Credible Transition Plans to Support Decarbonisation

Matthew MacGeoch

In this video, Matthew breaks down what makes a credible transition plan for achieving net-zero emissions. He explores the three essential elements, Ambition, Action, and Accountability, that ensure companies set science-based targets, implement concrete decarbonisation strategies, and maintain governance oversight. He further explains how transition plans align with corporate strategy, enhance investor confidence, and support regulatory compliance.

ESG Bond Markets

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Credible Transition Plans to Support Decarbonisation

4 mins 36 secs

Key learning objectives:

Understand what makes a transition plan credible and how it aligns with corporate strategy
Identify the three key elements, Ambition, Action, and Accountability, in transition planning
Understand how transition plans enhance investor confidence and regulatory compliance

Overview:

A credible transition plan sets clear, time-bound targets for net-zero emissions and outlines concrete actions for achieving them. It includes short- and medium-term targets covering all material emission scopes, a defined financing plan, and mechanisms for governance and accountability. Companies must track progress, adapt strategies, and transparently report updates. Integrating these plans into corporate reporting strengthens commitment and credibility, ensuring meaningful climate action while maintaining investor and stakeholder confidence.

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Summary

What is a transition plan, and why is it important?

A transition plan is a time-bound strategy that outlines how a company will achieve net-zero emissions. It serves as a roadmap for decarbonisation, ensuring transparency and guiding decision-making for stakeholders, including investors and regulators. The Climate Bonds Initiative defines credible transition plans based on ambition, action, and accountability, ensuring that sustainability commitments are not just pledges but strategically executed and financially backed.

What are the three key elements of a credible transition plan?

Ambition: A strong commitment to net zero with clear, science-based GHG targets across Scope 1, 2, and 3 emissions. Targets must align with sector-specific pathways and include short- and medium-term goals.

Action: A clear plan for emissions reduction, avoiding fossil fuel lock-in, and ensuring financial backing through capital allocation and sustainable debt markets. Regular tracking and adjustments are essential.

Accountability: Governance mechanisms (e.g., board oversight, performance-linked incentives) ensure adherence, while external verification provides credibility. Transparent reporting is critical for stakeholder trust.

How should companies set ambitious and science-based targets?

Companies must align targets with a 1.5-degree pathway, covering Scope 1 (direct), Scope 2 (indirect energy use), and Scope 3 (value chain) emissions. Sector-specific benchmarks should guide reductions, and financial backing (e.g., through green bonds) must support execution. Targets should be short-term (2025-2030) and medium-term (2030-2040) to ensure steady progress toward 2050.

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Matthew MacGeoch

Matthew MacGeoch is a Senior Research Analyst at Climate Bonds' Research Team, specialising in transition plans, transition finance, and hard-to-abate sectors. He has led the development of Climate Bonds' SLB dataset and methodology, and has since developed their transition plan monitor. He has experience from the UN Department for Economic and Social Affairs, the Oxford Institute for Sustainable Development, and the Oxford Silk Road Society Think tank. He has also worked at the Afghanistan and Central Asian Association and Lafiya Nigeria, focusing on social issues.

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