Five stumbling blocks to a climate transition plan – and why it’s worth overcoming them

by Ruth Wood

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Where do you see yourself in 25 years? Basking in business success? Hunkering in your bunker? Globetrotting with the grandkids? Leaving the world a better place?

So much will depend on whether businesses can reduce their greenhouse gas emissions effectively to zero, as many have promised to do by 2050. Likewise, their chances of success depend on support from governments and citizens. We are all in this climate transition together, and when you consider that the Covid-19 crisis began more than five years ago, 2050 doesn’t seem so far away.

Though many businesses have pledged to reach net zero, only 41% have published a climate transition plan detailing how they will get there, according to the latest EY Global Climate Action Barometer. Here, we look at some of the stumbling blocks for businesses and how a credible climate transition plan could be a powerful way to bring consumers, investors, employees and other stakeholders with you on your net zero journey.

Stumbling block 1: We’re not sure what it is

A climate transition plan is a strategic document detailing the short-term steps an organisation will take to contribute to a rapid transition towards a low-carbon, climate-resilient economy.

Stumbling block 2: It’s not mandatory

Regulatory pressure has been intensifying on organisations in recent years amid economic uncertainty, geopolitical tensions and climate concerns. It’s understandable if your business is reluctant to voluntarily take on additional reporting work. However, getting ahead on a climate transition plan could ultimately give your business a competitive advantage.

Jurisdictions around the world are increasingly recognising the importance of these documents, and they are already mandatory in some markets, including Japan and New Zealand, with regulation in the UK expected in 2025.

A growing number of large EU companies and those outside the bloc with significant EU business operations will have to file reports under the European Union’s Corporate Sustainability Reporting Directive (CSRD) over the coming years. And these will need to include a climate change transition plan compatible with a 1.5°C warming trajectory.

Meanwhile, several countries have introduced, or look set to introduce, mandatory climate-related reporting in line with the standards developed by the International Sustainability Standards Board (ISSB) of the International Financial Reporting Standards (IFRS) Foundation. The standards require that businesses include a climate transition plan in these reports as well as in climate risk reports prepared in accordance with the former Task Force on Climate Related Financial Disclosures (TCFD).

Taking early action to ensure your organisation is prepared to comply with future regulations will prevent costly and stressful last-minute adjustments while enhancing your reputation among stakeholders.

Stumbling block 3: We’re not sure what good looks like

Even where companies are disclosing climate transition plans, the quality is falling short of effectively addressing the escalating climate crisis, according to EY’s recent survey of 1,400 companies in 51 countries.

Despite demands from stakeholders for greater transparency, the consultancy firm noted that companies were hesitant to disclose critical information such as their capex and opex commitments to transition activities. And though companies were making more use of scenario analysis to assess their climate risks, they were not always connecting the results of this analysis with their financial information, the survey found.

Although there is no universal ‘right’ way to write a climate transition plan, a ‘gold standard’ framework for private sector organisations does exist, published by the UK Government’s Transition Plan Taskforce (TPT) in October 2023.

The TPT guides entities in articulating their strategic ambition to decarbonise their value chains, respond to climate-related risks and opportunities, and contribute to an economy-wide transition. Organisations are then helped to translate these into concrete near-term actions with clear resource allocation and financial planning, all underpinned by robust metrics, science-based targets, governance and reporting.

The United Nations Global Compact and the UK’s Lloyds Bank have published guidance on creating impactful and credible climate transition plans. You can also learn from companies that are already publishing according to the TPT guidelines such as Lloyds Bank, HSBC and Compass.

Stumbling block 4: We have reporting fatigue

Creating a climate transition plan might not be the workload multiplier that some companies fear. Mindful of the heavy reporting burden on companies, the TPT designed its framework to align with the ISSB and TCFD frameworks and to complement the CSRD requirements. And the TPT recommends that a transition plan is produced as a standalone document only every three years, with any relevant updates woven into annual non-financial reporting.

Not just another box-ticking exercise, climate transition plans can speed your company’s progress towards its goals. Designed to close the ‘say-do’ gap, they signal to your stakeholders that you’re serious about moving from target setting and climate risk identification to concrete actions with results in the short-term. And since they involve breaking the lengthy net-zero journey into a glide path of near-term steps, many businesses find that the very act of preparing a plan can speed up the action they have been promising in their sustainability reporting.

“We know from working with some of the UK’s leading businesses that what may have started as a compliance exercise has quickly turned into a powerful mechanism to enhance corporate strategy.” – Dr Michael Green, UK Climate and Nature Lead at EY

Stumbling block 5: We’re not ready yet

Fear of failure appears to be holding many companies back from developing credible climate transition plans, according to a recent study of UK corporates by Lloyds Bank. In its November 2024 survey of 100 director-level executives from companies with at least £100 million annual revenue, half said access to high-quality data was problematic and 12% admitted they had no methodology in place to help them reach their climate goals.

Perhaps due to high-profile greenwashing cases, many were fearful of over-promising and under-delivering, with 43% admitting “we don’t want to go too far and fail”.

The TPT emphasises, however, that a climate transition plan is a living document, intended to be revisited and revised at least every three years. Businesses don’t need to wait until they’ve got all the data, methodologies, technology and governance in place before making a start. Rather, it’s about agreeing on a strategic ambition and near-term steps, then being transparent about uncertainties and dependencies so that policymakers, investors and other stakeholders can help you address them.

Don’t delay embarking on a plan just because policy and regulatory challenges currently block your path to net zero. The very act of highlighting these hurdles in your plan will help governments and regulators better understand how they can support you and other businesses to deliver the transition.

No business knows exactly where it will be in 25 years. But a transparent plan for transitioning the world to a net zero economy could turn out to be a self-fulfilling prophecy.


Expert sustainability report writers can help you explain your transition plan and report on progress in a clear and compelling way. Need some guidance on how to set out your plans? Get in touch with our team today.

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