Why Transition Plans Should be the Next Key Focus for CFOs

Businesses in 2026 are under unprecedented pressure to show concrete advancements in sustainability.

Vague commitments are insufficient; now, organisations must deliver verifiable outcomes capable of withstanding strict validation by regulators and investors alike.

With the global economy shifting toward low-carbon solutions, embedding environmental targets into core corporate strategy, operational planning and capital allocations has become vital.

Stefan Premer, who serves as the Senior Director of Sustainability Consulting at Sphera, discusses how modern enterprises are adapting their business frameworks to navigate these hurdles, ensuring enduring growth remains synchronised with pressing environmental needs.

What is climate transition planning and why is it important?

A transition plan is the mechanism that connects climate ambition with implementation. It turns high-level commitments into concrete decisions across operations, procurement, finance, products and commercial strategy.

It also provides a structured process for assessing the feasibility of climate targets by iteratively reviewing climate ambition against decarbonisation potential, helping organisations refine targets and implementation pathways over time.

In doing so, it gives companies a structured way to manage progress, evaluate trade-offs, and align climate action with business value.

Climate transition planning has historically been viewed as a sustainability-led exercise. Today, however, there is more influence from emerging regulations, capital markets and the operational realities of decarbonisation.

Particularly for large enterprises, the shift to a low-carbon economy is already influencing capital allocation, supply chain strategies, product decisions, risk management and long-term competitiveness.

Together, investors, regulators and boards are raising their expectations, assessing companies on whether they can translate those ambitions into credible, actionable, and measurable plans.

What's driving the growing focus on climate transition planning?

One main reason this topic is getting more attention is that companies now face higher expectations for disclosure and stricter standards for how they plan their transitions.

Around the world, transition planning is shifting from voluntary best practice to an increasingly formalised expectation.

Regulators want greater transparency into how companies intend to deliver their climate strategies; simply describing them is not enough.​

There is a growing emphasis on making corporate climate action more transparent and more closely aligned with core business strategy.

Both the Corporate Sustainability Reporting Directive and European Sustainability Reporting Standards (ESRS E1) have played a major role in driving this shift in Europe.

These require companies to disclose the specific planned decarbonisation actions, the resources allocated to deliver them (including CapEx and OpEx) and how their transition plans are embedded within overall strategic decision-making.

At the same time, there is more agreement on how to approach transition planning. Standards and frameworks are beginning to define what a credible transition plan should look like.

IFRS TPT (Transition Plan Framework), for instance, requires clear information on enterprise climate-related changes to fulfil its main purpose of supporting firms in disclosing this information consistently and transparently where relevant.

Supporting this, guidance such as the Transition Plan Taskforce framework is helping companies structure disclosures around foundations, implementation, engagement, metrics and targets, and governance.

Developments like IFRS S2 and ESRS E1 are making transition plans a central part of corporate reporting and governance.

How are investor and lender attitudes changing?

The investment industry now sees that transition planning is much more than just a compliance issue.

Markets are increasingly rewarding credible climate execution and penalising vague commitments.

Investors and lenders are thereby paying closer attention to whether a company has robust decarbonisation plans that account for a range of future scenarios.

​As a result, climate credibility is becoming a capital markets issue.

Access to capital, the cost of capital, and investor confidence now depend more on how strong a company’s transition story is and the evidence supporting it.

Stakeholders now want to see implementation logic, quantified levers, decision-useful data and governance structures that show the transition is being actively managed.

How can climate transition planning support business transformation and operational decision-making?

What started in industries like automotive is now spreading across value chains, as suppliers and partners in different sectors create their own transition plans.

Without a clear, measurable transition plan, decarbonisation efforts often stay scattered among sustainability, procurement, operations, R&D, finance and strategy teams.

​A quantified transition plan helps convert those fragmented efforts into an integrated transformation pathway.

It allows companies to connect emissions hotspots with reduction levers, assess the feasibility and cost of different actions, and sequence decisions around R&D and procurement in a way that supports both climate goals and business performance.

This transformation shows up in several ways. First, transition planning guides how companies invest by connecting decarbonisation paths to product choices, markets, R&D, procurement, and key milestones. This helps companies prioritise decisions based on timing, feasibility, strategic value, and emissions.

​Second, it supports operational transformation by helping organisations understand the required actions, implementation feasibility, and prioritise the most effective levers across procurement, manufacturing, logistics, and product development.

Third, it improves governance and accountability by making climate responsibilities part of all business functions, not just sustainability departments. Strong governance helps organisations guide and manage the transition plan and its rollout by shaping decisions, supporting investment and strategy, building the operating model, and allowing for ongoing performance tracking and improvement.​

What distinguishes an effective climate transition plan from a compliance exercise?

​Strong transition plans are grounded in quantified emissions inventories, credible decarbonisation levers, scenario analysis and iterative review.

They are aligned with emerging standards, supported by governance to help steer implementation and designed to turn decarbonisation levers into priorities, engagement activities and cross-functional execution.

​For companies that start now, a sound, quantified transition plan provides a strong foundation for effective reporting and successful implementation.

Third, it improves governance and accountability by making climate responsibilities part of all business functions, not just sustainability departments. Strong governance helps organisations guide and manage the transition plan and its rollout by shaping decisions, supporting investment and strategy, building the operating model, and allowing for ongoing performance tracking and improvement.​

What distinguishes an effective climate transition plan from a compliance exercise?

​Strong transition plans are grounded in quantified emissions inventories, credible decarbonisation levers, scenario analysis and iterative review.

They are aligned with emerging standards, supported by governance to help steer implementation and designed to turn decarbonisation levers into priorities, engagement activities and cross-functional execution.

​For companies that start now, a sound, quantified transition plan provides a strong foundation for effective reporting and successful implementation.