‘I’ve got a real love-hate relationship with the CSRD, but I’m all in on our Climate Transition Plan,’ my client said as we navigated countless articles, abbreviations, and requirements to draft the foundation for an ambitious race to achieve net-zero.

‘Me too,’ I thought, reflecting on how one obligation can feel heavy and tedious, while another—despite involving just as much intricate detail—feels fun and purposeful.

So, I decided that it’s worth to dig into that thought and summarize the outcomes for the benefit of every company that is working on their carbon neutral journey – and how they can reap benefits from having a solid climate transition plan, in terms of:

• Achieving their climate goals
• Activating and engaging internal stakeholders
• Attracting ESG-focused investors

A side note: I truly believe that the concept of ‘fun’ in a Climate Transition Plan can extend beyond the environmental aspects to encompass all areas of a company’s overarching sustainability strategy, such as social and governance factors. By integrating these dimensions into a cohesive, well-articulated plan, companies can enhance engagement and simplify the process of meeting regulatory requirements. 

And now – let’s go back to the Climate Transition Plan!

What is a climate transition plan?

A Climate Transition Plan is a company’s roadmap for aligning its strategy and business model with the transition to a sustainable, low-carbon economy—one that limits global warming to 1.5°C, in line with the Paris Agreement, and achieves climate neutrality by 2050. In other words, it’s a clear, actionable plan that guides companies on their path to becoming climate-neutral and resilient, by cutting greenhouse gas (GHG) emissions, managing climate risks, and adapting their overall business strategies. This means meeting ambitious, science-based climate goals, building resilience to climate impacts, and engaging stakeholders like employees, investors, and communities in a transparent journey.

So while compliance requirements can feel heavy and technical, a well-designed Climate Transition Plan offers a refreshing alternative, injecting an element of creativity and engagement into the journey to sustainability. By embracing this perspective, companies can transform their climate goals from mere obligations into opportunities for meaningful change—proving that regulatory requirements can indeed be ‘fun’.

How does a climate transition plan fit into the overall European sustainability agenda?

A Climate Transition Plan is not only a key element in every integrated sustainability strategy, it is also essential for meeting the goals of the European Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), as both prioritize sustainable practices, transparency, and accountability. Here’s how it fits:

CSRD:

• Climate Reporting: A climate transition plan provides a roadmap for reducing emissions, managing climate risks, and alignment with the Paris Agreement. 
• Transparency and Accountability: The plan supports the CSRD’s aim for transparent, accountable sustainability practices by setting clear goals and tracking progress,

CSDDD:

• Climate Due Diligence: A climate transition plan helps companies proactively manage climate impacts across their operations and supply chains.
• Long-Term Risk and Value Chain Management: The plan embeds climate risk management into company strategy, addressing both direct operations and supply chain sustainability.

In essence, a climate transition plan is both a compliance requirement and a strategic opportunity for businesses. By aligning with CSRD and CSDDD, companies can support sustainable business and climate goals, enhance transparency, and build long-term resilience. ‘Designing a climate transition plan is not just about meeting regulations—it’s an opportunity to fundamentally transform your supply chain, supplier relationships, and procurement practices.’, shares supply chain and procurement sustainability expert, Adélaïde Cipagauta. With implementation timelines fast approaching, integrating CSRD and CSDDD requirements into a unified climate strategy ensures full compliance while driving meaningful emissions reductions across all three scopes.

Are there already “gold standards” and practices for climate transition plans?

The good news is – YES! The Transition Plan Taskforce (TPT) is emerging as a gold standard for climate transition planning, setting a comprehensive framework that helps crafting credible, detailed, and transparent plans. TPT also aligns closely with other leading frameworks such as:

• IFRS/ISSB: The TPT helps companies meet the reporting needs that IFRS sustainability standards support, especially in financial markets focused on climate-related risks and transition strategies.
• SBTi: By integrating SBTi’s science-based approach, TPT helps companies set emissions targets that are in line with limiting global warming to 1.5°C. 
• CSRD & CSDDD: For companies operating in the EU, TPT’s structure supports compliance with CSRD and ESRS reporting requirements by detailing how climate transition efforts impact both financial planning and long-term strategy, and emphasize emissions reductions and climate risk management across supply chains. 

So overall, with TPT’s guidance, companies can create transition plans that meet regulatory standards, align with global climate goals, and enhance accountability to investors and stakeholders. To ensure these plans are robust and comprehensive, companies can also leverage additional frameworks like the 4 A’s of Climate Leadership from the We Mean Business Coalition, and CDP can also validate completeness, ensuring alignment with global climate goals and accountability to investors and stakeholders. Considering alternatives and complementary tools such as these can further strengthen the effectiveness and credibility of a company’s climate strategy.

‘Having a comprehensive climate transition plan has been transformative for Signify, not just in reducing emissions but in connecting our entire organization around sustainable action. This plan has boosted engagement at every level, driven tangible progress, and demonstrated to our investors that we’re committed to long-term environmental stewardship. As a result, we’re not only meeting the ambitious targets of Signify’s sustainability program “Brighter Lives, Better World” to double the pace of decarbonization required by the Paris Agreement’s 1.5°C scenario by the end of 2025, but also building resilience and trust in a rapidly changing market.’, shares Maurice Loosschilder, Head of Sustainability at Signify, the world leader in lighting.

Wrapping up: the three reasons why is a climate transition plan not only a necessity that ensures compliance, but also ‘fun’?

So while a transition plan is a necessity ensuring regulatory compliance and alignment, it’s also a fun opportunity to future-proof your business and make a real impact while:

• Inspiring: It encourages teams to think creatively, finding new ways to reduce emissions and reimagine products, sparking fresh ideas across the company.
• Engaging: Employees get to actively contribute to meaningful goals, fostering a sense of purpose as they tackle real-world challenges together.
• Driving Value Creation: By embracing climate commitments with enthusiasm, companies can strengthen their resilience, attract investors, and enhance their reputation, turning sustainability into a strategic advantage.

“Translating a carbon neutrality strategy into an investment story has a powerful effect. It not only helps management see the business case more clearly, highlighting key opportunities and risks, but also transforms the narrative from a simple commitment into a showcase of competitive strengths.

As we recently observed with one of our automotive clients, it’s about creating meaningful impact, both within the company and in the broader market. This approach also provided them with the opportunity to establish themselves as thought leaders—a true strategic advantage. And that’s where the real fun lies!”, concludes Severine Camp, Partner at Fairvue, a leading strategic management consultancy dedicated to investor relations and the capital markets.

Author: Darina Elencheva, Founder & Lead Strategist at the sustainable link & co.