Climate Transition Plans Help Companies Cut Carbon Footprint

If you thought the weather was a little warm last year, it wasn’t your imagination. In fact, 2023 was the hottest year on record. For decades, scientists have predicted weather extremes including heat waves, and they point to the accumulation of greenhouse gases in the atmosphere as the culprit.

To head off catastrophic warming, the head of the United Nations, Antonio Guterres, has urged nations to “slash emissions” and business leaders to set ambitious greenhouse gas reduction targets.  “If we act now, we can still secure a livable sustainable future for all,” asserted another United Nations climate expert.

That is why Green Century° presses companies to set goals to drastically cut their emissions. But we know that goals are not enough. Green Century holds  companies accountable by asking them to develop and publish climate transition plans. If such a plan sounds like  something only scientists would read, then try this analogy.

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What is a Climate Transition Plan?

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Imagine your daughter (who represents a company in this example) announces that she’s going on a cross-country road trip to San Francisco with her friends. Naturally, you (the investor) are immediately flooded with questions: Which route will you take? Where will you stop along the way? How are you going to pay for this trip? What if you run into unforeseen problems like storms or a flat tire?  How often will you stay in touch?

For her to reach her destination, you want to know that she has mapped out a route, saved money for the trip, has overnight lodging and has plans to communicate with you on a regular basis.

In the corporate world, that’s what a climate transition plan does. It fills in the gap between where a company starts its journey and how it plans to get to its destination.

Intel’s* First Climate Transition Plan

In a real-world example, Intel Corp., the famous computer chip maker, had set goals to reduce the greenhouse gas emissions from its business operations to be net-zero by 2040. This means it committed to cut its emissions significantly by 2040 and has pledged to work with its suppliers to reduce their emissions by 30% by 2030.

Green Century noticed that Intel had not developed a climate transition plan and worried that the chip manufacturer’s goals might not be fully credible without one. We filed a shareholder resolution in 2022 with the company, and it agreed to publish a climate transition within six months. As soon as it was released, Intel contacted Green Century to share its inaugural plan.

Intel’s plans include requesting suppliers set 100% renewable electricity and develop project roadmaps to achieve their goals, implement energy conservation projects, build new green factories and facilities, and reduce the amount of greenhouse gases used to manufacture its computer chips. Their deadline is 2030.

Green Century is pleased with Intel’s first plan, which creates a solid foundation from which to build more detailed plans in the future.

Due to the urgency of limiting the impacts of climate change, Green Century will continue to work with our portfolio companies to make the dramatic emissions reductions needed to protect the planet and ourselves. The work will be hard, but preparing a solid climate transition plan provides investors assurance that companies intend to do the necessary hard things.