Climate Transition Plan — A Catalyst for Reaching Net Zero

Regular climate-change impact reports released by the Intergovernmental Panel on Climate Change (IPCC) over the last few years and the rise in stakeholder pressure to mitigate global warming risks have sparked a long-overdue uptake in companies’ commitment to climate change action. Each year, more organizations commit to developing science-based targets to reduce their carbon footprint and contribute toward limiting global warming to 1.5 degrees Celsius by the end of the century.

However, with greenwashing concerns in the environmental, social and governance (ESG) space starting to grow, the diligence used by interested parties to gauge companies’ performance against such criteria has started to change. This is especially prevalent in the matter of climate change, which sits under the environmental pillar of ESG.

Today, research organizations and investors agree that despite the improved effort in climate-related reporting, public disclosures of many organizations still lack a credible action plan for how they will align their operations and execute long-term strategies in line with the Paris Agreement. Lack of credibility in publicly disclosed planning led to increased demand for the more comprehensive reporting of climate action known as the climate transition plan (CTP). Climate transition plans present a comprehensive set of strategic actions that go far beyond commitments and mid-term carbon performance improvements.

Here we take a closer look at what climate transition plans are, why they are rapidly gaining stakeholders’ interest and how companies across the world should prepare to disclose them.