This page was reviewed and updated on 01/10/25.
Transition plans – also called climate or net zero transition plans – are becoming a central part of the UK’s journey to net zero. They provide businesses with a structured roadmap for how they will adapt, decarbonise, and remain competitive in a low-carbon economy.
What is a transition plan?
A climate transition plan sets out how a company intends to adapt and transform its operations, strategies, and business model in line with net zero goals. It should outline:
- Clear objectives: Setting ambitious yet achievable emission reduction targets.
- Detailed strategies: Outlining specific actions, such as adopting renewable energy, enhancing energy efficiency, and innovating low-carbon products.
- Stakeholder engagement: Involving employees, customers, suppliers, and the community in the transition process.
- Regular monitoring and reporting: Tracking progress and being transparent about achievements and challenges.
The Transition Plan Taskforce (TPT), established by the UK government, has developed a Disclosure Framework to guide businesses. Its principles – Ambition, Action, Accountability – are designed to ensure that plans are credible, comparable, and internationally aligned.
The move towards mandatory transition plans
At present, transition plan disclosure is most advanced in the financial sector and among listed companies:
- Transition plans are already accounted for under the Financial Conduct Authority’s (FCA) rules. Listed issuers are required to make TCFD-aligned disclosures on a comply or explain basis, which includes describing their plans for transitioning to a low-carbon economy.
- Firms regulated by the Prudential Regulation Authority (PRA) – such as banks, insurers, and large asset managers – also fall within scope.
Looking ahead, requirements are set to broaden. In July 2025, the government launched a consultation on transition plan requirements for “economically significant” businesses, including FTSE100 companies and financial institutions. Options under consideration include:
- Mandatory disclosure for certain large businesses.
- A “disclose or explain” approach for others. Small and medium-sized companies are unlikely to be brought into scope in the near term.
The consultation links closely with the draft UK Sustainability Reporting Standards (UK SRS) and wider reforms to modernise corporate reporting.
In the EU, similar obligations will be introduced through the Corporate Sustainability Reporting Directive (CSRD). Together, these developments point to a future where transition plans are not optional but an expected part of corporate reporting.
Transition plans vs. net zero plans
While often used interchangeably, there are important differences:
Feature | Transition Plan | Net Zero Plan |
Scope | Broad – covers business model, governance, financial risks, and opportunities | Narrower – focused specifically on achieving net zero emissions |
Purpose | Ensure the organisation is prepared for the low-carbon economy | Provide a pathway to reduce emissions to net zero |
Regulatory status | Increasingly mandatory for large firms | Often voluntary, but increasingly expected |
Timescale | Long-term strategy for resilience and competitiveness | Typically aligns to 2030, 2040 or 2050 climate targets |
In practice, most organisations will need both: a net zero plan to cut emissions, embedded within a broader transition plan that ensures financial and operational resilience.
Global uptake and challenges
Transition planning is gaining momentum worldwide, but progress is uneven.
- A 2023 CDP report found that 25% of over 23,000 reporting companies had a 1.5°C-aligned transition plan.
- The Science-Based Targets initiative (SBTi) reported that the number of UK companies with validated science-based targets more than doubled in 2023.
- Yet quality remains a concern: of nearly 1,800 listed UK organisations disclosing transition plans, 88% reported against fewer than 15 of CDP’s 21 credibility indicators.
- And according to the TPI Global Climate Transition Centre (LSE), fewer than 3% of the world’s largest listed companies have published credible transition plans to meet their climate targets.
This highlights a widening credibility gap between corporate climate ambition and delivery – one of the key drivers for strengthening UK and EU transition planning policy.
Do net zero transition plans deliver financial benefits?
Evidence increasingly suggests that transition planning can deliver significant benefits for companies, including supporting firm-level emission reductions, increasing competitiveness and reducing the cost of debt.
Embedding transition planning at a strategic level can help ensure that companies and financial institutions realise the benefits of transition plans, including the ability to manage the risks and seize the opportunities of the transition to net zero. According to a Lloyds Bank report on credible transition plans, 65% of executives believe that achieving all their targets will make the company “more” or “much more” competitive.
Concerned about your company’s Net Zero transition plan?
Whether you’re just getting started or need expert guidance to refine your strategy, our specialists at Sustainable Energy First are here to help.
Get in touch today for a no-obligation chat and take the next step towards a more sustainable future.
To get started with your transition plan or for further advice, get in touch for a no-obligations chat with one of our specialists at Sustainable Energy First.
