Transition plan
A transition plan is an entity's organized set of targets, actions, resources, assumptions, and accountability arrangements for moving its strategy and operations toward a lower-carbon or climate-resilient economy. It explains how the entity intends to respond to relevant climate-related risks and opportunities over time.
In simple terms
A useful plan connects strategic ambition with near-, medium-, and long-term actions, financial planning, operational changes, dependencies, and governance. It can cover both Climate mitigation and Climate adaptation, including how progress will be measured and how assumptions may change. Under IFRS S2, an entity is not required to create a transition plan; however, if it has one, material information about the related strategy may need disclosure. Requirements still depend on the reporting framework and jurisdiction in use.
Why it matters
A target states an intended destination; a transition plan shows a route, resources, decision points, and accountability. That detail helps investors and other users evaluate credibility, execution risk, and exposure to changing markets or policy. It can also reveal where Transition finance is needed and whether stated climate goals are reflected in capital allocation and operating decisions.
Example
A manufacturer sets emissions milestones, identifies equipment replacements, assigns executive oversight, estimates capital needs, describes supplier dependencies, and publishes performance indicators with review dates. Its Transition plan explains the operational route and financing assumptions. A green bond used for one upgrade is Transition finance, but the financing instrument is not the plan itself.
References
Current status
- As of
- Issuer
- IFRS Foundation
- Instrument or version
- IFRS S2 transition-plan disclosure guidance, June 2025
- Status
- June 2025 guidance supports transition-plan disclosures under IFRS S2 without adding to or changing IFRS S2 requirements.
Applicability: IFRS S2 does not require an entity to have a transition plan. It requires material information about climate-related risks and opportunities and, when an entity has a plan, relevant information about its strategy; legal applicability depends on jurisdictional adoption or use.