A Simple Guide to: Climate Transition Plans

Introduction 

A Climate Transition Plan (CTP) defines a business’s approach to cutting Greenhouse Gas³ (GHG) / “carbon” emissions and aligning its operations with national and EU climate objectives, such as Ireland’s Climate Action Plan⁴ and the EU’s Green Deal⁵ . It serves as a strategic guide to help businesses shift from a carbon-heavy to a low-carbon economy. The plan generally outlines targets, actions and investment needed to reduce GHG emissions. These could be by enhancing energy efficiency, shifting to renewable electricity sources, and integrating green technologies like low or zero carbon vehicles or fuels. Additionally, it is a strategic way to ensure your business stays ahead of regulatory changes and an opportunity to embrace innovation, attract investment, and secure a competitive edge in the green economy.  

Why develop a Climate Transition Plan?

There are several reasons for developing a CTP driven by regulatory, financial, market and reputation as illustrated below. In particular, CTP are mandatory for businesses to disclose under the EU Corporate Sustainability Reporting Directive⁶ (CSRD) assuming climate change materially impacts the business, which is the case for most. Under CSRD the European Sustainability Reporting Standard⁷ (ESRS) E1 requires disclosure of a 1.5°C aligned reduction target and a CTP on how to get there. Additionally, voluntary accreditations such as the Science Based Targets initiative⁸ (SBTi) and benchmarking schemes like Carbon Disclosure Project⁹ (CDP) motivate businesses to adopt this approach. In a nutshell, a CTP helps businesses address climate change risks and opportunities, demonstrating to stakeholders that the organisation is committed to a 1.5°C transition pathway¹⁰ and remains competitive as the economy transitions towards a net-zero_¹¹ future.

 Regulatory Compliance  - The global shift towards sustainability is reflected in stricter environmental regulations. Developing a CTP helps businesses stay ahead of regulatory requirements, avoid penalties, and proactively adapt to the changing legal landscape such as CSRD (ESRS E1), International Financial Reporting Standards¹² (IFRS) S2, and CDP.

Future Proofing - A successful transition to a low-carbon economy ensures your business remains competitive and resilient in the long term. With the accelerating effects of climate change and shifting consumer preferences, businesses that adapt early will have a distinct competitive edge.

Operational Efficiency - Sustainable practices can improve operational efficiency, leading to cost savings and better resource management.

Financial Benefits - Transitioning to sustainable practices, such as improving energy efficiency, reducing waste, and optimising resource management, can lead to long-term cost savings. Having a CTP in place also opens opportunities for green investments, including government grants, funding, and tax incentives aimed at supporting sustainability initiatives.

Brand Image and Consumer Demand -  As consumers and investors increasingly prioritise environmental responsibility, businesses that adopt sustainable practices can strengthen their reputation and attract loyal customers. A strong CTP enhances your brand image and positions your business as a responsible corporate entity.

Investor Confidence - Many investors now seek companies with clear sustainability goals, making a CTP an important tool for attracting capital.

How Davy Horizons can help

Davy Horizons sustainability advisors work with PLCs, large private companies, government bodies, semi-states, and not-for-profits to incorporate sustainability credibly in their business aligned to regulation, industry best practice and stakeholder demands. We provide sustainability consultancy services across all sectors and topics. Contact us at sustainability@davy.ie.