HB Ad Slot
HB Mobile Ad Slot
Australia: Climate-Related Transition Plans – Governing for Net Zero Across the Board
Friday, August 1, 2025

On 16 July 2025, The Australian Council of Superannuation Investors (ACSI) and the Australian Institute of Company Directors (AICD) published guidance on Governing for Net Zero: The Board’s Role in Organisational Transition Planning (ACSI & AICD Guide), which is designed to assist directors in preparing Climate-Related Transition Plans (Transition Plan).

ACSI & AICD Climate-Related Transition Plan Guide

As the third component of the Australian Government’s Sustainable Finance Roadmap, Sustainability Reporting entities must disclose any Transition Plan the entity has in place, which should include the entity’s targets, actions, and resources for its transition towards a lower-carbon economy. While there is currently no legal requirement for disclosing entities to have a Transition Plan and with guidelines not due to be released by the Treasury until the end of the year, the ACSI & AICD Guide provides some useful advice on what should be included in a Transition Plan.

Some of the topics addressed in the Guide include the following.

  1. Understand risks and opportunities

    Understand the entities’ climate-related risks, including any physical risks such as climate catastrophes that may physically affect the entity, as well as transition risks arising from regulatory changes. Boards should align climate-related risks and opportunities with the organisation’s business model to support sustained profitability and long-term value creation.

  2. Build leadership capability

    Build the requisite skills and confidence to critically assess climate-related advice. A well-informed leadership team should select credible advisers, evaluate the quality of external advice, and engage confidently with stakeholders. Boards should focus on structured governance education and updates on climate science to support board oversight capabilities.

  3. Engage with key stakeholders

    Consult with stakeholders to understand how the transition plan may impact or how engagements may create value. Productive engagement with stakeholders such as customers and industry peers will support the execution of transition goals.

  4. Develop strategic ambition and targets

    Set clear, measurable, and achievable targets for transitioning to a climate-resilient business model. Strategic ambition of an organisation comprises the entity’s objectives and priorities for responding to the transition towards a low greenhouse gas emission economy.

  5. Establish governance structures and oversee commercial integration

    Embedding transition planning into an organisation’s overall strategy and budget is essential. Boards should require that management demonstrate actions to embed the plan into day-to-day operations and long-term planning.

  6. Monitor and review transition plans

    Implementing a Transition Plan requires regular review and updates. Boards should enable the creation of a system in which Transition Plans are periodically reviewed and updated to assist the corporation to respond to existing and emerging climate risks and opportunities to maximise future returns for investors.

Conclusion

Climate transition planning is becoming an important strategic capability for Australian organisations. 

Thais Fernandes contributed to this article

HTML Embed Code
HB Ad Slot
HB Ad Slot
HB Mobile Ad Slot
HB Ad Slot
HB Mobile Ad Slot
 
NLR Logo
We collaborate with the world's leading lawyers to deliver news tailored for you. Sign Up for any (or all) of our 25+ Newsletters.

 

Sign Up for any (or all) of our 25+ Newsletters