Climate transition plan quality criteria and red flags defined

A group of climate experts ranging from the SBTi and CDP to the WBCSD and UNEP has defined the principles that should be used to assess the robustness of corporate climate transition plans – and identified potential red flags.

Companies are faced with the growing imperative to develop ‘credible transition plans’, and the framework created by the Assessing Transition Plan Collective (ATP-Col) – a working group made of more than 100 individual experts from climate organisations – is meant to help them understand how to define this credibility.

The document defines a credible transition plan as a “one aligned with international decarbonisation goals, consistent with relevant sectoral and local transition plans where the company operates, and feasible within its proposed timeline”.

ATP-Col proposes assessing the robustness of climate transition plans based on four principles, including: relevance, transparency and completeness; ambition and feasibility; consistency; and long-term value and just transition.

Transition plan red flags: carbon credit disclosures, interim targets, financial details

In addition, the suggested, standard-agnostic assessment would include checking compliance with selected disclosure frameworks, checking the granularity of the data, and identifying potential red flags.

Red flags are listed under each assessment criteria (see Transition plan assessment criteria). Regarding companies’ greenhouse gas performance, red flags include not following the rules of international GHG accounting standards such as ISO 14064-1 or the GHG Protocol, disclosing emissions as total aggregated carbon dioxide equivalent (CO2e) figures instead of providing details on all types of greenhouse gases, and not reporting carbon credits separately.

For climate targets, ATP-Col considers not having any interim targets or setting goals only on emissions intensity (as opposed to absolute reductions) as red flags, among other things.

And in terms of mitigation actions included in transition plans, the lack of identified ‘decarbonisation levers’ – as well their resulting emissions reductions – and details about how these initiatives will be funded are all red flags, according to the framework.

(These guidelines roughly match the comments made by CDP and Transition Plan Taskforce (TPT) representatives as part of CSO Futures’ article series on climate transition plans for Chief Sustainability Officers.)

For fossil fuel companies, the document states that any credible transition plan must include a fossil fuel phase-out.

Transition plan assessment criteria

Assessment criteria are organised according to the five main elements of a climate transition plan: strategic ambition, metrics and targets, implementation strategy, governance, and engagement strategy.

Each of these categories holds between four and 18 assessment criteria, as well as details about the level of granularity expected. For instance, in the governance section, companies should explain how the climate transition plan is embedded within the organisation, what level of oversight the board and management team hold, and how remuneration and incentive structures are aligned with it.

“Climate goals cannot be achieved unless transition plans are sufficiently ambitious and will actually achieve what they promise, so being able to assess their credibility is crucial. Bringing together this international group of experts has helped harmonise perspectives on what counts as credible, including the importance of considering nature, just transition, and the local external context,” Tom Wainwright, System Lead, Sustainable Corporates at Climateworks Centre and ATP-Col member, commented upon launching the framework.