ERM: Strategies for Achieving Robust Climate Transition
As the Earth grapples with climate change, the call for comprehensive climate transition planning by businesses becomes more critical.
While a significant percentage of prominent global companies are setting their sights on net zero carbon emissions, a closer look reveals that few have concrete strategies to achieve these goals.
Paul Simpson, a partner at ERM (Environmental Resources Management), underscores the pivotal moment for corporate climate action.
He highlights that although understanding climate impacts is high and targets ambitious, translating these into beneficial operational strategies remains a challenge for many.
According to Paul: "While companies increasingly understand their climate-related risks and impacts, and many are setting ambitious targets to address them, businesses still find it difficult to convert targets into operational actions that create commercial value."
Effective climate transition is more than a corporate duty; it is crucial for unlocking capital and enhancing long-term profitability.
In an economy increasingly shaped by environmental concerns, proactive climate strategies do not just minimise risk—they position businesses at the forefront of a sustainable future.
Meet Climate Advocate Paul Simpson
Paul Simpson's role at ERM extends well beyond traditional consultancy. He founded CDP in 2001, an international not-for-profit that helps entities manage their environmental impacts.
For his efforts, Paul has been recognised widely, including being bestowed with an Officer of the Order of the British Empire (OBE) in 2022 for services in tackling climate change.
Paul's connection to climate initiatives is extensive, collaborating with bodies like the Science Based Targets initiative and the Climate Disclosure Standards Board. His experience positions him as a formidable force in the push for thoughtful, actionable climate strategies.
Boosting Investor Confidence with Clear Strategies
One of the most notable advantages of robust climate transition planning is fostering investor confidence.
Paul notes: "Done right, climate transition planning is a great tool for bridging the valuation and communication gap between companies and investors."
The finance community has shifted noticeably, with sustainability now at the forefront of investment strategies.
Specifically, as per a 2024 report from the Global Sustainable Investment Alliance, a majority of global assets take into account environmental, social and governance (ESG) criteria, with a marked emphasis on climate variables.
Developing and communicating detailed transition plans can, therefore, serve to demonstrate a company's preparedness for environmental contingencies, possibly leading to a reduction in capital costs and an increase in perceived shareholder value.
Regulatory Compliance and Risk Mitigation
The regulatory framework related to climate is tightening globally, with various jurisdictions instituting carbon pricing and obligatory emissions disclosures.
This shifting legal landscape places added pressure on companies to adapt swiftly or face potential regulatory consequences.
Paul further explains the incoming legislative landscape.
He says: "Beginning in 2025, the EU Corporate Sustainability Reporting Directive (CSRD) expects 14,000 companies to state whether they have a climate transition plan and provide details if they do, while the EU Corporate Sustainability Due Diligence Directive (CSDDD) wants 6,000 companies to have transition plans ready by 2027.
"The efforts by the International Sustainability Standards Board (ISSB) have also underscored the importance of adequate transition planning." He remarks, "The Transition Plan Taskforce (TPT) is widely recognised as a trailblazer in transition planning disclosures."
By addressing regulatory needs proactively, firms can mitigate risks associated with non-compliance and harness the opportunities emerging from the so-called 'climate decade'. A robust climate roadmap not only supports environmental objectives but steers businesses towards long-term operational success.
Explore the latest edition of FinTech Magazine and be part of the conversation at our global conference series, FinTech LIVE.
Discover all our upcoming events and secure your tickets today.
FinTech Magazine is a BizClik brand
