Why we created a climate transition plan guide

Article 22 of the Corporate Sustainability Due Diligence Directive (CSDDD) is arguably the most important piece of climate-related law ever introduced. It requires companies, banks included, to create actionable plans that align their business operations with limiting global temperature rise to 1.5 degrees Celsius. 

We’ve published guidance to help organisations deliver effective transition plans. Our approach utilises legal documents and commercial contracts as levers to turn climate commitments into enforceable, actionable outcomes.

New corporate sustainability regulations

This guidance was created to align with and go beyond the current corporate sustainability regulatory environment. We identified significant developments in the European market, such as the recent reporting and due diligence directives. However, we also recognised that the focus on transition plan requirements is growing globally. This is why we designed the guide to be adaptable for use in any jurisdiction.

The EU’s Corporate Sustainability Reporting Directive (CSRD) asks companies to disclose their transition plan or explain otherwise. The CSDDD, on the other hand, requires companies to adopt a plan and sets out minimum requirements for what it must include. Under Article 22, transition plans must also be “put into effect”. In other words, companies need to implement their plans to ensure they are compatible with the Paris Agreement and EU climate goals. 

Contracts as a tool

While we welcome the market catching up with our work, we also recognise the importance of stretching the boundaries of what’s possible when re-wiring contractual architecture for positive change. Put simply, companies cannot put their transition plans into effect without changing how they do business, from strategic decision-making to contracting practices. Action needs to be taken now to prepare for and take control of managing climate risks and operationalising emissions reduction targets. 

Climate transition plan resources

It is important to note that climate transition plans are not new in the market. For example, the Transition Plan Taskforce (TPT) was launched in April 2022 to establish the gold standard for transition plans. On 24 June 2024, the IFRS Foundation announced that it would assume responsibility for the disclosure-specific materials developed by the TPT. There is a range of guidance, recommendations and examples out there too. Most recently, the EU standards body EFRAG launched its implementation guidance. 

Key takeaways

Our guidance was created with the aforementioned developments in mind. It was also designed to demonstrate a tangible and accessible approach to translating climate targets into legally enforceable commitments. Our guide was written and reviewed by a wide range of subject matter legal experts, to ensure its ambition, quality and integrity. We thank them for helping us create free and easily accessible content to support a meaningful transition to a sustainable economy. 

So, are your contracts ready for your transition plan? Remember, a contract entered into tomorrow for a set amount of years could seriously impact such plans. From customers to investors, the expectations for a credible transition plan are now greater than ever. They must be put into effect – our guide enables you to do this.