Key takeaways: How to adopt a value-led approach to accelerating and scaling decarbonisation

As part of this new programme, we hosted a masterclass for NEDs in financial services, in partnership with ERM and the Green Finance Institute (GFI). The session focused on adopting a value-led approach to climate transition planning, exploring how boards can unlock the strategic potential of the net zero transition and enhance commercial outcomes. 

This masterclass brought together insights from a diverse ecosystem of financial services professionals, including asset owners and asset managers, bankers, insurers, and pension funds — representing a cross-section of the UK’s financial landscape. 

It was a rich and wide-ranging discussion, with key takeaways including: 

Moving beyond compliance to strategic implementation

• Shifting board focus: While reporting and regulatory compliance have been a primary focus for organisations developing their transition plans, boards looking to harness the opportunity of the transition, need to now pivot towards strategic implementation.  

• Investable transition plans: The shift beyond compliance requires developing fully costed, Board-ready ‘investment grade’, implementation-focused transition plans that can deliver genuine business transformation and unlock value creation opportunities. 

• Leveraging regulatory requirements: Although a compliance-only mindset can limit focus, the regulatory imperative can serve as an unblocker vehicle for boards. They can utilise the analysis and information flow from reporting obligations to identify how the business is likely to evolve and what risks and opportunities lie ahead, enhancing strategic discussions.  

Value creation and integrating transition into the financial conversation

• Identifying value creation opportunities: By leveraging regulatory requirements and making the most of the data and insights generated, boards can identify opportunities to reduce operational expenses, build brand value, create competitive advantages, and lower the cost of capital. 

• Financial metrics: Successful transition planning requires translating decarbonisation initiatives into clear financial metrics that support a value creation narrative. 

Financial innovation and market solutions

• Market-led innovation: The financial sector is developing tailored instruments and products to meet emerging transition-related demands. Examples include Utilisation Linked Finance for EV charging infrastructure and innovations in green mortgages. Applying an innovation mindset to the transition can unlock more of these market opportunities. 

• Cross-system collaboration: Scaling innovative financial solutions often requires collaboration across the ecosystem. While rolling out innovative instruments and products at scale may require public finance — e.g., via blended finance solutions — market-led innovation can help to demonstrate proof of concept. An investment-grade transition plan that includes a well-targeted and comprehensive engagement plan will identify opportunities to exert influence across the system, including with government and regulators, to scale innovative financial solutions that can change the economics and accelerate the transition progress. 

• Collective action: The Transition Finance Market Review (TFMR) highlights how bringing together different parts of the ecosystem — including financial institutions, government, real economy players and regulators — is crucial for solving shared challenges and maximising opportunities in the transition. With that in front focus, Transition Finance Council is now formally launched and will be delivering on the recommendations of TFMR. 

Implementation challenges and opportunities

• Building confidence: The development of investment-grade transition plans presents various implementation challenges. However, boards that successfully identify and pursue immediate decarbonisation opportunities can build momentum for more comprehensive planning. 

• External drivers: The effectiveness of transition planning depends on multiple drivers and unblockers, including consumer pressure, investor demands, and the certainty of the policy environment. These external factors can both challenge and enable successful implementation of transition plans. 

Discover more  

To discover events, insights, and networking opportunities designed specifically for NEDs across the UK financial services ecosystem, we invite you to visit the newly launched Chapter Zero's Financial Services Spotlight page.