Climate Transition Plans
Climate transition plans are a vital tool to demonstrate to investors, suppliers, customers and other key stakeholders that an organization is committed to achieving a 1.5-degree pathway transition, and that its business model will remain relevant (ie profitable) in a net-zero carbon economy.
CDP's latest report, The State of Play: 2023 Climate Transition Plan Disclosure, shines a spotlight on how far along organizations are on their journey to developing credible climate transition plans.
The State of Play: 2023 Climate Transition Plan disclosure
There is clear progress when it comes to businesses disclosing credible climate transition plans:
of companies said they had a 1.5-degree aligned climate transition plan in place – a 44% increase since last year.
of these companies are already disclosing data against most (at least two thirds) of the indicators needed to judge a credible plan.
of all disclosing companies (over 8,200) disclosed that they plan to set one within two years.
Disclosing through CDP enables organizations to disclose in a standardized and comparable way – this is essential as a plan is only as good as the data that informs it, and data is most useful to the market in this way.
Having a credible climate transition plan is becoming more important for accessing capital, driving business efficiencies, and for complying with regulatory and market demands.
Organizations that continually disclose through CDP year-on-year are more likely to provide sufficient details on their climate transition plan.
41% of all repeat CDP disclosers report against “some”, “many”, or “all” of the key climate transition plan indicators. This compares to 30% of all companies disclosing for the first time. Almost all companies reporting against “all” of the 21 key indicators are repeat disclosers.
However, there are barriers to progress that remain consistent including strategy, target setting and financial planning, although significant progress has been made for financial planning.
140 companies disclosed sufficient information against the 21 indicators in CDP’s climate change questionnaire (up from 81 last year).
The pace of credible climate transition plan uptake is too slow if we are to reduce emissions in line with a 1.5-degree pathway.
As we see more and more convergence across emerging standards and frameworks, we expect to see the uptake of transition plans increase.
Credible climate transition plan disclosure
Almost 6,000 companies disclosed having a 1.5 aligned climate transition plan in 2023. Out of those, 2,329 disclosed to more than two-thirds of the key indicators CDP developed to judge credibility. 140 companies disclosed sufficiently to all 21 key indicators.
Some indicators = disclosing to fewer than 14 key indicators in CDP’s climate change questionnaire developed to judge credibility
Many indicators = disclosing to between 14-20 key indicators in CDP’s climate change questionnaire developed to judge credibility
All indicators = disclosing to all 21 key indicators in CDP’s climate change questionnaire developed to judge credibility
The report homes in on disclosure trends across the key industries, global indices and key elements involved in developing a climate transition plan – including targets and financial planning – and looks at industry and geographical trends across all climate transition plan elements.
Additional resources
CDP has produced a discussion paper for organizations to ensure their business model aligns with a net-zero economy. The high-level summary reviews and reflects the thinking drawn from other existing frameworks and related benchmarks, such as the Assessing the Low-Carbon Transition (ACT) framework, Science-Based Targets Initiative, Transition Pathways Initiative (TPI), CA100+ and the Climate Safe Lending Network.
CDP has also created a technical note with guidance on disclosing organizations can demonstrate that they have a credible climate transition plan in place.
Meanwhile you can download CDP's previous Climate Transition Plans report (published in February 2023).
You can also:
browse further guidance for companies disclosing through CDP;
learn how Assessing Low-Carbon Transition complements the EU's climate transition; and
see how CDP is aligned with disclosure frameworks and standards.
In partnership with Say on Climate.