Your climate transition plan: insights and actions for business resilience

A robust climate transition plan is essential for managing risks, maximising sustainability opportunities and building long-term viability. It is your roadmap for adopting, and thriving in, a low carbon economy. It is a demonstration of your ambition, a strategic tool for action and evidence of your accountability.

Ricardo’s Technical Director of Sustainability, Jamie Pitcairn, chaired our recent series of Climate Transition Plan webinars where we delved into key aspects and considerations for effective climate transition plans. In this blog, he shares key insights from across the series which are all available to watch in full on demand.

Over the past few months it has been a privilege to host a webinar series on Climate Transition Plans to explore the topic and share insights from our work with clients and from highly experienced industry professionals. The series explored key elements of a credible transition plan, meeting stakeholder expectations, quantifying the financial costs associated with your transition and the importance of your value chain.

The climate crisis is accelerating. Regulations are evolving, deadlines for climate commitments are fast approaching, and investors and customers are increasingly demanding improved environmental credentials and more sustainable products and services. The pressure is mounting. Companies must not only act but be seen to act by their stakeholders.

One of the most powerful tools your company can develop to navigate this transformation, drive meaningful change, and demonstrate a genuine commitment to sustainability is a credible climate transition plan.

These plans go beyond public commitments – they serve as structured, data-backed strategies for aligning operations, capital allocation, and supply chains with science-based emissions targets. The key to a successful transition plan is not only setting ambitious goals but also translating them into concrete actions. 

Building the credibility of your climate transition plan

Take action now, don’t wait for perfection

In our first webinar, Ben Gilbey from the international Transition Plan Network (ITPN) highlighted that transition planning is an emerging field, and many businesses are still in the early stages of developing their plans. It is expected that many plans will fall short when it comes to independent assessment but by sharing plans and progress you will build trust both internally and externally.  Don’t let the pursuit of perfection hinder progress. 

Align with climate science

The Corporate Sustainability  Reporting Directive (CSRD) requires companies to set long-term net-zero targets aligned with the Paris Agreement's 1.5°C goal. These targets must be backed by timelines, and interim milestones, and cover emissions across scope 1, 2, and 3. Compliance ensures alignment with global climate science.

Not all transition plans are created equal. To be credible, a plan must reflect alignment with climate science, detailed execution pathways, and accountability mechanisms. According to guidance from bodies like the Transition Plan Taskforce (UK) and the GFANZ initiative, credible plans include:

• Short-, medium-, and long-term targets: Not just a 2050 goal, but interim milestones (e.g., 2030, 2040) backed by operational changes.
• Clear governance and accountability: Board-level oversight and integration into risk management frameworks.
• Scenario analysis and resilience testing: Understanding how business models adapt under various climate and policy scenarios.
• Just transition principles: Considering the social and economic impacts on workers, communities, and suppliers.

Moreover, companies are increasingly expected to report publicly on progress annually, using standardised metrics and third-party verification.

Communicate with your stakeholders

 Building a successful transition plan requires the support of key stakeholders, including investors, employees, customers, and suppliers. Regular communication and transparency will build trust and ensure alignment with sustainability goals.

Be flexible

Your climate transition plan must be dynamic, regularly monitored, and adjusted as necessary. Milestones should be reviewed regularly, with adjustments made if targets are missed. Climate goals should be treated as seriously as financial ones.

Financing your transition

As with most things worth doing, there will be a cost to transitioning your business to thrive in a low-carbon economy but the cost of inaction is likely to be far greater.

Align capital expenditure with decarbonisation goals

Businesses must link their climate objectives to clear financial planning. Transition-aligned capital expenditure (CapEx) and operational expenditure (OpEx) must be quantified. 

Joachim Klement from Panmure Liberum shared that to secure funding, many firms are leveraging sustainability-linked loans (SLLs) and green bonds. These financing mechanisms tie interest rates or capital access to verified emissions reductions or ESG performance. Tools like internal carbon pricing are being used to help prioritise low-emission projects by assigning a cost to carbon in decision-making.

An increasing number of institutional investors now require manufacturers to disclose how CapEx and R&D budgets align with the company’s decarbonisation pathway, particularly in line with the EU Taxonomy, ISSB, or Task Force on Climate-related Financial Disclosures (TCFD) frameworks.

Aligning transition planning and financial planning

In our second webinar, Natalie Jackson from Accounting for Sustainability (A4S) discussed how integrating transition planning into financial planning processes is becoming more commonplace as it enables organisations to understand the financial implications of reaching net zero using robust processes and governance. Collaborating with experienced financial teams means decarbonisation targets are more likely to be properly costed and therefore more likely to be achieved.  

