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June 11, 2024

Reputational risk hampering ambitious climate transition plans

Corporate directors cited a ‘need to be realistic’ as one of the main obstacles in developing credible transition plans © POOL/AFP via Getty Images
Corporate directors cited a ‘need to be realistic’ as one of the main obstacles in developing credible transition plans © POOL/AFP via Getty Images

With the UK expected to impose mandatory transition planning, corporates may be tempering their ambition to avoid missing targets, study suggests

Bad publicity and fears of greenwashing are impeding companies in setting ambitious targets in their climate transition plans, shows a survey by Lloyds Bank.

The “Reporting vs Reality” study surveyed 100 UK-based director-level executives and 100 UK-based institutional investors, with respectively a minimum of £100mn in annual revenue and a minimum of £100mn assets under management at the end of 2023.

Over-promising and under-delivering were the main worries among corporate directors who flagged a need “to be realistic”, the risk of “going too far and failing” and a lack of expertise as the main challenges in developing credible transition plans.

While 80 per cent of companies surveyed have transition plans, a similar percentage of corporate directors felt their organisation could be doing more to ensure a just transition and improve climate risk and operations. Engaging with peers was noted by 60 per cent of corporate respondents as the most effective way to overcome these challenges.

Meanwhile, 69 per cent of investors called for more transparency in climate transition plans, with 54 per cent arguing that companies with ambitious targets hold a competitive edge.

You can find the full report here

A service from the Financial Times