Despite their noble intent, these reports often face the challenge of being ‘lost in translation’, leaving stakeholders puzzled or misinformed. This blog explores the intricacies of transition plan reporting, exploring the challenges and offering insights to create meaningful and impactful communication.
In today’s fast-paced world of organisational change and sustainability initiatives, transition plan reporting has emerged as a critical tool for communicating a company’s roadmap toward achieving its long-term objectives. Whether it involves carbon neutrality, digital transformation, or structural reorganisation, transition plans aim to offer clarity and transparency. Yet, despite their noble intent, these reports often face the challenge of being ‘lost in translation’, leaving stakeholders puzzled or misinformed.
So, why does this happen? What factors contribute to the gap between what is reported and what is understood? And most importantly, how can organisations bridge this divide? This blog delves into the intricacies of transition plan reporting, exploring the challenges and offering insights to create meaningful and impactful communication.
Our study’s primary objective was to assess the propensity of a sample of globally large financial and industrial organisations to implement credible climate transition plans, in accordance with the Paris Agreement targets and relevant GFANZ and TPT frameworks. Instances of particularly good and-or poor practices are also identified and discussed.
Transition plan reporting revolves around outlining the steps an organisation needs to take to achieve a specific goal or adapt to a new operational paradigm. These plans are particularly prominent in sustainability reporting, where companies detail how they intend to transition to low-carbon operations or meet their environmental, social, and governance (ESG) commitments. The Transition Planning Taskforce, The Glasgow Nature Related Alliance for Net Zero (GFANZ) and the European Union, have developed similar but somewhat conflicting requirements.
At its core, a transition plan should address the following:
While these components seem straightforward, the translation of such plans into clear, concise, and actionable communication often falls short, creating gaps in understanding.
We found that most large financial and industrial organisations struggle with ensuring that their transition plans are both transparent and easily digestible. Here are some of the common pitfalls:
When transition plans are couched in highly technical or industry-specific jargon, they alienate stakeholders who lack specialised expertise. For example, climate transition reports often include references to ‘scopes 1, 2, and 3 emissions’ or ‘net-zero pathways’, terms that may confuse non-experts.
Transition plans can sometimes be overly vague, offering lofty ambitions without concrete details. Statements like ‘We aim to reduce our carbon footprint by 50% by 2030’ are inspiring but fail to explain the ‘how’ or ‘what’ behind the claim. Without actionable insights, stakeholders may lose trust in the organisation’s commitment.
The absence of standardised reporting frameworks can make it difficult for stakeholders to compare and evaluate transition plans across organisations. We also identified significant variations between more granular guidance provided by the International Sustainability Standard Board and European Financial Reporting Standards Board in this area. For instance, some companies may report absolute emissions reductions, while others emphasise intensity-based metrics, leaving room for misinterpretation.
Transition plans often overlook the fact that stakeholders come from diverse backgrounds with varying levels of understanding and priorities. Investors might seek financial implications, while employees may be more interested in how changes will affect their roles.
A common pitfall in transition plan reporting is the tendency to set ambitious goals without clear paths to achieve them. When these plans inevitably falter, they can erode stakeholder confidence.
When transition plans fail to resonate with their intended audience, the repercussions can be significant. Misunderstandings can lead to scepticism among investors, disengagement among employees, and even public backlash. For instance, if stakeholders perceive a company’s sustainability efforts as ‘greenwashing’, it can damage the brand's reputation and hinder long-term success.
Additionally, a poorly communicated transition plan may result in missed opportunities for collaboration. When stakeholders don’t fully grasp the roadmap, they may be less inclined to contribute ideas, resources, or support.
To ensure that transition plans are not ‘lost in translation’, organisations must adopt deliberate strategies to communicate their goals effectively. Here are some best practices:
Simplify complex concepts and avoid unnecessary jargon. For example, instead of saying ‘Our strategy focuses on decarbonisation of Scope 3 upstream activities’, say ‘We aim to reduce emissions from our supply chain operations.’
Charts, graphs, and infographics can help distil complex information into digestible formats. Visual timelines, for instance, are an excellent way to illustrate key milestones.
Using the terminology and recommended guidelines used in globally recognised standards, such as those set by the Task Force on Climate-related Financial Disclosures (TCFD), can improve consistency and comparability.
Different stakeholders have different priorities. Segment your reporting to address these unique needs. For instance, create detailed appendices for investors while offering high-level summaries for employees and other external stakeholders.
Transparency is key to building trust. Acknowledge where progress is being made and where hurdles remain, providing stakeholders with a balanced view of the journey.
Engage stakeholders in the reporting process by inviting feedback and questions. This not only enhances understanding but also fosters a sense of inclusion and collaboration.
As transition plan reporting continues to evolve, the emphasis on clarity, transparency, and stakeholder engagement will only grow. Technological innovations, such as AI-driven data visualisation tools, could play a key role in making reports more accessible and interactive. Furthermore, increasing regulatory requirements may push organisations towards standardised disclosure practices, reducing inconsistencies and improving trust.
Ultimately, the success of a transition plan lies in its ability to inspire action and convey a shared vision. By bridging the gap between strategy and understanding, organisations can ensure their plans are not ‘lost in translation’ but rather serve as powerful catalysts for meaningful change.
Transition plan reporting is as much an art as it is a science. While the technical details are important, the real challenge lies in communicating them in a way that resonates with diverse stakeholders. By addressing the common pitfalls and adopting best practices, organisations can transform their transition plans into compelling narratives that drive both understanding and action.
Governments need to take stronger measures to enforce mandatory transition plan reporting, especially for ‘opaque’ organisations such as occupational pension funds which are typically subject to ‘industry regulatory’ oversight
In a world where change is the only constant, let us strive to ensure that our plans – whether for sustainability, growth, or innovation – are not just written but truly understood.
‘International practices in climate transition plan reporting: Lost in translation?’