Ricardo’s Martin Georgiev and Olivia Witts shared strategies on selecting, prioritising and costing energy and heat decarbonisations projects – an area likely to account for the biggest impact when decarbonising your own operations.

Integrate sustainability into your core strategy

Transition planning is not a standalone initiative. It should be integrated into your overall business strategy, operational plans and targets. This requires strong collaboration across departments, clear communication, and a commitment to long-term investment in sustainability. 

Establish governance structures with clear roles at the board and management levels to drive and oversee progress. Use the appropriate level of incentives and penalties to support action.

Prioritise key functions and departments to identify actions and ensure they build in carbon into their decision-making across areas they can genuinely influence. A good example is procurement where tools like carbon pricing can be used within the supplier selection process.

Understanding the importance of your value chain

As Ricardo Scope 3 Expert, Daniel Crowe, explained in our third webinar, for most businesses your value chain is likely the greatest source of carbon emissions. These are your Scope 3 emissions and come mostly from upstream activities such as raw material extraction, processing, and transport and from downstream use and disposal of products.  This is the most complex area to tackle as it’s not within your direct control and is therefore a key element of your transition plan. 

Robust transition plans must include:

• Methods for collecting  supplier emissions data and how emissions are or will be integrated into procurement criteria
• Plans for material substitution strategies, e.g., switching from virgin to recycled metals or bio-based polymers
• How products will be redesigned for lower life-cycle emissions (e.g., modular design, energy-efficient usage)
• Processes for customer engagement to enable lower-emission use and end-of-life management

Leading manufacturers are using product-level Life Cycle Assessment (LCA) to understand full life time impacts of their goods and to model which change would make a positive impact overall rather than shifting the burden to another part of the life cycle.  Product Carbon Footprints (PCFs) are increasingly demanded by customers and regulators and, when based on robust data, can be used as a marketing tool.

Adam Leaver from EcoOnline, explained that that digital platforms are becoming an essential tool for collating and monitoring diverse streams of emissions data and can support reporting obligations under CSRD and other evolving standards.

Data acquisition is a journey: Keep working on the reliability of your data

A credible transition plan is data-driven, both qualitative and quantitative. By improving the accuracy of your data, you’ll be able to identify hotspots and assess reduction potential as well as accurately monitor the progress you are making to decarbonise.

Data is commonly cited as a significant challenge. The strong view from stakeholders is to use what you have and then build from this foundation. Identify the gaps and then develop a plan to fill these gaps. 

It is perfectly acceptable to communicate these gaps in a transition plan and then detail a data improvement strategy. Supplier data is commonly the challenge but develop a clear understanding of what data is helpful and how you will use it and focus on those strategic suppliers first. The big mistake is asking for data without a clear plan of how this will add value to the decision-making process.

Look beyond carbon

Lauren Wetherdon from The Biodiversity Consultancy shared that biodiversity and natural capital are often underrepresented or missing from many climate transition plans, especially in sectors like manufacturing. This is because measurement can be complex and also mandatory biodiversity disclosures are still emerging, so companies prioritise what’s currently regulated. However, the trend is shifting, with frameworks like the TNFD emerging to help businesses systematically include nature alongside climate in their strategies.

From compliance to competitive advantage

There’s no doubt regulatory compliance is a key driver in the adoption of climate transition plans but I strongly advise you to look at your transition plan as a vital strategic tool to future-proof your business. Organisations that build and proactively implement credible transition plans will not only avoid risk—they’ll also secure long-term cost reductions, customer loyalty, and access to climate-aligned capital.

The transition to net zero is as much as a financial challenge as a strategic one. But for those who can execute with discipline and transparency, it’s also a path to resilience and growth.

Further information

Watch the recordings of the webinar series:

• What makes a credible climate transition plan and what are stakeholders looking for?
  Jamie Pitcairn, Ricardo
  Ben Gilbey, International Transition Plan Network (ITPN)
  Joachim Klement, Panmure Librum
  
  
• Quantifying the financial cost of your climate transition: strategies and communication
  Jamie Pitcairn, Ricardo
  Natalie Jackson from Accounting for Sustainability (A4S)
  Martin Georgiev, Ricardo Renewables Expert
  Olivia Witts, Ricardo Heat Decarbonisation expert
  
  
• Understanding the importance of your value chain in developing a credible climate transition plan
  Jamie Pitcairn, Ricardo
  Daniel Crowe, Ricardo Scope 3 Expert
  Adam Leaver, EcoOnline
  Lauren Wetherdon, The Biodiversity Consultancy

Find out more about how we can support your climate transition planning whether you are at the start of your planning, want to strengthen your existing plan or need support to implement your plan:

• Transition plan support
• Get in touch with any questions or to start a conversation about how we can support you to maximise the strategic value and de-risk the implementation of your transition plan