Ceres' New Guidance Shows Leaders How to Build a Climate Plan Step-By-Step

Ceres, the nonprofit sustainability organization, recently released guidance to help companies take the next step in their climate strategies. Released in June, it’s aimed at corporations developing and evaluating a climate transition plan. The document provides a step-by-step path for corporate decarbonization strategies and aligns with the International Sustainability Standards Board reporting requirements.

“That was the impetus for this report,” said Laura Draucker, senior director of corporate climate action at Ceres and lead author of the report. “How do you understand what you're currently doing as a company, and move it towards what we call a ‘leading transition plan’ where it's fully integrated into a company's strategic plan?”

Climate plans differ from climate disclosures. Climate disclosures are snapshots in time or backward-looking statements. They identify risks and opportunities in the current moment, as well as the environmental impacts of a company’s activities. 

Climate transition action plans are forward-looking statements that lay out goals and targets for decarbonizing a company’s value chain and its plans for managing the risks and opportunities that climate change presents.

Investors want to see corporate climate plans

In the face of climate change, businesses are exposed to physical and transition climate risks. How storms or weather patterns affect capital assets and production are categorized as physical climate risks, while transition climate risks cover how companies have to comply with the evolving regulatory landscape.

Climate risks affect financial performance, and investors want assurance that companies are prepared for and managing these risks appropriately.

“Investors want evidence of implementation,” Draucker said. “They want to feel confident that their climate targets cover the company’s full emissions and that the actions they're taking, or planning to take, are going to move them towards meeting that goal.”

Over 600 investors managing $42 trillion in assets called for public disclosure of independently verified corporate climate plans in 2022.

What if you don’t have a perfect climate transition plan?

When it comes to building a climate transition plan, a lot of companies don’t know where to start, are overwhelmed by the size of the task, or fear they are going to do it wrong — all of which can lead to hesitation or inaction. Fear of failure was brought up during a workshop led by Ceres at the recent GreenFin 2024 sustainability finance conference in New York.

A representative from General Mills spoke about this fear, and how the company was unsure whether to publicly share that they have a large gap in their emissions and don’t know exactly what to do with it, Draucker said. 

“They went through a stakeholder process with Ceres,” Draucker said. “All of their peers, investors, and other stakeholders said, ‘please report that information because none of us know exactly how we’re going to do everything we need to do.’”

One of the important things for business leaders and sustainability professionals to keep in mind is that nobody, not even regulators, expects perfection when it comes to climate plans. What they expect is honesty, transparency, and a commitment to responsibly managing climate impacts and risks.

A climate plan evolves with time as new information and technology become available. Sustainability leaders don’t need to get everything right from the start.

“If in 2024 a company has to say, these are the things we can do now, and these are the areas of emissions that we don’t know how to address yet, that’s fine,” Draucker said. “When they update their plan in 2025, or 2026, or whenever they decide to do it, maybe then they have more information and can start to fill in those gaps.” 

How to start a climate transition plan

The Ceres guidance document is a useful reference for companies that need to develop a transition plan and for companies that want to evaluate their existing plan.

The guidance walks through the different aspects of a climate transition plan by outlining how to set goals and targets, how to decarbonize, how to track and report progress, as well as how to ensure a just transition and advocate for public policy. When it comes to developing a forward-looking climate plan, it all starts with buy-in from executive leadership.

“Executive buy-in is critical,” Draucker said. “There’s a lot that sustainability teams can do in the absence of leadership, but it's going to be difficult if leadership is making decisions without considering the climate impacts.”

The path to decarbonization starts with determining the largest sources of emissions across a full value chain, according to Ceres. The company can then identify strategies to reduce those emissions, estimate the expected emission reductions, and select meaningful metrics to set goals and track progress.

While there will certainly be some bumps in the road, the sooner companies start developing their climate transition plans, the more prepared they will be for regulations that require climate plan disclosure, like the EU’s Corporate Sustainability Reporting Directive.

There are, however, real advantages to implementing a strong climate plan beyond regulatory compliance and environmental stewardship. 

“Unilever and Mars, which are both leaders in this space, talk about the competitive advantage they see in having a transition plan and actually implementing it,” Draucker said. “Companies should use this guide to help them get that leadership buy-in and move from just having a climate disclosure to a leading transition plan.”