A new e-book aims to inspire a government in its first 100 days in power to act on the transition to net zero, natural capital accounting and a planet on which we can continue to live and work. That takes multi-faceted thinking and information sharing – and that thinking must be inspiring. 

Accelerating Transition, compiled by King’s Business School and Edinburgh Business School, delivers so many points of view by so many authors. Mark Manning, Visiting Senior Fellow at the Grantham Research Institute, LSE, contributed to the book, delivering six recommendations:

1. Develop a strategic national transition plan
2. Move swiftly to mandate transition plans across the economy, using the Transition Plan Taskforce (TPT) Disclosure Framework
3. Establish dedicated mechanisms for government to work in partnership with companies and financial services firms
4. Reconnect government and society to build trust, support and collective responsibility for climate action
5. Move decisively to mandate corporate reporting on sustainability related risks and opportunities, in line with the ISSB Standards
6. Set a clear expectation that asset owners should consider systemic risks in their capital allocation decisions.

A strategic national transition plan

While underscoring the importance of accelerating progress towards consistent and comparable reporting on climate and sustainability, Manning also talks about the opportunity for the government to go beyond disclosure. Consistent with Manifesto commitments, he encourages the government to require large companies and financial services firms to develop, not just disclose, comprehensive transition plans aligned with the TPT framework. 

Company transition plans must both inform, and be informed by, a strategic national transition plan – a roadmap for a whole-of-economy transition. “The TPT has really helped to build momentum behind corporate and financial services sector transition plans,” says Manning. “But to realise the potential from transition planning in the private sector, actors across the economy need direction from the government.” 

This will help to build a sense of collective responsibility. Manning emphasises that to truly achieve this, there needs to be mutual trust and open dialogue. “There has to be engagement, collaboration and co-creation so that the government can learn from what is happening on the ground, implement more targeted policy and create the right conditions and incentives for businesses and financial market participants to become agents of change.”

True transformation will require change at every level, including how we live, how we heat our homes, how we work and how we travel. As the economy transitions and the impact of a warming planet starts to be felt more acutely, the government and businesses need to be responsive to society’s needs and create a compelling narrative for change. This is how we will reconnect government with society. 

This is why collaboration, engagement and inspiration – three words Manning uses repeatedly – will be at the heart of net-zero transition.

Can the world afford transition?

Pre-pandemic, we were regularly assured that transition was within our means. Is that still true? “The more relevant question is can the world afford not to transition?” Manning says. “If, around the world, governments don’t step up and do what they can – through targeted policy incentives, or the targeted allocation of public money – we are on a path towards a 3˚C world; one where huge swathes of the planet are no longer habitable.”

Manning points to the flow-on economic and societal costs of such a scenario: mass migration, geopolitical tension, food insecurity and increased mortality. “It’s a pretty scary scenario,” he says. “So by stepping up now and investing in the transition, governments, businesses and society can lower the potential cost of inaction.”

Manning says that national transition planning is a way in which governments can think through, in a very deliberate way, what needs to be done to accelerate progress. “Where there are economic, policy, technological or financing barriers, that’s where you need more public-private engagement,” he says. 

Governments need to work with industry to truly understand where the challenges and constraints are today, so that they can determine what policy interventions are needed, says Manning, namely where fiscal incentives are needed, where the government might need to allocate catalytic capital or take the ‘first loss’, and where they might need to finance R&D or infrastructure development to help scale the deployment of new technologies.

Delivering direction

As a starting point for public-private engagement, Manning points to the Transition Plan Taskforce Disclosure Framework sub-element 1.3 (page 23): “An entity shall disclose key assumptions that it has made and external factors on which it depends in order to achieve the Strategic Ambition of its transition plan.”

“For many companies, this will be a long list of assumptions and key external factors, spanning demand conditions, macroeconomic trends, the pace of decarbonisation in relevant sectors, access to new technology, policy and regulatory settings, and financial constraints,” says Manning. 

Importantly, he observes that “government can play a role in shaping a response to many of these dependencies. In the absence of clear government leadership in setting direction in these areas, companies will potentially be a bit rudderless.”

That’s why, he says, the work being done on national transition planning starts with the government setting a clear strategic ambition. “This will set the compass for the transformation of the economy. That then needs to be translated into a costed action and investment plan. But there needs to be close coordination both within government and between government, business and finance. For a successful whole-of-economy transition, the government will have to work in partnership with the private sector.”

In the final analysis, there needs to be that compelling narrative for change. This comes from inspiring markets, rather than penalising them. 

The views expressed in this article are those of the interviewee and not necessarily those of ICAEW.