Corporate Climate Transition Plan

A climate transition plan is a strategic document that outlines how a company will transition from its current emissions profile to one consistent with a 1.5°C scenario. It is neither a statement of intent nor a list of energy-efficiency measures: it is a document that integrates reduction targets, committed investments, changes to the business model, governance responsibilities, and mechanisms for reporting progress.

Until recently, it was a voluntary document associated with companies that had made advanced climate commitments. That context has changed. European regulators, validation bodies such as the SBTi, and investment funds aligned with ESG criteria are now incorporating it as a requirement, with direct implications for Latin American companies that are part of global value chains or seeking international financing.

What Is a Climate Transition Plan?

The terminological confusion surrounding this document is real and has practical consequences. Before defining what it is, it is worth clarifying what it is not.

It is not the same as a decarbonization roadmap

A decarbonization roadmap identifies available reduction measures, ranks them by cost and impact, and assigns an implementation timeline. It is an internal, operational document focused on execution.

A climate transition plan is similar, though broader: it integrates that roadmap into a strategic framework that also includes the business model, financing strategy, commitments to the value chain, governance structure, and external communication plan. It is the document that the company presents externally—to regulators, investors, and customers—as evidence that its climate strategy is coherent and executable.

The roadmap answers the question, “How do we reduce our emissions to meet our targets?” The transition plan answers, “How does our company transform its business model to remain viable in a 1.5°C world?”

This is not the same as having SBTi-validated targets

Having SBTi-validated targets is one component of the transition plan, which defines the quantified reduction ambition. But a transition plan goes further: it describes the implementation path, the associated budget, who is responsible for each decision, and how progress will be reported.

In fact, under the SBTi V2.0 draft, Category A companies must develop a Climate Transition Plan and publish it within 12 months of their initial validation.

The definition used by regulators and investors

A transition plan is a roadmap with defined timelines to align strategy, operations, and capital allocation with a 1.5°C pathway, including levers for decarbonization, financing, governance, targets, and progress tracking.

What distinguishes a credible transition plan from a merely declarative one is precisely this: the explicit link between reduction targets and the investment decisions and business model that make them possible.

Who is requiring it and why

CSRD and ESRS E1: a requirement for European companies and their value chains

The specific content of a climate transition plan is defined in disclosure requirements E1-1 through E1-4 of the ESRS standard. Companies must develop and disclose a transition plan for climate change mitigation that aligns their strategies with the Paris Agreement to limit global warming to 1.5°C and achieve climate neutrality by 2050.

This applies directly to European companies subject to the CSRD. The indirect implication for Latin America is that European groups with subsidiaries or suppliers in the region are passing this requirement down the value chain: if you are a supplier to a European group, you will likely be asked in the coming years to provide evidence that you have—or are developing—a transition plan.

Additionally, ESRS E1-1 stipulates that, if a company does not have a transition plan in place, it must indicate whether it will adopt one and by when.

SBTi V2.0: New Requirement for Category A Companies Starting in 2028

The draft SBTi V2.0 introduces the requirement for larger companies to publish a Climate Transition Plan within one year of their validation. For Latin American companies with active SBTi targets or those considering committing to them, this means that the transition plan will no longer be an optional document associated with climate leadership but will instead become a requirement of the validation process.

Investors, CDP, and Financing: The Plan as a Sign of Credibility

Climate transition plans are a central requirement of recently published climate disclosure standards: the CSRD’s ESRS E1 standard, the ISSB’s IFRS S2 standard, the CDP scoring methodology, and the