As part of this, an entity shall disclose:

a. its objectives and priorities:

i. for reducing its Scope 1, 2 and 3 GHG emissions in either its operations or value chain

ii. for enhancing its resilience to the changing climate and responding to the risks and opportunities that arise from the transition to a low-GHG emissions, climate-resilient economy

iii. to use the levers and capabilities it has available to embed and accelerate a transition to a low-GHG emissions. climate-resilient economy

b. whether and how it has identified, assessed and taken into account the impacts and dependencies of the transition plan on its stakeholders (e.g. its workforce, value chain counterparts, customers), society (e.g. local communities), the economy, and the natural environment, throughout its value chain, that may give rise to sustainability-related risks and opportunities  

c. the extent to which it has taken into account and aligned with any external requirements, commitments, science-based targets, transition pathways, roadmaps or scenarios, which may include:

i. national or international commitments

ii. any targets it is required to meet by law or regulation

iii. sectoral pathways, roadmaps or other climate scenarios

iv. voluntary commitments (e.g. existing public commitments, organizational and industry standards, contractual relationships, codes of practices etc.)

d. any potential trade-offs, synergies or co-benefits identified between the objectives and priorities in 1.1a

e. any short-, medium- and long-term targets and milestones it has set to measure progress, including how short-, medium-, and long-term are defined in the context of transition planning.¹

The Strategic Ambition provides the basis for all the other elements of the entity’s transition plan and is likely also to be a core part of the entity’s wider corporate strategy.

Users of a transition plan will want to understand where the entity sees its main transition levers, and the relative emphasis that the entity places on the three inter-related channels of a strategic and rounded approach to transition planning:

• decarbonising the entity;
• responding to climate-related risks and opportunities; and
• contributing to an economy-wide transition.

The impacts and dependencies of a transition plan on stakeholders, society, the economy and the natural environment, throughout the entity’s value chain, may give rise to sustainability-related risks and opportunities (1.1.b). Users will value information about whether and how an entity has identified, assessed and taken these into account. For example, given the role of nature loss in driving climate change and the importance of nature for greenhouse gas sequestration and supporting climate resilience,² users will find it important to understand whether and how an entity’s climate transition plan safeguards nature.

The disclosures under this Sub-Element will also enable users to assess:

• whether and how the entity has identified, assessed and taken into account the impacts and dependencies arising from the transition plan on its stakeholders, society, the economy, and the natural environment, and how these may give rise to sustainability-related risks and opportunities that might affect its prospects
• whether is the entity has taken into account and aligned with credible external benchmarks or other reference points, such as science-based targets

Where an entity discloses that its Strategic Ambition is informed by, or aligned with, a credible external benchmark, users will be better able to gauge the level of the entity’s ambition, compare across entities, and understand the expected trajectory of the entity towards its long-term targets. This will support users in monitoring and assessing the entity’s progress in the short and medium term, improving accountability.

Altogether, these disclosures will enable comparison against peers and support users in assessing the entity’s Strategic Ambition.

In order to disclose effectively in accordance with 1.1, an entity may wish to consider the following.

(Non-exhaustive) examples of objectives and priorities (1.1.a) may include:

• short-, medium- and long-term GHG emissions reduction targets across Scopes 1, 2 and 3;
• developing and scaling climate solutions (e.g. via research and development activities);
• adapting business operations to a low-GHG economy;
• phasing out GHG intensive product processes;
• shifting to low GHG emissions products and services;
• introducing new procurement processes to decarbonise supply chains;
• advocating for policy change in support of the transition to a low-GHG emissions, climate-resilient economy;
• supporting and encouraging entities in hard-to-abate sectors in their transition;
• investing in activities required for the transition towards a low-GHG, climate-resilient economy;
• avoiding, reducing or mitigating current or future negative impacts on nature; and
• regenerating and restoring ecosystems.

Depending on the size, sector and location of the entity, targets and timeframes for achieving objectives and priorities will vary. Entities will also differ in the transition levers they identify, and the emphasis of an entity’s ambition may focus on a subset of the three channels. For example, a company providing solutions to companies in hard-to-abate sectors that help them manage their energy usage may itself have relatively low Scope 1 and 2 GHG emissions, but significant opportunities to help embed and accelerate a whole-of economy transition by adapting and expanding these solutions.

