

Biodiversity loss is increasing, as evidenced by the report on biodiversity decline worldwide published by the Intergovernmental Panel on Biodiversity and Ecosystem Services (IPBES) in 2019. The global landscape bears the scars of land degradation, impacting approximately 23% of Earth’s land surface and the people living on it - 100-300 million people are at increased risk of floods and hurricanes because of the loss of coastal habitats and protection.

The conservation of biodiversity and nature presents challenges which may even surpass the complexities of addressing the adverse impacts of climate change. The loss of biodiversity has a profound impact on global supply chains. It can lead to disruptions in the delicate ecological balance that many industries rely on for sourcing raw materials and ensuring stable production processes. Additionally, as biodiversity loss threatens essential ecosystem services like pollination and water purification, supply chains dependent on agriculture and natural resources may experience increased costs and reduced reliability.

Similar to how the Taskforce on Climate-related Financial Disclosures (TCFD) pioneered a framework for addressing climate-related issues, the Taskforce on Nature-related Financial Disclosures (TNFD) is working on establishing a structured methodology to assess the dependencies, risks and consequences of financial institutions and companies’ actions on nature. Since 2022, CDP has also included several mandatory questions on the consideration of biodiversity issues in its climate change questionnaire.

Identifying, measuring, and reporting on all biodiversity impacts can be challenging for many organisations, especially given their complex supply chains. A data-driven approach, therefore, helps organisations focus on the activities, impacts and dependencies associated with biodiversity that are most relevant or material to the business. This should encompass biodiversity screening, providing insights into areas of biodiversity risk within direct operations and supply chain, and biodiversity footprinting, to understand the capacity of ecosystems to deliver the ecosystem services on which organisations’ activities depend and allow for an effective assessment of changes in biodiversity. It is important to note that impacts on biodiversity are site-specific. An understanding of the local context and collection of specific data in which an organisation interacts with biodiversity is crucial to assessing its impact.

What is the critical role of climate data analytics in understanding and informing actionable climate and sustainability strategies?

Many of our clients rely on long and complex supply chains, involving intricate emissions profiles with multiple sources of greenhouse gas (GHG) emissions. These emissions, along with their associated hotspots, can be challenging to accurately quantify. Progress in reducing emissions also depends on long-term planning and strategic decision-making. In this context, expertly applied data is key to effective climate and nature action: modelling various scenarios, forecasting the impact of possible measures and optimising resource allocation are capabilities that help organisations define decarbonisation and climate resilience strategies that work for both them and the planet.

Moreover, a data-driven approach helps unlock hidden aspects and quantifies risks that may not be immediately apparent. This forms the bedrock for business transformative action. The integration of AI is likely to further unlock new insights from the vast and complex simulations facilitated by climate modelling. Responding to the above-mentioned complexity of monitoring biodiversity, AI technologies can be leveraged to build predictive models of forthcoming biodiversity change, drawing upon current observations and different scenarios of human activities, adding new dimensions to the transformation process towards net-zero.

Why does embracing early compliance with legislation like the TPT and proactively developing robust climate transition plans give businesses a competitive edge in the marketplace?

While regulation for the mandatory disclosure of climate transition plans is still being shaped, we have seen in the last years how organisations are voluntarily sharing their strategies for transitioning to net-zero. This proactive approach reflects the growing recognition among organisations that transparency and accountability regarding climate change and the preservation of nature are non-negotiable for preserving stakeholder trust and effectively managing climate-related risks and opportunities.

In this context, organisations with a credible climate transition plan not only stand a better chance of attracting investment and expanding into new markets but also are best placed in future-proofing their businesses and ensuring long-term profitability. Importantly, this isn’t limited to industries that are most visibly impacted by climate change and nature degradation; this imperative resonates across industries as climate and nature considerations increasingly permeate all aspects of the global business landscape. An example of this shift is provided by CDP’s recent findings, which project staggering environmental supply chain risks amounting to US$120 billion by 2026.

How can independent advisors like EcoAct support businesses to transition and transform their operations for net-zero while managing the impacts such as risk and opportunities?

Over more than 18 years, EcoAct has developed a deep understanding of the challenges and opportunities that organisations face in addressing climate change and transitioning to a net-zero economy. We firmly believe that the path towards net-zero is anything but simple and linear. Rather, it is a multifaceted and ever-evolving challenge, which may require multiple cycles of change. Our solutions have always been tailored to the specific needs and challenges of our clients, considering their emission profile, maturity, vulnerability, capabilities, and available resources to create an effective pathway towards net-zero emissions. This is key to ensuring businesses’ ambitions and aspirations translate into actionable roadmaps and transformative change, incorporating climate change and nature’s constraints into their value proposition.

This transformation will undoubtedly present its share of challenges. It will require organisations to think differently about their products, their operations and their relationships with their customers and suppliers. At EcoAct, data serves as the very foundation of our work, forming the bedrock upon which we build our climate and sustainability solutions. It plays a pivotal role across multiple dimensions, helping us unlock critical insights and drive meaningful change.

Above all, data is our linchpin when it comes to tracking primary emissions data across all scopes. It enables us to develop comprehensive greenhouse gas (GHG) emission profiles for organisations, painting a clear picture of their environmental impact. This isn't just about numbers; it's about understanding the true carbon footprint, both direct and indirect, and recognising the significance of every emission source.

Moving beyond carbon footprinting, data equips us to identify climate-related risks and vulnerabilities, enabling businesses to proactively address potential threats. It provides the vital context needed to map double-materiality, helping organisations navigate the intricate landscape of sustainability reporting and disclosure. This comprehensive approach is key to assessing activities' alignment with sustainability goals and ensuring that businesses are well-prepared for the evolving climate agenda.

However, our data-driven approach doesn't stop at emissions and climate risks. We also employ data to screen for biodiversity risks within our clients' direct operations and supply chains. By delving into biodiversity data, we gain insights into areas where ecosystems are under threat, enabling us to develop strategies for conservation and responsible sourcing. Biodiversity footprinting, another critical dimension, helps us understand the full extent of operational and supply chain impacts on ecosystems, fostering more responsible and sustainable practices.

Data isn't just a static entity for us; it's dynamic, enabling us to set science-based targets and implement improvement initiatives that are grounded in real-world evidence and aligned with the latest scientific advancements. It serves as the guiding compass as we chart the broader economic decarbonisation contribution of businesses, showcasing their commitment to a low-carbon future. When addressing other key aspects of effective transition planning – governance and supply chains, data ensures transparency and accountability, fostering effective collaboration between organisations, partners, and suppliers.

Finally, data is the key to compliance with evolving regulations and legislation, allowing organisations to stay ahead of the curve in a rapidly changing landscape. It's the heart of transition planning, facilitating a smooth and informed journey towards a sustainable and resilient future.