Eight key questions about climate-related transition planning

What your organisation needs to know about transition plans, how they relate to new disclosure requirements and how to get started.

Climate-related transition planning is rapidly moving from a specialist sustainability exercise to a core part of business strategy and governance, driven by emerging Australian and global regulation. In Australia, the introduction of AASB S2 has created a more transparent and structured environment for disclosing climate-related information.  

Early views on leading practice are beginning to emerge among regulators, investors and boards. This reflects a growing expectation that businesses can explain how they will navigate the transition, including reducing emissions across their business model and value chain.

Approached strategically, climate-related transition planning not only supports compliant and credible reporting but can also help your organisation to manage its exposure to legal and reputational risk in an environment of heightened scrutiny around greenwashing. Developing a transition plan is an opportunity to reclarify your climate ambition, direct internal strategy, develop purposeful actions and consolidate information into a centralised plan.

So where do you begin and what do you need to know? Here are the answers to eight of our top client questions.  

1. What is a transition plan?

A transition plan is the ongoing strategic process organisations work through as they manage their climate-related impacts, set decarbonisation targets and drive action towards them. Leading guidance is available from the Transition Plan Taskforce (TPT) and the Australian Treasury.

Australian businesses captured under the AASB S2 regime are required to disclose information about any climate-related transition plan. That means any aspect of the entity’s overall strategy that lays out targets, actions or resources intended to support the transition to a lower-carbon economy, including reducing greenhouse gas emissions. 

2. Is a transition plan mandatory in Australia?

Not currently. However, if your organisation has such a document, the AASB S2 standard requires you to disclose much of that information, including key assumptions and dependencies. 

Guidance from AASB S2 and the Australian Treasury will help your organisation to map, execute, and disclose its climate-related transition planning actions in a credible and robust way.

3. How is a transition plan different from mandatory climate-related financial disclosures?

AASB S2 climate-related financial disclosures and transition plans are closely connected. But they are not the same thing. 

Climate-related financial disclosures form part of an entity’s annual reporting suite, providing transparent, decision-useful information to investors and regulators about the financial impacts of climate on the organisation. 

A transition plan, by contrast, is a strategic document that articulates your organisation’s climate-related ambitions and outlines the actions and accountabilities required to deliver against those ambitions. 

4. Why would my organisation develop a transition plan?

Organisations develop transition plans to clearly explain how they will navigate the shift to a lower-emissions economy and deliver on their climate commitments.

A transition plan brings together strategy, targets, actions and governance into a single framework that guides decision-making and demonstrates progress to stakeholders. 

For AASB S2 reporters, any transition plans need to be disclosed and are likely to be scrutinised and strengthened as reporting expectations evolve. Developing a plan can therefore help organisations prepare for more transparent and structured climate reporting.

For high-emitting sectors and those with emissions or net zero targets, transition plans provide a credible pathway to translate ambition into practical action plans and coordinate efforts across the business. A well-designed plan also creates a central repository of information that supports climate-related financial disclosures.

As investors, regulators and boards focus more closely on climate-related risks and opportunities, organisations are increasingly expected to show how these exposures are reflected in strategy, financial planning and formal climate disclosures. A transition plan provides a structured way to demonstrate this connection and communicate it transparently to the market.

5. What are the core components of a transition plan?

Baringa worked closely with the UK’s Transition Path Taskforce whose guidance stands out as the global gold standard. The TPT guidance frames climate-related transition planning across three core principles:

• Ambition: reflecting the urgency to act and setting the organisation’s ambition across:
  • Decarbonising the entity
  • Responding to the entity’s climate-related risks and opportunities
  • Contributing to an economy-wide transition
• Action: translating strategic ambition into concrete steps and a roadmap of planned actions across the short, medium and long-term.
• Accountability: enabling delivery of the transition plan through integration into an entity’s organisational processes, including business and financial planning, governance and reporting.

6. Do all elements of climate-related transition planning guidance apply to my organisation?

No. Design your climate-related transition planning in a way that is proportionate way to the size, context and ambition of your business. Smaller or less complex organisations can take a more streamlined approach, focusing on the most material risks, opportunities and strategic implications.

7. Who should be responsible for a transition plan within my organisation?

Climate-related transition planning is usually owned by Sustainability or Strategy. Assigning a key owner or responsible team will streamline planning and transition plan updates, with supporting governance and board oversight to ensure that the plan influences real business decisions.

8. How often should we update our transition plan?

Transition plans are typically refreshed once a year, with in-depth reviews aligned to broader strategic planning and reporting cycles to ensure the plan remains relevant and decision useful.

How Baringa can help

We’ve been helping our Australian clients to develop detailed transition plans as guidelines have evolved. If you’re revisiting your climate-related transition plan or just starting out, reach out to find out what works in practice and what stakeholders in your sector are expecting. 

We can also help you gain a clear, strategic view of how climate-related change will impact and shape your business – and plan how to embed this information in day-to-day decisions.

Whether you're just getting started or exploring the latest developments, check out our insights on Australian climate disclosure here.