The impacts and dependencies of a transition plan on stakeholders, society, the economy and the natural environment, throughout the entity’s value chain, may give rise to sustainability-related risks and opportunities (1.1.b). For example, such impacts and dependencies may include:

• dependencies on the entity’s workforce (e.g. on workers ability to successfully implement envisioned changes in the entity’s operations);
• dependencies on particular ecosystem services (e.g. water availability, regulation of water quality, regulation of hazards, such as floods);
• adverse or positive impacts on workers (e.g. from new opportunities or lay-offs resulting from a change in the entity’s strategic direction);
• adverse or positive impacts on the ability of nature to provide social or economic functions (e.g. resulting from land or ocean use change);
• adverse or positive impacts on customers (e.g. from changes in product prices or specifications); and
• adverse or positive impacts on communities in which the firm operates (e.g. from changes to local employment, or benefit sharing agreements).

Disclosing whether and how the entity has identified, assessed and taken into account such impacts and dependencies will help users assess the comprehensiveness of the plan and whether it adequately addresses potential implications for long-term value. For example, an entity may want to disclose information about:

• any impacts and dependencies it has identified;
• how these impacts and dependencies have been assessed including the scope and methodology of the assessment (e.g. what business operations have been considered);
• the resulting risks and opportunities to the entity and how these have been identified;
• where in the value chain the resulting risks and opportunities are concentrated; and
• how these impacts and dependencies have been taken into account in the entity’s Strategic Ambition, including how they may have resulted in specific changes to objectives and priorities.

In assessing and disclosing the nature-related impacts and dependencies of its transition plan, an entity may find it helpful to refer to the recommendations of the Taskforce for Nature-related Financial Disclosures (TNFD). 

An entity’s transition plan may be informed by both bottom-up considerations drawn from the entity’s own situation and operating context, as well as top-down considerations based on the changes needed to limit the worst effects of rising global temperatures. In defining its objectives and priorities, an entity may therefore reference:

• external requirements (e.g. targets it is required to meet by law or regulation);
• commitments (e.g. voluntary commitments made as members of net-zero initiatives);
• science-based targets (e.g. Science Based Targets initiative (SBTi) Criteria and Recommendations for Near-Term Targets);
• transition pathways/roadmaps (e.g. TPI Sectoral Decarbonisation Pathways, SBTi Sector Decarbonisation Pathways); and
• scenarios (e.g. IEA Net Zero by 2050 Scenario; NGFS Climate Scenarios).

Where an entity references such benchmarks in its transition plan, it should disclose which ones it has taken into account and the extent to which it has aligned its Strategic Ambition with these (1.1.c).

An entity may find that there are trade-offs, synergies or co-benefits between different objectives and priorities (1.1.d). Examples of potential trade-offs may include:

• scaling up low- or no- GHG emission technologies may result in a short-term increase in GHG emissions (e.g. emissions resulting from the production and or delivery of the technology);
• pursuing rapid short-term emissions reductions may not be additional to the economy-wide transition (e.g. where firms focus on installing roof top solar panels to reduce Scope 2 emissions in areas where the regional or national decarbonisation implies a rapid decarbonisation of the wider electricity grid); and
• scaling up renewable energy projects may result in higher vulnerability to the physical effects of climate change (e.g. where these projects are located on flood plains or low-lying areas).

Examples of potential synergies and co-benefits (1.1.d) may include:

• nature-based solutions that strengthen resilience and create additional co-benefits by storing carbon in biomass (e.g. increasing tree cover, installing green rooves, protecting and/or restoring wetlands and marshes)
• social measures which increase the availability of key skills and knowledge while ensuring an inclusive and equitable transition (e.g. re-skilling and upskilling measures)
• the provision of products and services which tackle entity-level emissions whilst also reducing the cost faced by consumers (e.g. scaling up low-cost renewable power generation).

Where such trade-offs, synergies, or co-benefits arise, entities should disclose these, and may consider explaining how any trade-offs have been managed, or synergies and co-benefits leveraged.

Entities’ definitions of short, medium and long term time horizons (1.1.e) are likely to differ. This may depend, for example, on their sector, existing financial or business planning cycles as well as engagement with initiatives that apply particular definitions. Entities should be transparent about how they have defined these time horizons and may consider providing information about why these have been defined in a particular way.

Please note: Transition planning is an emerging space in which current practice is rapidly evolving. The selected examples should not be regarded as an articulation of “best practice”. Instead, they are intended to illustrate the type of information an entity may want to include under a particular Sub-Element to support interpretation of the framework by preparers. It is important to note that selected examples will often not cover the entirety of TPT Recommendations and may sometimes contain information which is relevant to multiple TPT Sub-Elements. Readers should note that some examples are taken from transition plan-related content in entities’ wider climate-related disclosures, as well as content in standalone transition plans.

Example 1:
Example of how a company in the Food & Agriculture Sector has disclosed information relevant to 1.1.a.ii:Source: Diageo plc, Annual Report, p.23, (2023)

Example 2:

Example of how an Asset Owner has disclosed information relevant to 1.1.e:

Source: Phoenix plc, Net Zero Transition Plan, p.39, (2023)