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A detailed climate transition plan is becoming an increasingly vital pre-requisite for companies wanting to demonstrate their climate action and progress to stakeholders.
A full transition plan covers not just how a company is progressing with its climate commitments, but also how their business will continue to remain relevant and profitable in a net zero world.
Climate disclosure non-profit CDP, which collects disclosures from thousands of companies every year on behalf of investors and other stakeholders, says a credible transition plan should include 8 core elements:
These core elements break down further into 21 key indicators, which are detailed in full on the CDP website.
In 2022, more than 4,000 global companies disclosed to CDP that they had a climate transition plan in place. However, only 81 demonstrated best practice by disclosing against all 21 key indicators. A lack of detail on financial planning, insufficient targets and limited supply chain engagement were among the common gaps.
“The need for companies to develop a credible climate transition plan is not an additional element but an essential part of any future planning,” explained CDP global director Amir Sokolowski. “Tracking corporate disclosure against transition related indicators is essential to ensure companies are kept accountable to the targets and plans they set.
“Whilst overall disclosure of credible climate transition plans is low, it is encouraging to see more companies recognising the relevance of a climate transition plan and start their journey towards developing one.”